Authority: National Company Law Tribunal, Division Bench, Court-I, Ahmedabad

Order Date: 15 July 2026

Case Overview

The National Company Law Tribunal (NCLT) Ahmedabad heard an application (IA(Dis.)/15(AHM)/2026) filed by Mr. Premraj Ramratan Laddha, the Liquidator of Somnath Textile Private Limited, under Section 54 of the Insolvency and Bankruptcy Code, 2016 seeking dissolution of the corporate debtor.

Somnath Textile Private Limited (CIN U17120GJ2010PTC063332) was a textile fabrics company incorporated under the Companies Act, 1956. The corporate insolvency resolution process (CIRP) was initiated on 28 July 2017 after the company filed under Section 10 of IBC. The application was admitted in CP(IB) No. 49 of 2017. The applicant was confirmed as Resolution Professional by the Committee of Creditors on 29 August 2017. The tribunal passed a liquidation order under Section 33 of IBC on 5 February 2018, appointing the applicant as Liquidator.

During the liquidation process, the sole secured financial creditor, State Bank of India (claim: ₹47,95,18,747), relinquished its security interest in favor of the liquidation estate during the first Stakeholders' Consultation Committee meeting on 19 July 2019, confirming this via relinquishment letter dated 17 September 2019. The Income Tax Department (Assistant Commissioner of Income-tax, Benami Prohibition, Surat) filed a delayed claim of ₹11,04,30,000 as an unsecured operational creditor.

The liquidation faced multiple challenges including a stay on the liquidation order sought by promoters through related party Kapil Fabrics Pvt. Ltd. in IA No. 99 of 2018 (dismissed on 22 January 2020), and a provisional attachment order issued by Income Tax Department under the Prohibition of Benami Property Transactions Act on 10 March 2021, which was subsequently vacated in May 2022 when the adjudicating authority held the corporate debtor's assets were not benami properties.

The liquidator conducted multiple e-auctions for asset sales:

  • Plant and machinery sold on 30 November 2019 for ₹1.50 crore to Mr. Shah Gulam Mustufa, Proprietor of Nine Trading
  • Land and building sold on 5 June 2021 for ₹4.60 crore to Mr. Kadvabhai Devshibhai Monpara (plus delayed payment interest of ₹2,72,220)

Total realization: ₹6.15 crore against estimated liquidation value of ₹6.27 crore

Transaction audit revealed avoidable and fraudulent transactions, leading to filing of IA No. 661/2021 (Sections 43, 45, 50) and IA No. 986/2023 (Section 66). The Stakeholders' Consultation Committee resolved that these proceedings would continue after dissolution, with any recoveries to be distributed among stakeholders.

An earlier dissolution application (IA No. 904/2022) was dismissed on 9 September 2024 as premature due to pending avoidance proceedings. The Committee of Creditors subsequently authorized State Bank of India to prosecute the pending avoidance/fraudulent transaction proceedings, with applications for substitution filed.

Final Outcome

The NCLT ordered the dissolution of Somnath Textile Private Limited with immediate effect under Section 54(2) of IBC 2016. The dissolution does not affect the adjudication, continuation or outcome of the pending avoidance and fraudulent transaction proceedings (IA No. 661/2021 and IA No. 986/2023) or any consequential relief that may be granted. The liquidator, Mr. Premraj Ramratan Laddha, is discharged from his duties but must preserve all records for at least eight years. The registry and liquidator are directed to serve copies of the order to the Registrar of Companies, Income Tax Department, and IBBI within seven days.

Distribution of proceeds was made according to Section 53 of IBC:

  • Insolvency resolution process costs and liquidation costs: ₹36,88,480 (100% distribution)
  • State Bank of India (secured creditor): ₹8,56,36,768 (17.9% recovery against claim of ₹479,518,747)
  • No amounts were distributed for workmen's dues, employee wages, unsecured creditors, government dues, or shareholders

Total claims admitted: ₹589,948,747

Total distributed: ₹89,325,248

Topics: Insolvency Proceedings, Corporate Dissolution, Liquidation Process