27 March 2019: Shrenuj & Co, the century-old diamond house that had the late Maharani Gayatri Devi of Jaipur as its brand ambassador during its heydays, has been admitted into bankruptcy court.
The National Company Law Tribunal (NCLT) admitted an insolvency petition filed by Bank of India against the company for defaulting on Rs 226 crore of loans. The state-owned lender represented a consortium of 17 banks and financial institutions.
NCLT also directed a probe into claims by the company that the bank had misappropriated or lost its diamonds kept as security due to fraud or gross negligence.
“The financial creditor, along with other members of the consortium, is jointly and severally liable to pay an amount of Rs 1,561.87 crore to the corporate debtor, against the value of the company’s stock,” Shrenuj told the NCLT. “The corporate debtor claims Rs 5,000 crore as damages for loss of business, profit and goodwill.”
The Mumbai bench of NCLT, while passing an order admitting Shrenuj, appointed Hiten Mukundbhai Parikh as interim resolution professional and asked him to inform the Enforcement Directorate, the Economic Offences Wing, the Income Tax Department and the Serious Fraud Investigation Office to look into the matter.
The lenders denied any misappropriation, tampering with or replacement of the diamonds.
“There has been a default in repayment and the same has been admitted to some extent,” the lenders informed the court.
“I am of the conscientious view that the counterclaim – that too in the nature of damages – to the amount claimed by the financial creditor cannot, in fact or in law, be the basis to dispute the amounts owed to the financial creditor,” observed MK Shrawat, a judicial member of the NCLT, while admitting the plea.
Shrawat said the corporate debtor should be put under insolvency proceedings and simultaneously an investigation be carried out so that the interests of all stakeholders can be watched and protected.
The order was pronounced on March 12 and uploaded on the NCLT’s website on March 25.
Shrenuj’s solitaire jewellery brand ‘Arisia’ had Gayatri Devi as its brand ambassador between 2007 and 2009. The company, founded in 1906, was among the first diamond houses to be listed on the stock exchanges in 1989. It was delisted in August 2018.