A file photo of Mehul Choksi. (HT)
A file photo of Mehul Choksi. (HT)

Bankers vote to liquidate Gitanjali Gems on time over-run

  • Creditors reject extension of the resolution process and chose to go for liquidation of Gitanjali Gems
  • Both Gitanjali Gems' Mehul Choksi and his nephew diamantaire Nirav Modi are absconding and are facing extradition now

The Mehul Choksi-run Gitanjali Gems, which owes over 12,550 crore to 31 financial creditors and a key player in the 14,000-crore PNB scam, is headed for liquidation as the committee of creditors have voted to end the resolution process citing time over-run.

Choksi and his nephew diamantaire Nirav Modi are absconding after the biggest financial fraud came to light in February 2018 and are facing extradition from Antigua and Britain, respectively.

Together uncle-nephew duo have defrauded the state-run Punjab National Bank of 14,000 crore between 2011 and 2017, using fake letters of undertaking through the bank's Brady House branch in south Mumbai's tony Horniman Circle area, which is a stone throw away from the Reserve Bank headquarters here.

The lenders of Gitanjali Gems have rejected a resolution proposal and have voted for liquidation, citing time over-run beyond the 180 days, the company informed the exchanges Tuesday.

The committee of creditors met on March 28, and with a majority of 54.14 percent, rejected a plea to continue with the resolution process, and instead chose to go in for liquidation, it added.

"The 180 days since the resolution process began ended on April 6. Since extension is not approved by the lenders, the next logical step is to go for liquidation," the company said in a BSE filing.

In an exchange filing, ICICI Bank had earlier claimed dues worth 890.20 crore from Gitanjali Gems, with a 7.09 percent voting share in the committee of creditors.

Overall, as many as 31 financial creditors have claimed dues worth over 12,558 crore from Gitanjali Gems once owned by Choksi.

According to media reports, PNB has the largest exposure of 5,518.5 crore and the highest voting share of 43.94 percent. Corporation Bank ( 543.82 crore), and Allahabad Bank 521.81 crore) are among the other major lenders to the jewellery company.

The corporate affairs ministry had earlier sought the NCLT intervention to attach the properties owned by Modi, his wife Ami, brother Nishal and uncle Choksi, across the world.

Modi and Choksi and their families used to own or control as many as around 114 companies.

Sebi is also looking into the matter and the ministry is also seeking the help of the Central Board of Direct Taxes to ascertain the assets of the prime accused and other related parties.

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