NCLAT dismisses insolvency plea in opposition to PepsiCo India

Picture used for consultant function solely.
| Photograph Credit score: Reuters

The Nationwide Firm Legislation Appellate Tribunal (NCLAT) has dismissed an insolvency petition in opposition to PepsiCo India Holdings after observing that provisions of IBC can’t be was a debt-recovery continuing.

The appellate insolvency tribunal has upheld the sooner order handed by the Chandigarh bench of the Nationwide Firm Legislation Tribunal (NCLT), which had rejected SNJ Synthetics’s plea.

“The adjudicating authority (NCLT) has not dedicated any infirmity in not permitting the CIRP of the company debtor [PepsiCo] to be initiated solely on the premise of the declare of the contested and unsubstantiated curiosity part,” mentioned a three-member NCLAT bench.

The NCLAT held that SNJ’s insolvency petition, filed beneath Part 9 of IBC as an operational creditor was not maintainable because the principal quantity of the debt claimed from PepsiCo had already been repaid and solely a disputed declare for curiosity remained.

“The provisions of Insolvency & Chapter Code (IBC) can’t be was a debt-recovery proceedings and to commend any such plan of action would tantamount to pushing the company debtor to face the perils of company dying as an alternative of being rejuvenated and revived,” NCLAT mentioned in its order handed on Could 7, 2025.

The NCLAT route came visiting a petition filed in opposition to the NCLT order.

The Chandigarh bench of NCLT on January 5, 2025, dismissed the Part 9 plea filed by SNJ Synthetics in opposition to PepsiCo India Holdings after observing that within the current case, the principal quantity stands paid, subsequently the CIRP (company insolvency decision course of) can’t be initiated solely on the premise of the declare of curiosity part.

SNJ Synthetics had claimed a due of ₹1.96 crore by which the principal quantity was at ₹91.63 lakh and had calculated curiosity on the fee of 24% every year of ₹1.05 crore as on February 28, 2021.

The events on February 10, 2023 settled the quantity of principal excellent with the reconciled quantity of ₹77.73 lakh. Thereafter, the petitioner has submitted that its declare now’s for the excellent curiosity quantity of ₹1.05 crore.

Nonetheless, this was dismissed by NCLT observing that the principal quantity has been paid in the course of the pendency of the petition, subsequently a requirement of Part 9(5)(i)(b) of IBC just isn’t complied with.

The NCLT additionally mentioned the reconciled quantity was ₹77.73 lakh — 84.83% of ₹91.63 lakh, which is the principal quantity claimed within the petition — and if the identical ratio is utilized presuming the proportional discount of every of the principal quantity due from PepsiCo, the curiosity quantity works out to ₹89.21 lakh, which might be under the edge quantity of ₹1 crore, and thus the petition will not be maintainable for the curiosity quantity.

Furthermore, the availability settlement dated October 9, 2018, didn’t have the signature of each the events, mentioned NCLT.

SNJ Synthetics is within the enterprise of PET Preform manufacturing. It entered right into a provide settlement with PepsiCo, whereby it was to fabricate merchandise to be provided to the drinks main for the manufacturing of PET bottles for carbonated gentle drinks, and non-carbonated drinks.

PepsiCo had transferred the enterprise to Varun Drinks beneath a enterprise switch settlement on February 18, 2019, and the dispute is earlier than that interval.