Sending a Corporate Debtor into liquidation just because the liquidation value is more than the enterprise value, would not be in keeping with the objectives of the IBC – CFM Asset Reconstruction Pvt. Ltd. Vs. S S Natural Resources Pvt. Ltd. – NCLT Kolkata Bench
In this case, a Financial Creditor is pursuing its application for liquidation because the liquidation value is more than the enterprise value. The Adjudicating Authority holds that but that cannot be a ground for sustaining this application, nor is it in line with the objects of the Code. Sending the Corporate Debtor into liquidation just because the liquidation value is more than the enterprise value, would not be in keeping with the objectives of the Code. The Code is not about maximising value at all costs even if it means corporate death, which will inevitably ensue if the company is sent into liquidation. In so far as the use of the term “shall” in section 33(4) is concerned, we are convinced that this will have to be construed in the conspectus of facts that each case presents itself with. A mechanical interpretation that once a default is established, then liquidation should be the result, would not sub-serve the purposes of the Code.