Related-party objection in insolvency failed where prior resignations and shareholder records did not show defect in liquidation

A challenge to liquidation and dissolution failed where the alleged related-party objection was not supported by the record. The tribunal noted that M.S. Balaji had resigned from the corporate debtor and the operational creditor well before admission of the insolvency application, and the appellant did not establish that the operational creditor was reflected as a shareholder in the relevant annual returns. The claim of 27% shareholding was found to concern Kasa Anlagen India Private Limited, not M.S. Balaji personally. No factual or legal error was shown to justify interference, so the liquidation and dissolution orders remained undisturbed.

---

---

Issues: (i) Whether the liquidation and dissolution process was liable to be set aside on the ground that the operational creditor was allegedly a related party and that the corporate debtor's process stood vitiated by the shareholding and directorship of M.S. Balaji.

Analysis: The challenge rested on the assertion that Kasa Anlagen India Private Limited or M.S. Balaji held controlling shareholding and thereby rendered the insolvency process defective. The record, however, showed that the adjudicating authority had found that M.S. Balaji had resigned from the corporate debtor on 17.11.2018 and from the operational creditor on 01.04.2019, both well before admission of the insolvency application on 06.04.2022. The material placed by the appellant did not establish that the operational creditor was shown as a shareholder in the relevant annual returns, and the pleading regarding 27% shareholding was found to relate to Kasa rather than to M.S. Balaji personally. No factual or legal error was demonstrated to warrant interference with the liquidation or dissolution orders.

Conclusion: The objection to the liquidation and dissolution process failed, and the appeals were liable to be dismissed.

---