# In the matter of Mega Foods Products Madras Pvt.  Ltd. IA(IBC)-1322(CHE)-2021 in IBA-1364-2019

> NCLT judgment dated 2022-06-01. Citation: TCN-2022-NCLT-02499. The case involves an application filed by Amit Chandrakant Vaishnav, a suspended director of…

- **Court:** NCLT
- **Order date:** 1 Jun 2022
- **Citation:** TCN-2022-NCLT-02499
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/mega-foods-products-madras-pvt-ltd-iaibc-1322che-2021-in-iba-1364-2019-26b86b1e

## Summary

### Background

The case involves an application filed by Amit Chandrakant Vaishnav, a suspended director of Mega Foods Products Madras Pvt Ltd., under Section 21(2) r/w Section 70(2) of the Insolvency and Bankruptcy Code, 2016, seeking reliefs related to the Corporate Insolvency Resolution Process (CIRP) initiated against the company. The applicant sought to dissolve the Committee of Creditors (CoC) due to the presence of a related party (M.D. Overseas Limited), declare the CIRP initiation as void, remove the Resolution Professional, and impose costs for fraudulent actions. The applicant argued that M.D. Overseas Limited, the 1st Respondent, is a related party that maliciously initiated CIRP and suppressed a shareholder agreement. The respondent contended that the tribunal had

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## Facts

Amit Chandrakant Vaishnav, a shareholder and suspended director of Mega Food Products Madras Pvt. Ltd., filed an application against M.D. Overseas Limited and S. Vasudevan, the Resolution Professional. M.D. Overseas Limited had invested Rs.7.47 Crore in the Corporate Debtor to cover bank dues, and in return, 49% of the Corporate Debtor's shares were transferred to Ms. Deepti Bansal for Rs.1/- via a Shareholders Agreement dated 2016-11-16. M.D. Overseas Limited initiated CIRP against Mega Food Products Madras Pvt. Ltd. on 2021-04-27, and S. Vasudevan was appointed as the Interim Resolution Professional. Amit Chandrakant Vaishnav argued that M.D. Overseas Limited is a related party to the Corporate Debtor because Ms. Deepti Bansal, holding 49% of the shares, is the niece

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## Issues and analysis

### Issue 1: Whether 1st Respondent is a related …

**Ratio:** The ratio is based on Section 5(24) of the Insolvency and Bankruptcy Code (IBC), 2016,

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**Reasoning:** The court reasoned that the 1st Respondent and Ms. Deepthi Vinod Bansal, who holds 49% of

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**Interpretation:** The interpretation of 'related party' under Section 5(24) of the IBC, 2016, is

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**Application:** In this case, the court applied the definition of 'related party' to the facts

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## Parties

- **Judges:** S. Ramath…; Anil Ku…
- **Appellants:** Amit Chandrakant…
- **Respondents:** Mega Foods…; M.D. Overseas…
- **Advocates:** Mr.R.Ramasubramani…; Mr T.K. B…; +2 more

## Timeline

- **2016-11-16 — Shareholders A…**: Shareholders Agreement dated 2016-11-16, 49% of the Corporate Debtor's shares were…
- **2016-11-16 — Promissor…**: Promissory note dated 2016-11-16 entered between the Corporate Debtor and the 1st…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 21(2) — Committee of creditors](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-21)

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