# In the matter of Meena Jewellers Private Limited

> NCLT judgment dated 2024-11-12. Citation: TCN-2024-NCLT-00266. The case involves an application filed by the Resolution Professional (RP) of Meena Jewellers…

- **Court:** NCLT
- **Order date:** 12 Nov 2024
- **Citation:** TCN-2024-NCLT-00266
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/meena-jewellers-private-limited-101ae2df

## Summary

### Background

The case involves an application filed by the Resolution Professional (RP) of Meena Jewellers Private Limited (Corporate Debtor) under Sections 118, 128, and 213 of the Companies Act, 2013, and Section 66(1) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the NCLT Rules, 2016. The RP sought recovery of amounts illegally paid to Respondents 3 & 4, recovery of diverted stocks, investigation into the affairs of the Corporate Debtor, and orders for violation of provisions of Sections 118 and 128 of the Companies Act, 2013. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) on 26.11.2019, and Mr. KV Srinivas was appointed as the RP. Subsequently, a forensic audit was conducted, and the Corporate Debtor was put into

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## Facts

The State Bank of India (SBI) extended financial facilities to Meena Jewellers Private Limited (Corporate Debtor). The Corporate Debtor defaulted on payments, leading SBI to declare the account as Non-Performing Asset (NPA) on 27.09.2016. The Resolution Professional (RP) appointed after the initiation of Corporate Insolvency Resolution Process (CIRP) found no records at the Corporate Debtor's registered office. The RP requested information from the suspended management (Respondents 1 & 2), but they did not provide any documents. A forensic audit revealed that the Corporate Debtor's sales were not routed through the designated Cash Credit Account, and negligible bank receipts were reported. The inventory was improperly valued, and the diamond stock was undervalued.

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## Issues and analysis

### Issue 1: Whether the Respondent No.1 and 2 carried on the business of the Corporate Debtor with an intent to …

**Ratio:** The ratio is based on the analysis of the audited balance sheets, the forensic audit

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**Reasoning:** The Tribunal reasoned that the significant decline in inventory and trade receivables,

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**Interpretation:** The interpretation centers on the fiduciary duty of directors and the

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**Application:** The Tribunal applied the ratio to the facts by concluding that the respondents

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** State Bank of…
- **Respondents:** Meena Jewellers…; Umesh Purushotam…

## Timeline

- **2016-09-27 — Account Decla…**: State Bank of India declared the…
- **2019-11-26 — CIRP Init…**: The Corporate Debtor was admitted into…

## 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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