NCLT Mumbai orders liquidation of Mehul Choksi-promoted Gitanjali Gems

The National Company Law Tribunal (NCLT) at Mumbai on February 7 ordered the liquidation of Gitanjali Gems, a jewellery retailing company of which fugitive Indian businessman Mehul Choksi is the managing director. .A coram of judicial member Kuldip Kumar Kareer and technical member Anil Raj Chellan also appointed Santanu T Ray as the liquidator. "It is evident that the assets of Gitanjali Gems were under attachment by the Directorate of Enforcement under the provisions of the PMLA and considering the bleak chances of insolvency resolution amid the ongoing investigations and attachment of assets, the CoC had resolved to liquidate the Corporate Debtor by a majority of 90.16% voting in favour. This Bench is of the opinion that the Corporate Debtor is required to be liquidated," the NCLT order stated. .This is the second company with Choksi as promoter to be admitted under liquidation. The first was Nakshatra World, another jewellery retailer that was admitted into liquidation in July 2021..Gitanjali Gems was admitted into the Corporate Insolvency Resolution Process (CIRP) on October 8, 2018 with an admitted liability of over ₹12,000 crores.Resolution professional (RP) Vijay Kumar Garg informed the NCLT 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 Enforcement Directorate (ED).The ED passed several orders attaching the properties and assets of the company.Garg had 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, Garg informed NCLT.Aggrieved by this, the consortium head ICICI Bank along with the RP had approached 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 Committee of Creditors (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.Hence, the RP filed moved for liquidation which the NCLT 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..Advocates Rohit Gupta and Anant Upadhyay appeared for the Resolution Professional. .[Read Order]