The National Company Law Tribunal‘s Ahmedabad bench has accepted an insolvency resolution application against Jatin Rajnikant Mehta, the personal guarantor of the insolvent Winsome Diamonds and Jewellery, for a default amounting to INR 457 crore.
Mehta is believed to be located in St. Kitts and Nevis, a Caribbean island nation.
Winsome Diamonds, formerly known as Su-Raj Diamonds and Jewellery, has admitted liabilities totaling INR 12,668 crore.
“It is noted under Section 128 of Indian Contract Act, 1872 that when a default is committed, the principal borrower and surety are jointly and severally liable to the creditor and the creditor has the right to recover its dues from either of them or both of them simultaneously,” observed a division bench of judicial member Shammi Khan and technical member Sameer Kakar in its order of March 11.
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Anuj Bajpai has been appointed by the tribunal as the resolution professional.
The tribunal has also appointed Anuj Bajpai as the resolution professional.
Initially, in February 2018, Winsome Diamonds and Jewellery entered the corporate insolvency resolution process (CIRP) under the supervision of the NCLT in Ahmedabad.
On September 1, 2020, the tribunal mandated the liquidation of the company due to the absence of any workable resolution plan. Mehta had stood as a guarantor for the repayment of the debt owed to the State Bank of India.
Prior to the tribunal’s ruling, the lender, represented by counsel Nipun Singhvi, contended that the personal guarantor (Mehta) had been declared a ‘fugitive economic offender’ under the Fugitive Economic Offenders Act, 2018. Consequently, they argued that the response of the personal guarantor should not be considered under Section 14 of the aforementioned Act.
Nonetheless, the tribunal noted that despite requesting the lender to present the court order declaring Mehta a fugitive economic offender, the lender failed to provide it. Consequently, the tribunal proceeded with its proceedings in the absence of such documentation.
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Representing Mehta, senior counsel Manish Bhatt contended that the personal guarantor had relocated from India, and therefore, the application’s service was incomplete. Bhatt stated that the personal guarantor had surrendered his Indian passport in 2012 and obtained citizenship in St. Kitts and Nevis, a matter previously communicated to the financial creditor.
In 2016, Winsome Diamonds was classified as a wilful defaulter.
Presently, Mehta and his family members are under investigation by at least four central agencies: the Enforcement Directorate (ED), the Central Bureau of Investigation (CBI), the Serious Fraud Investigation Office (SFIO), and the income tax department.