# In the matter of Valecha LM Toll Private Limited

> NCLT judgment dated 2024-04-26. Citation: TCN-2024-NCLT-01576. The case involves an application filed by the liquidator of Valecha LM Toll Private Limited,…

- **Court:** NCLT
- **Order date:** 26 Apr 2024
- **Citation:** TCN-2024-NCLT-01576
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/valecha-lm-toll-private-limited-994a5289

## Summary

### Background

The case involves an application filed by the liquidator of Valecha LM Toll Private Limited, alleging fraudulent transactions under Section 66 of the Insolvency and Bankruptcy Code, 2016. The application seeks to impugn certain transactions that allegedly caused loss to the Corporate Debtor by siphoning off monies and unjustly enriching Valecha Infrastructure Limited (VIL). The Corporate Debtor, a Special Purpose Vehicle (SPV) for road construction, entered into a Concession Agreement with Madhya Pradesh Road Development Corporation (MPRDC). Subsequently, the Corporate Debtor transferred the Concession Agreement to its parent company, VIL, which then sub-contracted the work to Dilip Buildcon Ltd. The applicant contends that this indirect approach led to diversion of

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## Facts

Valecha LM Toll Private Limited (Corporate Debtor) was undergoing Corporate Insolvency Resolution Process (CIRP). No resolution plan was approved, and the CoC resolved to liquidate the Corporate Debtor. The applicant was appointed as the liquidator. The Corporate Debtor, an SPV, entered into a Concession Agreement with MPRDC for road construction. The Corporate Debtor transferred the Concession Agreement to Valecha Engineering Limited (VEL), its parent company, for Rs.245,00,00,000/-. VEL then entered into a sub-contracting agreement with Dilip Buildcon Ltd. for Rs.210,00,00,000/-, earning a profit of Rs.35,00,00,000/-. The applicant contends that the Corporate Debtor could have directly sub-contracted with Dilip Buildcon Ltd. The Corporate Debtor availed credit

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## Issues and analysis

### Issue 1: Whether the transfer of the Concession Agreement from the Corporate Debtor to its parent company, …

**Ratio:** Section 66(1) of the Insolvency and Bankruptcy Code, 2016 stipulates that if during the

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**Reasoning:** The court found that VEL is the parent company of the Corporate Debtor and also had

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**Interpretation:** Section 66(1) aims to prevent fraudulent activities during the CIRP or

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**Application:** The court applied Section 66(1) to the facts of the case, finding that the

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## Parties

- **Judges:** V.G. B…; Prabhat…
- **Appellants:** Udayraj Pat…
- **Respondents:** Valecha LM Toll…; Dinesh Hariram…

## Timeline

- **2018-01-01 — Initiation…**: The Financial Creditor filed a petition to initiate Corporate Insolvency Resolution…
- **2019-03-29 — Appointment…**: Mr. Udayraj Patwardhan was appointed as the Interim Resolution Professional (IRP) of 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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