State Bank of India Vs. Ushdev International Limited (CP No.1790/IBC/NCLT/MB/MAH/2017) - Synopsis
Team SoOLEGAL 22 Mar 2021
FACTS:
In this case, State Bank of India Vs. Ushdev International Limited (CP No.1790/IBC/NCLT/MB/MAH/2017), the Resolution Professional had filed an application under Section 33 of the Insolvency Bankruptcy Code, 2016 for the liquidation of the Corporate Debtor after the CoC rejected the Resolution Plan submitted by a Resolution Applicant with 77.61 percent voting share against the Resolution Plan. The decision of the Company of Creditors was challenged by one of the Corporate Debtor's financial creditors, namely Lodha Development Management Pvt. Ltd, the Promoters of the Corporate Debtor, namely Mr. Suman Gupta, the Employees Association, and lastly Resolution Applicant himself, namely Tagud. Pte. Ltd. The objection was raised in relation to the justification of the CoC's alleged 'commercial wisdom.'

DECISION OF THE COURT:
After considering various rules and discussions, the Hon'ble NCLT had determined that the CoC's decision to liquidate the company should be rejected. According to the NCLT, the Adjudicating Authority's role is not simply to stamp each and every decision of the CoC, but to test the decision on three parameters and they are feasibility, viability, and successful implementation. The Hon'ble NCLT also stated that liquidation must be a last resort and that it must be equitable and just, only in the absence of a Resolution Plan. As a result, the CoC decision, which has a negative impact on so many lives, should be based on common judicious prudence combined with commercial viability, and the absence of these requirements is nothing but a poor exercise of a non-commercial decision.
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