# In the matter of K G Corporation Limited

> NCLT judgment dated 2024-02-20. Citation: TCN-2024-NCLT-02517. The application, IA/338(AHM)2021 in CP(IB) 271 of 2019, was filed under Section 21 read with…

- **Court:** NCLT
- **Order date:** 20 Feb 2024
- **Citation:** TCN-2024-NCLT-02517
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/k-g-corporation-limited-ffa67b73

## Summary

### Background

The application, IA/338(AHM)2021 in CP(IB) 271 of 2019, was filed under Section 21 read with Section 5(24) and 60(5) of the Insolvency and Bankruptcy Code, 2016, and Rule 11 of the National Company Law Tribunal Rules, 2016, seeking reconstitution of the Committee of Creditors (CoC) of the Corporate Debtor, K.G. Corporation Ltd., along with other consequential reliefs. The main application, CP (IB) 271 of 2019, was filed under Section 7 of the IBC, 2016, by Acrow Construction Pvt. Ltd.& Ors. for initiating Corporate Insolvency Resolution Process (CIRP) against K.G. Corporation Ltd., which was admitted on 09.11.2020. The applicants, members of CoC holding 32.45% of the voting share, alleged that Respondent Nos.1 to 20 are related parties of the corporate debtor who

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## Facts

Acrow Construction Pvt. Ltd.& Ors. filed CP (IB) 271 of 2019 under Section 7 of the IBC, 2016, to initiate CIRP against K.G. Corporation Ltd., which was admitted on 09.11.2020. Punjab National Bank & Ors., members of the CoC holding 32.45% of the voting share, filed IA/338(AHM)2021, alleging that Respondent Nos.1 to 20 are related parties of the corporate debtor and wrongfully included in the CoC, holding 67.55% of the voting share. The applicants argued that these respondents are interconnected through common directors, cross-shareholdings, and common registered addresses, indicating a 'controlling mind' acting in concert to defraud creditors. Respondent No.21, the RP, admitted claims of Respondent Nos. 1 to 5, 7 to 9, and 11 to 20 to the tune of Rs.1279.93

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## Issues and analysis

### Issue 1: Whether Respondent Nos. 1 to 20 are related parties to the corporate debtor as defined under …

**Ratio:** Section 5(24) of the IBC defines 'related party' in relation to a corporate debtor,

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**Reasoning:** The NCLT analyzed the shareholding patterns, common directorships, and registered

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**Interpretation:** The definition of 'related party' under Section 5(24) is interpreted broadly to

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**Application:** Based on the evidence presented, the NCLT concluded that Respondent Nos. 1 to

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## Parties

- **Judges:** Chitra Ha…; Velamur G Venkata…
- **Appellants:** Punjab National…
- **Respondents:** K.G. Corporation…; Alpha(India)…

## Timeline

- **2019-01-01 — CP (IB) 271/NCLT/AHM/201…**: Main application filed under Section 7 of the IBC, 2016, by Acrow Construction Pvt. Ltd.&…
- **2020-11-09 — Admission o…**: CIRP against K.G.…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(24) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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