Gitanjali Gems Faces Liquidation Order from NCLT

In a significant development, the National Company Law Tribunal (NCLT) has ordered the liquidation of Gitanjali Gems, a prominent jewellery retailer in India. The company, promoted by absconding diamantaire Mehul Choksi, has been embroiled in various financial irregularities and legal issues.

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Resolution Professional Files Liquidation Application

The resolution professional of Gitanjali Gems, Vijay Kumar Garg, filed an application for liquidation before the NCLT. Garg highlighted the ongoing investigations by multiple law enforcement agencies, including the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI), due to alleged fraud perpetrated by the company and its officers.

Challenges in Liquidation Process

Garg informed the tribunal that the ED had attached the properties of Choksi, making it difficult to proceed with the Corporate Insolvency Resolution Process (CIRP). Despite requests to various investigation authorities, access to properties, assets, stocks, and records of Gitanjali Gems was denied, hindering the liquidation process.

CIRP Duration Expires, Revival Chances Bleak

Garg further stated that the 180-day duration of the CIRP had already expired in April 2019, and with the company lacking ongoing business operations, the chances of its revival were bleak. Consequently, he submitted an application to initiate the liquidation process and declined to serve as the liquidator.

NCLT Orders Liquidation

Considering the ongoing investigations, attachment of assets, and the low likelihood of insolvency resolution, the NCLT deemed it necessary to proceed with the liquidation of Gitanjali Gems. The order also acknowledged the approval of the Committee of Creditors (CoC) for the liquidation, given the bleak chances of receiving any resolution plan.

Gitanjali Gems' Financial Liabilities

Gitanjali Gems, with liabilities exceeding Rs 12,558 crore, was admitted under the CIRP in October 2018. The company's financial woes and alleged involvement in fraudulent activities have severely impacted its operations and led to its eventual liquidation.

The NCLT's order to liquidate Gitanjali Gems marks a significant development in the ongoing legal proceedings surrounding the company. With the liquidation process underway, the focus will shift towards recovering dues, settling liabilities, and ensuring a fair resolution for all stakeholders involved.