20 June 2019: The NCLAT Thursday set aside orders of the NCLT Kolkata-bench, and directed it to hear the insolvency plea against Duncans Industries afresh filed by A J Agrochem, an operational creditor of the tea firm.
Allowing the petition of Agrochem, a two-member NCLAT bench headed by Chairman Justice S J Mukhopadhaya has directed the National Company Law Tribunal (NCLT) to hear its plea and pass an appropriate order.
On October 5, 2018 the NCLT had rejected the insolvency plea on the ground that the provisions of the IBC are not applicable unless the Operational Creditor “seeks consent of the Central Government to start the Corporate Insolvency Resolution Process” in view of Section 16G(1) (c) of the Tea Act, 1953.
“We set aside the impugned order dated October 5, 2018 and remit the case to the Adjudicating Authority, Kolkata Bench, (NCLT) Kolkata to pass appropriate order under Section 9 of the I&B Code after notice and hearing the parties,” the National Company Law Appellate Tribunal (NCLAT) said.
A J Agrochem had moved the NCLAT under section 9 of Insolvency & Bankruptcy Code (IBC), under which an operational creditor can file application for initiation of corporate insolvency resolution process against a corporate debtor.
However, over the issue that claim against Duncans Industries is barred by limitation, the NCLAT asked the company to raise the issue before NCLT during hearing.
“Whether the claim is barred by limitation is a mixed question of fact and law. It will be open to the respondent (Duncans) to raise this question before the Adjudicating Authority and in such case Operational Creditor’ may show that there is a continuing cause of action and claim is not barred by limitation and there by there is an existence of debt’ and default’,” the NCLAT said.
Duncans Industries had submitted that the cause of action arise on November 14, 2014 and the petition has been filed on February 12, 2018.
On January 28, 2016 the central government had issued notification under the Tea Act, 1953 authorising Tea Board to take over the management of seven Tea gardens owned by Duncans Industries.
It was contended that section 16(1)(c) of the Tea Act said that where the management or a tea undertaking or tea unit owned by the company has been taken over by the Tea Board no proceeding for the winding up of such company shall lie in any court except with the consent of the Central Government”, and section 9 of the IBC would not be applicable.
However, rejecting it the NCLAT said: “Section 16G (1)(c) relates to winding up and on the other hand Section 9 of IBC application filed is not a proceeding for winding up but for initiation of Corporate Insolvency Resolution Process’ to ensure revival and continuation of the Corporate Debtor’ by protecting the Corporate Debtor’ from its own management and from corporate debt by liquidation”.
It further said: “For the reasons aforesaid, we hold that for filing an application under Section 9 against Tea Company under the management of the different board, no permission of the Central Government is required in terms of Section 16G(1) of the Tea Act, 1953”.
Duncans Industries Ltd is part of The Duncan Goenka Group, which is one of the oldest business houses in India with a diversified product portfolio of Tea, FMCG, Engineering, Paper, Synthetic Fibers, Chemicals and Polymers.
According to the information available on the portal, Duncans Industries Ltd has 14 tea estates encompassing over 8,000 hectares of land spread.