NCLT Allahabad Orders Liquidation Of Usha India Ltd, Rejects ₹22.49 Crore Resolution Plan

The Allahabad Bench of the National Company Law Tribunal (NCLT) has rejected the resolution plan submitted by the consortium of Dr Mukesh Kumar Agarwal and Divyansh Agarwal for Usha India Limited.

The tribunal also ordered liquidation of the company.

The bench of Judicial Member Praveen Gupta and Technical Member Ashish Verma held that it was unable to record satisfaction that the approved resolution plan complied with the mandatory requirements of the Insolvency and Bankruptcy Code.

Explaining its reasons, the bench observed, “....we are of the considered opinion that although the Resolution Plan envisages a mechanism for restoration, development and possible monetisation of certain assets, it fails to adequately demonstrate how the Corporate Debtor itself is proposed to be revived and sustained as a going concern.”

Usha India Limited was engaged in the manufacture of semiconductor devices such as silicon diodes, thyristors, low-power devices, semiconductor module bridges and rectifier stacks.

Its electrical division manufactured computers, electro-medical equipment, telecom products and household appliances including washing machines, mixers, vacuum cleaners, irons and toasters. The company had also diversified into rigid PVC pipes, colour coating and PVC-coated galvanised sheets.

The company was admitted to the corporate insolvency resolution process on October 5, 2023, on an application filed by the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI). Chirag Rajendrakumar Shah was initially appointed as the Interim Resolution Professional. He was later confirmed as the Resolution Professional.

During the CIRP, 27 meetings of the committee of creditors were held. Multiple invitations seeking expressions of interest were also issued. The consortium of Dr. Mukesh Kumar Agarwal and Divyansh Agarwal ultimately emerged as the sole resolution applicant with a compliant resolution plan.

The resolution plan dated June 6, 2025, read with an addendum dated June 11, 2025, proposed a total outlay of Rs 22.49 crore. The plan contemplated the transfer of the entire shareholding of the company to the consortium. It also proposed payment to creditors, infusion of funds through unsecured loans and continuation of the corporate debtor as a going concern under a restored board.

The committee of creditors approved the plan with 95.01% voting share. However, dissenting creditors including SUUTI, Life Insurance Corporation of India, and Edelweiss ARC raised objections regarding valuation, treatment of claims and viability of the plan.

The tribunal observed that although the commercial wisdom of the committee of creditors is ordinarily not open to judicial review, it was still required to examine whether the plan satisfied the requirements relating to feasibility, viability and effective implementation.

The bench noted that the corporate debtor had remained non-operational for more than two decades. It found that the provisions concerning continuation as a going concern did not provide a clear operational roadmap for recommencement of business activities.

After examining the affidavit and other material relied upon by the successful resolution applicant, the bench observed, “In our view, these materials undoubtedly indicate an intention on the part of the SRA Consortium to restore, develop, and commercially exploit certain immovable assets of the Corporate Debtor. However, restoration and monetisation of assets cannot, by themselves, be equated with revival of the Corporate Debtor as a going concern”.

The tribunal also considered objections relating to a fixed deposit of about Rs 18.93 crore and accrued interest held by the corporate debtor. It noted that objecting creditors had contended that a substantial portion of the value proposed under the resolution plan was already represented by assets of the corporate debtor.

While reiterating that the commercial wisdom of the committee of creditors is generally not subject to interference, the bench observed,

“However, this Tribunal cannot remain a mute spectator where the very anchor of the insolvency resolution process, the bona fide and the commercial judgment of the CoC, is corroded by patent arbitrariness and opacity.”

The tribunal concluded that the approved plan appeared to be primarily focused on restoration, monetisation and value realisation from the existing asset pool of the corporate debtor.

It held that the plan failed to adequately demonstrate how the company would be revived and sustained as a going concern.

The tribunal therefore rejected the resolution plan. It ordered liquidation of Usha India Limited and appointed Avneesh Srivastava as the liquidator.