# In the matter of Energy Properties Private Limited

> NCLT judgment dated 2024-11-21. Citation: TCN-2024-NCLT-00188. The case revolves around an application (I.A. No. 1299/(KB)/2024) filed in the context of a…

- **Court:** NCLT
- **Order date:** 21 Nov 2024
- **Citation:** TCN-2024-NCLT-00188
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/energy-properties-private-limited-4c066891

## Summary

### Background

The case revolves around an application (I.A. No. 1299/(KB)/2024) filed in the context of a corporate insolvency resolution process (CIRP) initiated against M/s Energy Properties Private Limited (Corporate Debtor) by M/s Avani Towers Private Limited (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The applicant, Chintan Jhunjhunwala, a suspended director of the Corporate Debtor, challenges the inclusion of Avani Towers Private Limited in the Committee of Creditors (CoC), arguing that Avani Towers, being a related party, is ineligible to be part of the CoC. The core dispute centers on whether Avani Towers, initially classified as a financial creditor and a related party, can circumvent this disqualification by claiming to be an

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## Facts

M/s Avani Towers Private Limited initiated CIRP against M/s Energy Properties Private Limited under Section 7 of IBC, 2016, as a financial creditor. The Corporate Debtor, M/s Energy Properties Private Limited, owns land measuring 10.19 acres in West Bengal, acquired in 2008 under the SARFAESI Act. A Development Agreement was entered into between the Corporate Debtor and Avani Towers for developing the land, with Avani Towers making a security deposit of Rs. 12 crores, which was not to carry any interest. An additional sum of up to Rs. 3 crores, advanced by Avani Towers, was to carry 18% interest. No development work was carried out. In 2019, Sesa International Limited filed an application against Avani Towers, leading to CIRP against Avani Towers. Avani Towers then

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## Issues and analysis

### Issue 1: Whether a related party Financial Creditor who is disqualified to be a member of CoC by virtue of …

**Ratio:** The ratio is that the intent and object of the first proviso to Section 21(2) of the IBC,

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**Reasoning:** The reasoning is that allowing a related party, already disqualified as a financial

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**Interpretation:** The interpretation is that the term ‘related party' has been defined in IBC,

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**Application:** In the present case, Avani Towers Private Limited has been classified as a

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## Parties

- **Judges:** SH. ASHOK KUMAR…
- **Appellants:** Chintan Jhunjhunwa…
- **Respondents:** M/s Energy…

## Timeline

- **2008-01-01 — Acquisition…**: The Corporate Debtor acquired land measuring 10.19 acres in West Bengal under the…
- **2008-06-16 — Development A…**: The Corporate Debtor entered into a Development Agreement with Avani Towers Private…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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