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McLeod Russel insolvency case: NCLAT admits promoter’s plea but no stay on CIRP

The National Company Law Appellate Tribunal (NCLAT) has admitted debt-laden tea maker McLeod Russel promoter Aditya Khaitan's appeal against the insolvency proceedings order passed by the New Delhi Bench of the National Company Law Tribunal (NCLT).

The Appellate Tribunal, however, has not granted a stay on the corporate insolvency resolution process (CIRP) initiation against McLeod Russel, one of the world's largest tea producers and a group company of financially stressed Williamson Magor group

NCLT, New Delhi Bench, vide its order dated August 6, admitted the insolvency application filed by Techno Electric & Engineering, a financial creditor, under Section 7 of the Insolvency and Bankruptcy Code (IBC). Under the provision of IBC, the Bench appointed Kanchan Dutta as the interim resolution professional (IRP) for McLeod.

The financial creditor had filed the insolvency application after the tea company defaulted on repayments of term loans of `Rs. 100 crore and interest thereon.

Appearing before the NCLAT Bench of Justices Jarat Kumar Jain and Technical Member Ashok Kumar Mishra on 25 August 2021, senior advocate Abhishek Manu Singhvi, for appellant Khaitan, submitted that the respondent had no locus or authority to apply to Section 7 of the IBC as there is no financial debt and the corporate debtor (McLeod Russel) has not committed any default.

The Bench also heard an application for a stay of the NCLT order which approved the commencement of the insolvency proceedings against McLeod.

Senior Advocate Kapil Sibal, appearing for respondent Techno Electric and Engineering, vehemently opposed the admission of Khaitan's appeal as well as the stay application.

"We have considered the submissions, the appeal is admitted for hearing, however, we will consider the application for a stay after filing reply by the respondent," the NCLAT Bench said in its order dated 25 August.

Senior Advocate Mr. Sibal sought 10 days to file a reply, which was granted. The matter was fixed "for admission (after notice)" on 8 September 2021.

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