# In the matter of Charming Apparels Private Limited CA No. 993-2019 in (IB)-348(ND)2017

> NCLT judgment dated 2020-02-10. Citation: TCN-2020-NCLT-02025. CA 993/2019 was filed by Atul Jain, an ex-director of Charming Apparels Private Limited,…

- **Court:** NCLT
- **Order date:** 10 Feb 2020
- **Citation:** TCN-2020-NCLT-02025
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/charming-apparels-private-limited-ca-no-993-2019-in-ib-348nd2017-00c60830

## Summary

### Background

CA 993/2019 was filed by Atul Jain, an ex-director of Charming Apparels Private Limited, objecting to the resolution plan submitted by Sanjay Singhal. The objections were based on the grounds that the CIR process was flawed due to incomplete disclosure of assets and undervaluation of the Corporate Debtor's assets in the information memorandum filed by the Resolution Professional (RP). It was also alleged that no valuation report was shared with the suspended Board of Directors and that the claims of workers and employees were ignored. The Corporate Debtor was incorporated in 1991 and engaged in manufacturing textiles under the brand "Charming", but had no business activity for over two years. Rachna Sarees initiated the resolution process due to large debts.

## Facts

Rachna Sarees initiated corporate insolvency resolution process against Charming Apparels Private Limited. Atul Jain, an ex-director of Charming Apparels, filed CA 993/2019 objecting to the resolution plan submitted by Sanjay Singhal. The objections included allegations of incomplete asset disclosure, undervaluation, and ignored employee claims. The Corporate Debtor was incorporated in 1991, engaged in textile manufacturing, but had been inactive for over two years. The authorized share capital was Rs. 30 Crores. The Corporate Debtor owns fixed assets, including plant and machinery in Noida, seven commercial shops, residential premises, and 11 luxury cars. The RP received claims from 18 operational creditors for Rs. 53548856/-, admitting Rs. 3,49,03,924/-. Seven

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## Issues and analysis

### Issue 1: Whether the CIR process is vitiated due to incomplete disclosure of assets and undervaluation of …

**Ratio:** The Adjudicating Authority should not interfere with the commercial wisdom of the

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**Reasoning:** The court found that the objections regarding undervaluation and incomplete disclosure

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**Interpretation:** This legal principle emphasizes the importance of respecting the commercial

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**Application:** In this case, the court applied the ratio by deferring to the COC's decision to

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## Parties

- **Judges:** Ina Mal…; L. N. G…
- **Appellants:** Atul…
- **Respondents:** Charming Apparels…; Civil L…
- **Advocates:** Rahul Mend…; Krishnendu…; +3 more

## Timeline

- **2017-12-08 — Petition for CIRP…**: Order dated 8th December, 2017, admitted the petition for initiating the Corporate…
- **2018-11-26 — RP Appoin…**: The RP was appointed and confirmed on 26th November, 2018, after various lapses, upon…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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