The Ahmedabad bench of the National Company Law Tribunal has admitted an insolvency resolution application against Jatin Rajnikant Mehta, the personal guarantor of bankrupt Winsome Diamonds and Jewellery, for a default of over Rs 457 crore.
Mehta is suspected to be in St. Kitts and Nevis, a Caribbean island country.
Winsome Diamonds, which was earlier known as Su-Raj Diamonds and Jewellery, has admitted liabilities of over Rs 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.
The tribunal has also appointed Anuj Bajpai as the resolution professional.
Originally, in February 2018, Winsome Diamonds and Jewellery was admitted under the corporate insolvency resolution process (CIRP) by the NCLT in Ahmedabad.
On September 1, 2020, the tribunal ordered liquidation of the company in the absence of any viable resolution plan. Mehta stood as guarantor in respect of repayment of the debt in favour of its lender, State Bank of India.
Before the tribunal’s order, the lender argued, through counsel Nipun Singhvi, that the personal guarantor (Mehta) has been declared a ‘fugitive economic offender’ in terms of the Fugitive Economic Offenders Act, 2018 and hence, the reply of the personal guarantor should not be considered in terms of Section 14 of the said Act.
However, the tribunal observed that when it directed to produce the order of the court declaring Mehta a fugitive economic offender, the lender couldn’t place the same, hence the tribunal proceeded without it.
Senior counsel Manish Bhatt appeared for Mehta and argued that the personal guarantor had moved out of India and the service of the application was not complete as the personal guarantor had surrendered his Indian passport and become a citizen of St. Kitts and Nevis in 2012, about which they have intimated to the financial creditor.
In 2016, Winsome Diamonds was declared a wilful defaulter.
Currently, at least four central agencies—Enforcement Directorate (ED), Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and the income tax department—are probing Mehta and his family members.
