Mehul Choksi's Gitanjali Gems Receives Liquidation Order from NCLT Mumbai

On February 7, the National Company Law Tribunal (NCLT) in Mumbai ordered the liquidation of Gitanjali Gems, a jewelry retailing company with Mehul Choksi as the managing director, who is currently a fugitive Indian businessman. Santanu T Ray was appointed as the liquidator by Judicial member Kuldip Kumar Kareer and technical member Anil Raj Chellan.

"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 favor. This Bench is of the opinion that the Corporate Debtor is required to be liquidated," stated the NCLT order.

This marks the second company with Choksi as a promoter to be admitted under liquidation, following Nakshatra World, another jewelry retailer, admitted in July 2021. Gitanjali Gems entered 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, due to alleged fraud, the company's affairs were under investigation by law enforcement agencies such as the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED).

The ED issued orders attaching the company's properties and assets. Garg sought details of these attachments to aid in the CIRP, but his request was denied by the agencies, which also refused to lift the attachment over the properties, as Garg informed NCLT. Aggrieved by this, the consortium head ICICI Bank, along with the RP, approached the appellate authority under the Prevention of Money Laundering Act, resulting in the setting aside of the attachment confirmatory order in March 2019.

However, the RP claimed unsuccessful attempts to take control of the assets and conduct activities in furtherance of the CIRP, informing the Committee of Creditors (CoC). With the CIRP duration expiring in April 2019 and Gitanjali Gems lacking a running business due to the seizure or attachment of all assets by investigating agencies, the CoC decided not to extend the CIRP, considering the bleak chances of a resolution plan. Consequently, the RP filed for liquidation, which was granted by the NCLT. The RP expressed unwillingness to act as the liquidator, leading to the appointment of a new liquidator with the CoC's consent. Advocates Rohit Gupta and Anant Upadhyay represented the Resolution Professional.