# In the matter of Educomp Solutions Limited

> NCLT judgment dated 2023-08-25. Citation: TCN-2023-NCLT-01910. The application was filed by Shantanu Prakash, Ex-Director/Suspended Management of Educomp…

- **Court:** NCLT
- **Order date:** 25 Aug 2023
- **Citation:** TCN-2023-NCLT-01910
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/educomp-solutions-limited-32ec70c4

## Summary

### Background

The application was filed by Shantanu Prakash, Ex-Director/Suspended Management of Educomp Solutions Limited (ESL/Corporate Debtor), under Section 60(5) read with Section 47 of the Insolvency and Bankruptcy Code 2016. The case concerns a loan facility of USD 20 million availed by Educomp Asia Pacific Pte Limited, a fully owned subsidiary of ESL (CD), to acquire a 51% stake in The Learning Internet Inc. (TLI) from State Bank of India, Singapore. ESL (CD) owns almost 55% of TLI through its subsidiary. SBI Singapore, contemplating divesting shares of TLI, raised queries regarding the divestment process. The applicant alleged that the shares of TLI, owned by the subsidiary of CD, were sold by the security holder (SBI Singapore) at a scrap value price, less than the loan

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## Facts

Educomp Solutions Limited (ESL), the Corporate Debtor (CD), is undergoing CIRP. Educomp Asia Pacific Pte Limited, a fully owned subsidiary of ESL, availed a loan facility of USD 20 million from State Bank of India (SBI), Singapore, to acquire a 51% stake in The Learning Internet Inc. (TLI). ESL, as the holding company, provided a corporate guarantee in favor of SBI Singapore. Educomp Asia pledged the shares of TLI with SBI Singapore. In March 2014, the equity valuation of TLI was conducted by Mazars. As of 12.01.2022, the 55% stake of Educomp Asia Pacific Pte Limited in TLI was estimated to be over 250 million USD. In terms of an order dated 12.09.2017, ESL was admitted to CIRP, and a Resolution Professional (RP) was appointed. SBI Singapore became a member of the

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## Issues and analysis

### Issue 1: Whether the shares held by Educomp Asia Pacific Pte Limited i.e., a subsidiary of the CD herein …

**Ratio:** A holding company and its subsidiary are distinct legal entities. The holding company

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**Reasoning:** The court relied on Vodafone International Holdings BV vs. Union of India and Bacha F.

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**Interpretation:** The expression 'property' has a wider connotation and includes the asset and

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**Application:** The court concluded that the shares held by Educomp Asia Pacific Pte Limited in

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## Parties

- **Judges:** SH. ASHOK KUMAR…; SH. L. N.…
- **Appellants:** Shantanu P…
- **Respondents:** Educomp Solutions…; Mahendar Singh…

## Timeline

- **2017-09-12 — Admission t…**: Educomp Solutions Limited…
- **2017-06-30 — Liquidation of Educomp…**: Educomp Asia Pacific Limited went into liquidation as per an order passed by the High…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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