# In the matter of KVR Industries Private Limited

> NCLT judgment dated 2024-09-06. Citation: TCN-2024-NCLT-00656. The application was filed under Section 66 read with 60(5) of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 6 Sept 2024
- **Citation:** TCN-2024-NCLT-00656
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kvr-industries-private-limited-6f9c0d91

## Summary

### Background

The application was filed under Section 66 read with 60(5) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the National Company Law Tribunal Rules, 2016. The Resolution Professional filed the application against the suspended directors of M/s. KVR Industries Private Limited, seeking orders and directions under Section 66 of the IBC to make necessary contributions to the assets of the Corporate Debtor. The Corporate Debtor was placed under the Corporate Insolvency Resolution Process (CIRP) by an order dated 18.02.2022. The Applicant engaged Nukala Sreedhar & Co, Chartered Accountants, to conduct a Transaction Audit of the CD, and upon reviewing the audit report, formed the opinion that the CD had engaged in transactions falling under Section 66 of

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## Facts

M/s. KVR Industries Private Limited was admitted into Corporate Insolvency Resolution Process (CIRP) on 18.02.2022. Mr. Purusshotham Behra was initially appointed as the Resolution Professional (RP), and subsequently, the Applicant, Mr. Maligi Madhusudhana Reddy, was appointed as the RP on 07.09.2022. The Applicant engaged Nukala Sreedhar & Co, Chartered Accountants, to conduct a Transaction Audit of the Corporate Debtor (CD). The Transactional Audit Report raised concerns about payments made to related parties without clear documentation, suggesting potential misutilization of funds and preferential treatment. Specific transactions highlighted in the report included unsecured loans to Dr. K. Venkata Rao and transactions in the Bharath Vummidi Ledger Account. The

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## Issues and analysis

### Issue 1: Whether the reliefs sought by the Applicant in the extant application under Section 66 of IBC, …

**Ratio:** The Hon'ble Apex Court of India in the matters of Svenska Handels Bunken vs. Indian

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**Reasoning:** The court observed that the Transaction Audit Report merely reflected the auditor's

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**Interpretation:** The court interpreted that the allegations of fraud must be supported by strong

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**Application:** In this case, the Applicant relied solely on the Transaction Audit Report's

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## Parties

- **Judges:** Rajeev Bh…; Sanjay…
- **Appellants:** Maligi Madhusudhan…
- **Respondents:** M/s. KVR Industrie…; Venkat Rao…

## Timeline

- **2022-02-18 — CIRP Init…**: The Corporate Debtor was placed under the Corporate Insolvency Resolution Process (CIRP)…
- **2022-09-07 — Appointment…**: By an order dated 07.09.2022, the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 66 — Fraudulent trading or wrongful trading](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-66)

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