NCLAT: No insolvency proceedings against Tata Chemicals

By Weindrila Sen-

The three-member bench at National Company Law Appellate Tribunal (NCLAT), comprising of Acting Chairperson Justice Bansi Lal Bhat, Technical Members V.P. Singh, and Shreesha Merla had dismissed the appeal filed by Allied Silica. An appeal was filed by Allied Silica Limited (the operational creditor) challenging NCLT, Mumbai Bench’s order at NCLAT. NCLAT upheld the NCLT order and dismissed the appeal of initiating the Corporate Insolvency Resolution Process against Tata Chemicals Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC). 

Tata Chemicals and the Operational Creditor had entered into a Business Transfer Agreement (BTA), where the formers silica business would be sold through Slump Sale for Rs.123 crores. Operational Creditor stated that Tata chemicals had only Rs.65 crore of the due amount. The remaining amount of Rs.58 crores in addition to the interest on the due balance amounts to Rs.10.44 crores. Thus Operational Creditor had a claim of total Rs.68.44 crores against Tata Chemicals. 

The Operational Creditor further mentioned that due to the Slump Sale deal, they had made other operating expenses which was separate from the sale deal amount. Contradicting all the claims, Tata chemicals said that they had 3 Tranche Payment Scheme under the BTA, of which they had duly paid the Tranche I, Tranche II, and the closing balance. Tata further added that even after non-compliance of Tranche I and II, they had paid the due amount and later adjusted the amount from Tranche III for making required improvements. Tata added that they had raised dispute claims within 10 days of receiving the demand notice from Operational Creditor. 

The NCLT had rejected the insolvency plea of the Operational Creditor after it failed to prove its operational debt.

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