The National Company Law Appellate Tribunal (NCLAT) upheld the order of the Mumbai bench of NCLT, directing to initiate an insolvency resolution process against Sahara group subsidiary Sahara Q Shop Unique Products Range Ltd.

A three-member NCLAT bench headed by Chairman Justice S J Mukhopadhaya upheld the order passed by the National Company Law Tribunal (NCLT), which had on December 15, 2017, admitted the plea to initiate insolvency proceedings against the company filed by one of its operational creditors.

This order was challenged before the appellate tribunal by a shareholder of Sahara Q Shop contending that there was no default in payment by the company as it could not pay to its creditors because the Supreme Court had prohibited 'Sahara Group of Companies' to pay any amount to any person in the on-going Contempt proceedings.

However, the plea was rejected by the NCLAT observing that there was no such specific directions in the Supreme Court order to Sahara Q Shop to stop payment in the matter of two Sahara group companies -- 'Sahara India Real Estate Corporation Ltd' and 'Sahara Housing Investment Corporation Ltd'.

"We find that except vague statement made by the Appellant, there is nothing on the record to suggest that the Supreme Court has passed specific order prohibiting Sahara Q Shop Unique Products Range Ltd to release or pay any amount," said the NCLAT.

It further observed that another group company of Sahara Group namely - Sahara Hospitality has settled the claim before the NCLT in another matter by paying Rs 20 crore.

"In view of the aforesaid factual aspect, we are not inclined to interfere with the impugned order dated December 15, 2017, on purported ground that there is no default on the part of the 'Corporate Debtor'," said the NCLAT adding that "in absence of any merit, the appeal is dismissed".

NCLT had on December 15 allowed the insolvency plea filed by S Gurumoorthy, an operational creditor under section 9 of the Insolvency and Bankruptcy Code (IBC).

S Gurumoorthy, who was appointed by Sahara Q Shop Unique Products Range Ltd as Assistant General Manager - Head Business Excellence, had claimed a default of Rs 46,57,019 on account of unpaid salary for the period from September 2014 to June 2016.

During the proceedings before NCLT at Mumbai, no representation was made before the tribunal by the Sahara group firm.

Later, Romi Datta, a shareholder challenged the order before the NCLAT contending that no default could be alleged against Sahara Q Shop as it being one of the Sahara Group Companies cannot pay any amount due to the Supreme Court order.

However, operational creditor contended that restrain orders passed by the Supreme Court in the contempt petitions over non-compliance of its order by 'Sahara India Real Estate Corporation Ltd' and 'Sahara Housing Investment Corporation Ltd' and all orders passed by the apex court are to be read in the context of these two companies only.

It was further submitted that a bare and collective reading of the orders passed by the Supreme Court on July 17, 2013, October 28, 2013 and November 21, 2013 as modified on June 4, 2014 in the 'Sahara India Real Estate Corporation Ltd' and 'Sahara Housing Investment Corporation Ltd' matter, Sahara Q Shop is "nowhere within the frame of the contempt Petitions".

On December 21, 2018, the government had informed that the Serious Fraud Investigation Office (SFIO) is probing Sahara group firm Sahara Q Shop Unique Products Range Ltd after receiving 744 complaints against the company.