A DAY before he allegedly died by suicide in his Raigad studio, national award-winning art director Nitin Desai’s appeal against National Company Law Tribunal (NCLT) order allowing initiation of corporate insolvency and resolution process against his firm, ND’s Art World Private Ltd, was dismissed by the National Company Law Appellate Tribunal (NCLAT).
The NCLT order came on July25, 2023, while the NCLAT dismissed Desai’s appeal on August 1, paving way for insolvency proceedings against his firm. Desai was found hanging in ND studios, Karjat, on August 2.
In his appeal, Desai’s counsel submitted that the application for insolvency was barred by Section 10A and that submission has wrongly been rejected by the NCLT. Section 10A of CIRP (Corporate Insolvency Resolution Process) was brought in to provide relief to companies during Covid lockdown that was announced on March 24, 2020. Section 10A states that no application of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after March 25, 2020, for a period of six months or such further period, not exceeding one year from such date.
Rejecting the plea, the appellate authority observed that the default by Desai’s company was on January 31, 2020, and thus could not get the benefit of section 10A of CIRP that companies defaulting during the pandemic had. The Raigad police that registered an FIR in the case, said they are investigating if the NCLAT order had any role to play in Desai committing suicide.
The NCLAT held that the adjudicating authority has noticed and returned a finding that the default recorded in the NESL is January 31, 2020, prior to the Section 10A period. “…no error has been committed by the adjudicating authority in admitting Section 7 application. There is no merit in the appeal, the appeal is dismissed,” read the NCLAT order.
The NCLT order shows that in 2016, ND’s Art World approached ECL Finance Limited (ECLFL) for a loan of Rs 150 crore and in 2018, the company approached ECLFL for a loan of Rs 35 crore and availed Rs 31 crore. With both the loan agreements, various security documents securing the loan were also executed by the corporate debtor, Nitin Desai, his wife Naina Desai and KND Investments and Finance Private Limited. While the total loan aggregated to Rs 181 crore, the debtors ND’s Art World was classified as SMA-2 in the books of ECLFL on March 30, 2020 because of irregular and delayed payments of the principal instalments.
Following the defaults, the amount outstanding as on May 15, 2022, aggregated to Rs 247.77 crore, payable immediately. However, as no payment was received from ND’s Art World despite the loan recall notice, as on June 30, 2022, the total default amount stood at Rs 252.48 crore.
On Tuesday, managing director of financial services company Edelweiss, Rashesh Shah, is likely to appear before the Raigad police in connection with the case.
Later, based on a statement given by his wife, police registered an FIR. In her complaint, Neha alleged that officers of Edelweiss were responsible for causing mental stress to her husband. She also said that employees of the creditor firm harassed her husband over loans. She even referred to on an audio clip by Desai in which he made allegations against Edelweiss. ECL Finance is a non-banking finance arm of Edelweiss Group.
As per the FIR copy, the audio note he is purportedly heard stating, “Rashesh Shah is a sweet talker and swallowed my hard-built studio for small and big entrepreneurs. I called 100 but no one answered… EOW, NCLT, DRT, harassed me a lot. I have two-three investors to invest..,” the audio note mentioned.
It added, “They pressured me in a different way to achieve their own interests and did not accept what I had given. Smit Shah, Keyur Mehta, RK Bansal robbed my studio, made me dance to their tune…The thugs have pressured me by threatening me with money, making me sell my office which is like gold, killing a Marathi artist is being done by these thugs. They have conspired, oppressed me and finished me off in my mind. They pushed me to commit suicide even if though I didn’t mean to.”
However, in a filing with the stock exchange on Sunday, Edelweiss stated, “The interest rate charged by ECLFL was as per prevailing market rates; legal processes for recovery are elaborately established under RBI and IBC guidelines and were duly followed by Edelweiss Asset ReconstructionCompany (EARC). At no time was there any undue pressure being put on the borrower for recovery…”
It added that various attempts to improve the financial condition of the company went in vain, and stated, “The loans were assigned to CFM Asset Reconstruction Company Pvt Ltd (CFM), which had initiated various legal actions under due provisions of law. Edelweiss Asset ReconstructionCompany (EARC) acquired a portfolio of assets from CFM under an auction process, which included NDAWPL and merely continued with legal actions that were initiated earlier.”
While the company was eventually admitted under Insolvency and Bankruptcy Code (IBC) by NCLT Mumbai on July 25, 2023, the statement said, “Shri Nitin Desai’s appeal against the NCLT order was dismissed by the Honourable Appellate Tribunal (NCLAT) on August 01, 2023,and he took his life the following morning. We would like to state that ECLFLand EARC have acted fully in accordance with the letter and spirit of law and the regulatory framework established by the RBI which prescribes that, pursuing recoveries on Non Performing Assets (NPA) accounts is not just a right of creditor but also an obligation”.
Desai, who hailed from Dapoli, worked as an art director and production designer for several Marathi and Hindi films, including Hum Dil De Chuke Sanam (1999), Lagaan (2001), Devdas (2002), Jodhaa Akbar (2008) and Prem Ratan Dhan Payo (2015).
Desai won the national award for art direction four times and Filmfare award three times. In 2005, he opened ND Studios spread over 50 acres at Karjat, Navi Mumbai, which has hosted movies such as Jodhaa Akbar and ColorsTV’s reality show Big Boss.
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