Knife Gate Valve Leakage

I'd say yes.

"We found all are leak," would indicate a problem.

If there was sufficient force to damage the thread hole portions while tightened between flanges, then there has been some significant effort involved.

The described deformation of the flanges would imply deformation of the other metalic components inside the valve structure. Seats and other internal components would have been distorted, housing material has been crushed and may crumble, protective coatings would be effectively useless.

As teh other response indicates. The vale is damaged.

If the thread holes are deformed then the body is also deformed. So, yes.

How much money did you really save by using unskilled/unaccountable labour for this job?

Even though some people say that all knife gates are bi-directional, (this is if they are leaking through), make sure they are installed correctly for preferred direction flow. Were the proper gaskets used for application? Is this new application? If not the lines could of pulled when the old ones were taken out. Sometimes, this does happen and if unqualified help has done this they think tightening up will solve the issue. Make sure the right gasket material was used per application, along with the proper fasteners as well. Every bolt has a torque and torque sequence to accommodate. Just a few things to look at. Good Luck.

If you don't find time to do it right the first time you will find time the second time.

As indicated before, if enough force was used to damage the bot holes the same stresses where placed on the body itself, therefore the gate maybe misaligned enough for the leakage.

A knife gate valve does have an allowance for leakage past the seat. MSS-SP81 allows 40CC/inch/min. for a metal seated valve. if it has an o-ring then it should be zero leakage. If you deformed the lugs that much then you most likely deformed the seat. If the leak rate is substantial there is not a lot you can do other than re-machining the seat. Next time only put about 110 ft/lbs on the bolts when tightening.

A clear example of "uncontrolled bolting" to the extreme

If proper bolting procedures are not implemented, it it is reasonably certain to expect that the replacement valve will suffer the same fate. "Proper" bolting procedures are far from simply ensuring that the correct torque is applied to the bolts...