# In the matter of Virtual Logic Systems Private Limited

> NCLT judgment dated 2020-08-24. Citation: TCN-2020-NCLT-00789. The case involves an application (I.A. No.274 of 2020) filed in connection with a corporate…

- **Court:** NCLT
- **Order date:** 24 Aug 2020
- **Citation:** TCN-2020-NCLT-00789
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/virtual-logic-systems-private-limited-3252b407

## Summary

### Background

The case involves an application (I.A. No.274 of 2020) filed in connection with a corporate insolvency resolution process (CIRP) initiated against M/s. Virtual Logic Systems Private Limited (Corporate Debtor) under C.P. (IB) No.126/BB/2017. The CIRP was initiated by Mr. K.S. Hiremath, an operational creditor, due to a default of Rs. 10,63,750. Mr. Venkata Subbarao Kalva was appointed as the Interim Resolution Professional (IRP) and later confirmed as the Resolution Professional. The Committee of Creditors (COC) approved the initiation of liquidation as no viable resolution plan was received. The liquidator then sought orders for the distribution of unsold intangible assets, specifically intellectual property, to Technology Development Board (TDB), a secured financial

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## Facts

M/s. Virtual Logic Systems Private Limited (Corporate Debtor) underwent Corporate Insolvency Resolution Process (CIRP) initiated by Mr. K.S. Hiremath, an operational creditor, due to a default of Rs. 10,63,750. Mr. Venkata Subbarao Kalva was appointed as the Interim Resolution Professional (IRP) and later confirmed as the Resolution Professional. The CIRP failed to produce a viable resolution plan, leading to the initiation of liquidation. The liquidator formed a liquidation estate comprising both tangible and intangible assets, including intellectual property (software). The intellectual property, developed during 2014-2016, was not upgraded and required significant investment. The Technology Development Board (TDB) is a secured financial creditor with a majority

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## Issues and analysis

### Issue 1: Whether the liquidator's application for directions regarding the distribution of unsold intangible …

**Ratio:** Section 35(1)(n) of the Insolvency and Bankruptcy Code (IBC) read with Regulation 38(1)

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**Reasoning:** The court reasoned that the assets of the Corporate Debtor had been completely

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**Interpretation:** The legal issue involves the interpretation of the liquidator's duties and

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**Application:** The court applied the ratio to the specific facts by permitting the liquidator

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Appellants:** Venkata Subbarao…
- **Respondents:** M/s. Virtual…

## Timeline

- **2017-01-01 — Initiation…**: C.P. (IB) No.126/BB/2017 filed by Mr. K.S. Hiremath under Section 9 of the IBC, 2016,…
- **2018-01-22 — Admission o…**: Adjudicating Authority admitted C.P. (IB) No.126/BB/2017 and appointed Mr. Venkata…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 36 — Liquidation estate](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-36)

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