NCLT Ahmedabad Orders Liquidation of Girdhari International After Finding Collusion With Resolution Applicants

The National Company Law Tribunal at Ahmedabad has held that the resolution plan for Girdhari International Private Limited was a "collusive arrangement" between the resolution applicant and the sole financial creditor, Drip Capital Inc., and refused to approve it, ordering liquidation instead.

The tribunal said that “the entire exercise suggests an accommodation or collusive arrangement” designed to secure the corporate debtor the benefits of clean slate under the Code rather than revive the company.

A bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma said the plan was approved despite missing export proceeds of over Rs 50 crores, serious financial irregularities, and the absence of any workable revival mechanism.

The tribunal recorded that the Code “requires the CoC to evaluate the resolution plan based on its feasibility and viability, a responsibility that appears to have been inadequately discharged in this case, as evidenced by the lack of scrutiny over the plan's business projections and financial provisions.”

It added that “this arbitrary conduct, lacking prudent decision making at arm's length, undermines the IBC's objective of maximising value for stakeholders.”

The corporate debtor entered CIRP on February 29, 2024 on a plea by Drip Capital. As the only financial creditor, Drip Capital became the sole member of the CoC. Sixteen CoC meetings were held. The Resolution Professional reported non-cooperation by the suspended board, repeated failures to supply records, a series of moratorium breaches, and multiple instances where Expression of Interests had to be republished.

The corporate debtor's bank accounts were also frozen. A resolution plan was eventually submitted on 18 November 2024 by a consortium led by Kailash Thanmal Shah and Nova Dyestuff Industries Private Limited. The CoC approved this plan on 21 April 2025 for Rs 45 lakh, including Rs 25 lakh payable to Drip Capital and Rs 20 lakh towards CIRP costs.

The Resolution Professional argued that the plan ignored the causes of insolvency and did not address the company's unrecovered export proceeds. She pointed out that 416 export shipments worth USD 33.39 lakh had yielded no payments, creating sundry debtors of Rs 50.51 crore, which valuers assessed at nil because no information was provided.

She added that the company had no operations, no staff, and only Rs 70 thousand  in its bank account. She also highlighted fictitious accounting entries and a written-down investment of Rs 3.30 crore, prompting her to file a Section 66 application against the suspended directors.

The tribunal held that the plan offered no method to restart business or recover the missing export proceeds. It said that judicial deference to the CoC cannot apply when a plan is “wholly capricious, arbitrary, irrational and de hors the provisions of the statute or rules.”

It found the applicants' claim that goodwill would revive the company wholly unsubstantiated. It concluded that the plan and the manner of its approval reflected an attempt to obtain undue benefits under the Code without any genuine effort at revival. The tribunal therefore ordered liquidation and appointed Rajendra Jain as liquidator, directed a forensic audit, and refused a fresh moratorium so that tax, customs and RBI authorities may continue their scrutiny.

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