The National Company Law Tribunal (NCLT) has given its approval to start insolvency proceedings against Apeejay Surrendra Group’s tea company Apeejay Tea for a “payment default”.
Admitting an operational creditor’s insolvency petition for initiating corporate insolvency resolution process under Section 9 of the Insolvency & Bankruptcy Code, 2016, for a default of around `48.72 lakh, the Kolkata bench of the National Company Law Tribunal (NCLT) has ordered commencement of the insolvency resolution process for Apeejay Tea, which is one of the major tea producers, having 17 tea estates in Assam.
Following the tribunal’s order, the company has taken steps to challenge it before the National Company Law Appellate Tribunal (NCLAT), a source close to the development told FE.
Apart from the tea business, diversified Apeejay Surrendra Group owns the Park Hotels, the luxury boutique hotels in the country’s major cities and tourist destinations, shipping companies under Apeejay Shipping and real estate, comprising commercial properties and business centres across India, among others. The group’s retail division has Oxford Bookstores and outlets of eatery Flurys.
A bench of Justices Virendra Kumar Gupta and Madan B Gosavi of the NCLT on October 18 ordered commencement of a corporate insolvency resolution process against Apeejay Tea, declaring moratorium in accordance with Sections 13 and 15 of the IBC. Earlier, the operational creditor, Assam-based Hanusita & Sons, which had been supplying fertilisers to the tea firm, alleged that the firm defaulted on payment of around `48.72 lakh. The default was claimed to have occurred in June 2016, while goods were supplied from 2013 to December 2016.
During the hearing at the tribunal, Apeejay Tea’s counsels raised the issue that the operational creditor was in collusion with a general manager of the company, and because of such a situation, inflated bills were raised and extra payment had been made for the goods supplied by the operational creditor due to such “fraud, collusion and conspiracy”. The counsel informed that the company had filed a suit before the Calcutta High Court, where Hanusita & Sons was impleaded as defendant and the suit is pending for adjudication. The suit was filed before the high court in 2017.
In his submission before the tribunal, the operational creditor’s counsels said the suit filed by the company before the high court “had no relevance” to the proceedings under Section 9 of the Insolvency & Bankruptcy Code (IBC) as it pertained to the alleged misconduct of the company’s own employee. He contended that the company, in its reply to the bench, did not mention disputes regarding the quantum and quantity (of goods supplied). Purchased orders were issued even after removal of the said employee (the general manager) of the company.
Pronouncing its order, the bench said, “…It is further observed that several suppliers have been impleaded and the operational creditor is one of them, hence, such suit does not specifically dispute the claim of operational creditor only. This fact by itself is sufficient to make the contention of corporate debtor devoid of merits. If such kind of mechanism adopted by the corporate debtor is allowed in the IBC proceedings, then none of the operational creditors would ever be able to initiate CIRP and thus, the very object of the IB Code would be defeated.” The bench appointed Samya Sengupta as the interim resolution professional of Apeejay Tea.
When contacted, a spokesperson of the Apeejay Surrendra Group declined to comment on the development.“Apeejay Tea took steps to challenge the tribunal’s order at the NCLAT,” the source cited above said. “The claim of the operational creditor is a bogus one. These are the handful of suppliers who were actually facilitating wrongdoings in the company through the earlier management. The company had filed suit against them at the high court in 2017. This case is going on,” the person said.
“The company always has a good financial health. It has good relationship with banks,” the person added. For the last financial year, the tea major had clocked a close to `400 crore revenue.