The National Company Law Tribunal (NCLT) at Mumbai has issued directions for liquidation of Gitanjali Gems, a jewellery retailing company. Fugitive Indian businessman Mehul Choksi is the Managing Director of this company.
The order was passed by a coram of judicial member Kuldip Kumar Kareer and technical member Anil Raj Chellan on February 7.
NCLT further appointed Santanu T Ray as liquidator in the case.
As per the NCLT order, it was evident that the assets of Gitanjali Gems were under attachment by the Directorate of Enforcement (ED) under the provisions of the Prevention of Money Laundering Act (PMLA) and considering the bleak chances of insolvency resolution amid the ongoing investigations and attachment of assets, the Committee of Creditors (CoC) had resolved to liquidate the Corporate Debtor by a majority of 90.16 percent voting in favour.
The Bench noted that the Corporate Debtor was required to be liquidated and issued directions for the same.
Gitanjali Gems has become the second company with Choksi as promoter to be admitted under liquidation. In July 2021, jewellery retailer Nakshatra World was admitted into liquidation.
Gitanjali Gems was admitted into the Corporate Insolvency Resolution Process (CIRP) on October 8, 2018 with an admitted liability of over Rs 12,000 crore.
The Tribunal was apprised by Resolution professional (RP) Vijay Kumar Garg that on account of fraud allegedly perpetrated by the company, its affairs were being probed by multiple law enforcement agencies like the Central Bureau of Investigation (CBI) and the ED.
ED had passed several orders attaching the properties and assets of the company.
Garg said he approached the authorities on the details of such attachment to aid in the CIRP. However, his request was turned down by the agencies, which also refused to lift the attachment over the properties.
The consortium head ICICI Bank, along with the RP, then moved the appellate authority under the Prevention of Money Laundering Act, which set aside the attachment confirmatory order in March 2019.
However, the RP claimed that he was unsuccessful in taking control of the assets and carrying out activities in furtherance of the CIRP, which was informed to the CoC.
The duration of the CIRP was expiring in April 2019 and the CoC resolved not to extend the same since Gitanjali Gems did not have a running business and all its assets were seized or attached by investigating agencies. Hence, the chances of getting a resolution plan was bleak.
The RP then moved the NCLT for liquidation, which was allowed.
The RP also expressed his unwillingness to act as the liquidator of the company and therefore, a new liquidator was appointed with consent of the CoC.
The RP was represented by Advocates Rohit Gupta and Anant Upadhyay.