# In the matter of Radhey Sham Tandon Manufacturing Pvt. Ltd.

> NCLT judgment dated 2023-05-16. Citation: TCN-2023-NCLT-03357. The case involves an appeal against the order of the Adjudicating Authority (NCLT) directing…

- **Court:** NCLT
- **Order date:** 16 May 2023
- **Citation:** TCN-2023-NCLT-03357
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/radhey-sham-tandon-manufacturing-pvt-ltd-b56b810b

## Summary

### Background

The case involves an appeal against the order of the Adjudicating Authority (NCLT) directing the liquidation of the Corporate Debtor based on the resolution of the Committee of Creditors (CoC) in its 5th meeting. The appellant argued that the decision to liquidate was unsustainable because the CoC subsequently permitted the appellant to file a resolution plan, and the minutes of the 6th, 7th, and 8th meetings of the CoC, where the plan was permitted for discussion, were not considered by the Adjudicating Authority. The Liquidator supported the decision of the CoC based on the commercial wisdom of the CoC.

## Facts

Small Industries Development Bank of India initiated insolvency proceedings against M/s. Radhay Sham Tandon Manufacturing Pvt Ltd. The Adjudicating Authority ordered the liquidation of the Corporate Debtor based on the resolution of the CoC in its 5th meeting. The appellant appealed against the liquidation order, arguing that the CoC had subsequently permitted the appellant to file a resolution plan, and the Adjudicating Authority failed to consider the minutes of the 6th, 7th, and 8th meetings of the CoC. The Liquidator supported the decision of the CoC based on the commercial wisdom of the CoC. The 5th CoC meeting, where the decision to liquidate the Corporate Debtor was taken, was held on 2020-02-24. The Hon'ble NCLAT order in “Company Appeal (AT) (Insolvency) No.

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## Issues and analysis

### Issue 1: Whether the decision of the CoC to liquidate the Corporate Debtor in its 5th meeting is sustainable …

**Ratio:** The commercial wisdom of the CoC is not absolute and must be exercised in accordance with

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**Reasoning:** The court reasoned that the CoC's initial decision to liquidate the Corporate Debtor was

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**Interpretation:** The interpretation is that the CoC's decision-making process must be

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**Application:** In this case, the CoC's initial decision to liquidate was flawed because it did

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## Parties

- **Judges:** Ramalingam…; SH. ATUL CHATURVED…
- **Appellants:** Small Industries…
- **Respondents:** M/s. Radhay Sham…

## Timeline

- **2020-02-24 — 5th CoC M…**: Decision to liquidate the…
- **2021-08-26 — Order of Adjudicating…**: Adjudicating Authority directed the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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