NCLAT dismisses plea to initiate insolvency proceedings against Tata Chemicals

New Delhi: The National Company Law Appellate Tribunal (NCLAT) has set aside a plea challenging an NCLT order that rejected the petition to initiate insolvency proceedings against Tata Chemicals for claimed operational debt of Rs 68.44 crore.

A three-member NCLAT bench upheld the order of the Mumbai bench of the National Company Law Tribunal (NCLT) that dismissed the plea of Allied Silica to initiate insolvency proceeding against the Tata group firm. Observing that the NCLT has rightly dismissed the plea as Allied Silica has failed to prove the operational debt and its default and further on the ground of pre-existing dispute, the appellate tribunal rejected the appeal against it.

We are of the considered opinion that the Adjudicating Authority (NCLT) has rightly dismissed the application filed under Section 9 of IBC, the NCLAT bench headed by Acting Chairman Justice B L Bhat said. "We do not find any reason to interfere with the impugned order. There is no substance in the appeal which is accordingly dismissed."

Allied Silica and Tata Chemicals had entered into a business transfer agreement (BTA) on April 7, 2018, under which the silica business of the former was to be acquired by the Tata group firm on a slump sale basis for a consideration of Rs 123 crore.

Tata Chemicals was also to acquire an existing silica plant at Cuddalore, Tamil Nadu from Allied Silica.

According to the appellant - Allied Silica, Tata Chemicals had only transferred Rs 65 crore out of Rs 123 crore and the balance Rs 58 crore was not paid and claimed to be due as unpaid operational debt. The sale was consummated on June 18, 2018, and on the same day, the possession of undertaking was handed over by Allied Silica to Tata Chemicals.