Updated: October 7, 2020 10:35:58 am
The National Company Law Tribunal (NCLT) has ordered the liquidation of Winsome Diamonds and Jewellery Limited, one of the top wilful defaulters that owes more than Rs 8,000 crore to a consortium of about 15 banks in India.
The order of the firm is a setback to the Enforcement Directorate (ED) that had opposed the liquidation, as it is probing the promoters and the management of Winsome Diamonds and its subsidiaries under the Prevention of Money Laundering Act (PMLA) and is in the midst of establishing the money trail that led to the alleged fraud.
The promoters of Winsome Diamonds, Jatin Mehta and his wife Sonia Mehta, left India in 2013 and became citizens of Saint Kitts and Nevis – a Caribbean nation known to be a popular tax haven.
Mehta, Winsome Diamonds and its subsidiaries, are also being investigated by the Central Bureau of Investigation (CBI) and the Serious Fraud Investigation Office (SFIO). However, the CBI has failed to get an Interpol red notice against Mehta, who is accused of bank fraud.
The company also figures in the list of top 10 bank loan defaulters that former Reserve Bank of India governor Raghuram Rajan sent to Prime Minister’s Office (PMO) in 2015 seeking “concerted” action.
While the NCLT order passed last month said Winsome’s liquidation will not affect the ongoing ED and CBI cases, it did not say if the assets attached by ED will be a part of the liquidation estate of the company. The ED has so far attached assets worth Rs 220 crore of Winsome Diamonds under PMLA as proceeds of crime. Sources said the ED is likely to appeal the NCLT order at the National Company Law Appellate Tribunal (NCLAT).
The NCLT has appointed resolution professional Amit Gupta as the liquidator in the case. It has directed Gupta to “endeavour to sell the company as a going concern” even as the company has not been operational since 2018.
Winsome Diamonds and its subsidiaries were taken to NCLT in February 2018 and its resolution process failed as no bidder emerged. With the NCLT liquidation order, the creditors of Winsome, mainly banks, are likely to take a haircut of 98 per cent since the diamond firm has assets of only about Rs 200 crore in its balance sheet that can be liquidated, said sources.
An ED investigation into Winsome Diamonds has found the company allegedly diverted at least $ 750 million (Rs 5,175 crore) to six entities in Hong Kong, Bahamas and UAE, directly or indirectly controlled by its promoter Jatin Mehta, through a web of “dummy companies”.
The CBI has alleged that 13 UAE-based companies controlled by Mehta and a Jordanian national – Haytham Salman Abu Ali Obaidah – have defaulted on payments of $ 1.26 billion to Winsome, which had led to the latter’s loan default.
On June 28, 2018, the CBI filed its chargesheet against Winsome, Mehta and 21 others, including senior public sector bank officials. In July, the ED filed a separate prosecution complaint (chargesheet) in the Winsome case.
Winsome Diamonds, which was classified as a wilful defaulter in October 2013, has claimed that it did not divert funds and was a victim of non-payment by Obaidah’s firms. The company has claimed that Obaidah and his associate firms suffered losses of about $ 1 billion in derivatives and commodity trading and were unable to pay their dues to Winsome.
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