# In the matter of Gajanan Solvex Limited

> NCLT judgment dated 2024-05-07. Citation: TCN-2024-NCLT-01403. The case involves an application (I.A. No. 677 of 2023) filed by the Resolution Professional…

- **Court:** NCLT
- **Order date:** 7 May 2024
- **Citation:** TCN-2024-NCLT-01403
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/gajanan-solvex-limited-dcdafefa

## Summary

### Background

The case involves an application (I.A. No. 677 of 2023) filed by the Resolution Professional (Mr. Vijendra Kumar Jain) of the Corporate Debtor (Gajanan Solvex Limited) under Section 66 of the Insolvency and Bankruptcy Code, 2016, seeking directions against the suspended board of directors (Mr. Nitin Ramchandra Jadhav, Mr. Bhavrao RamKrishna More, and Mr. Amol Jadhav) for alleged fraudulent and wrongful trading. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) on 20.07.2022. The application is based on findings from a forensic audit report indicating irregularities in transactions, particularly concerning investments in and transfer of shares of a subsidiary company, Rio Resource PTE Ltd., and a contract with Aero Steel Resources Ltd.

## Facts

The Corporate Debtor, Gajanan Solvex Limited, was admitted into CIRP on 20.07.2022. Mr. Vijendra Kumar Jain was appointed as the Interim Resolution Professional (IRP) and later as the Resolution Professional (RP). A Committee of Creditors (CoC) was formed. A forensic audit was conducted, revealing that the Corporate Debtor had invested Rs. 8,84,91,725/- in its subsidiary, Rio Resource PTE Ltd. The subsidiary had a fixed deposit of 3 million USD with Indian Bank, Singapore. Indian Bank filed an application against Gajanan Oil Private Limited (which had availed credit facility by creating a lien on the fixed deposit). The audited financials of the Corporate Debtor as of 31.03.2022 showed an investment of Rs. 8,84,91,725/- in Rio Resource PTE Ltd., but the shares had

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## Issues and analysis

### Issue 1: Whether the suspended directors of the Corporate Debtor engaged in fraudulent trading or wrongful …

**Ratio:** Section 66 of the IBC deals with fraudulent and wrongful trading. Fraudulent trading

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**Reasoning:** The court found that the directors falsified records, suppressed information about the

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**Interpretation:** The court interpreted Section 66 to impose liability on directors who knowingly

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**Application:** The court applied the provisions of Section 66 to the facts of the case,

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## Parties

- **Judges:** Reeta K…; SANJIV…
- **Appellants:** Vijendra Kumar…
- **Respondents:** Gajanan Solvex…; Nitin Ramchandra…

## Timeline

- **2022-07-20 — CIRP Admi…**: Corporate Debtor admitted under Corporate…
- **2022-08-12 — CoC Form…**: Committee of Creditors…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 66 — Fraudulent trading or wrongful trading](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-66)

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