Allied Silica Limited challenged the order of NCLT, Mumbai bench by filling an appeal in the National Company Law Appellate Tribunal challenging the order that rejected the insolvency application for initiating the Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code against Tata Chemicals Limited.
Tata Chemicals in the year 2018 entered into a Business Transfer Agreement to transfer the business of Silica (Operational Creditor) on a Slump Sale basis for a sum of Rs. 123 crore. The Appellant contended that Tata group had only transferred them a sum of Rs. 65 crores and further a balance of Rs. 58 crore remained was due, and due to default on part of Tata group on the payment the interest amounted to Rs. 10.44 crores, so a total of Rs. 68.44 crores was due. Furthermore, both parties had mutually agreed to continue their respective rights and obligations in laying down their operations, trial run etc. separately and distinctly from the slump sale.
Tata Chemcicals on the other hand contended that the Allied Silica Limited had suppressed various facts and some crucial information and furthermore, the said debt did not fall under the definition of an Operational Debt and the appellant was not an Operational Creditor as per the definition contained under Section 5(20) under the Insolvency and Bankruptcy Code.The Tata group further stated that the consideration under the Business Transfer Agreement was divided into a 3 Tranche Payment system in which Tranche I, Tranche II and the Closing Balance was duly paid to the Appellant even though there existed non-fulfillment of certain conditions precedent to the Tranche I and Tranche II payments. The Tata group further added that they had adjusted the Tranche III payment against the improvement costs born by them due to the non-completion of the Tranche II conditions precedent. Also, the reply to the demand notice by the Allied Silica Limited was submitted within 10 days as per Section 9 of the Insolvency and Bankruptcy Code.
The three-member Bench comprising of Justice Bansi Lal Bhat, Justice V.P. Singh and Shreesha Merla Member rejected the claim of Rs. 68.44 crores by Allied Silica Limited stating that, “The Learned Adjudicating Authority has rightly dismissed the application filed by Allied Silica Limited underSection 9 of the Insolvency and Bankruptcy Code. Therefore, we do not find any reasons to interfere with the impugned Order. There is no substance in Appeal which is accordingly dismissed.