# In the matter of Ultra Tile Pvt. Ltd. IA-558(CHE)-2021 in IBA-1263-2019

> NCLT judgment dated 2021-08-12. Citation: TCN-2021-NCLT-01359. The case involves an application (IA/558(CHE)/2021) in the matter of corporate insolvency…

- **Court:** NCLT
- **Order date:** 12 Aug 2021
- **Citation:** TCN-2021-NCLT-01359
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ultra-tile-pvt-ltd-ia-558che-2021-in-iba-1263-2019-95048e01

## Summary

### Background

The case involves an application (IA/558(CHE)/2021) in the matter of corporate insolvency resolution process (CIRP) of Ultra Tile Pvt Ltd (IBA/1263/2019). The Interim Resolution Professional (IRP) failed to appoint two registered valuers to determine the fair value and liquidation value of the Corporate Debtor within the stipulated timeframe as per Regulation 27 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The sole Financial Creditor passed a resolution for liquidation of the Corporate Debtor in the 2nd CoC meeting without exploring the possibility of insolvency resolution. The erstwhile promoter stated that there were willing buyers to buy the business as a going concern.

## Facts

The Interim Resolution Professional (IRP) of Ultra Tile Pvt Ltd failed to appoint registered valuers within the stipulated timeframe as per IBBI regulations. The sole Financial Creditor, Kotak Mahindra Bank Limited, expressed a preference for liquidation in the first CoC meeting. The 2nd CoC meeting, held on 07.05.2021, resulted in a resolution for liquidation without considering an application for liquidation as part of the agenda. The erstwhile promoter, Mr. Venkatarama Krishnamurthy, stated that there were willing buyers for the business as a going concern. The CoC resolved to liquidate the company and file a liquidation petition under Section 33(2) of the IBC, 2016. The CoC appointed the IRP, Mr. L.V. Shyam Sundar, as the liquidator. The Tribunal observed that the

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## Issues and analysis

### Issue 1: Whether the Commercial Wisdom of the CoC can override the procedures enumerated under the IBBI …

**Ratio:** The 'commercial wisdom' of the CoC is not absolute and must be exercised within the

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**Reasoning:** The Tribunal observed that the CoC's decision to liquidate the Corporate Debtor without

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**Interpretation:** The 'commercial wisdom' of the CoC is subject to judicial review to ensure that

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**Application:** In this case, the CoC's decision to liquidate the Corporate Debtor without

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## Parties

- **Judges:** R. Sucha…; B. Anil…
- **Appellants:** L V Shyam Sundar…
- **Respondents:** Ultra Tile…

## Timeline

- **2021-05-07 — 2nd CoC M…**: The sole Financial Creditor passed a resolution for liquidation of the Corporate Debtor…
- **2021-08-12 — Tribunal H…**: Hearing held on 12-08-2021 where the Tribunal directed the IRP to convene a fresh CoC…

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