NCLAT Chennai Stays Insolvency Proceedings Against Café Coffee Day’s Parent Company

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mrs. Shreesha Merla (Technical Member), while adjudicating an appeal filed in Malavika Hegde v Indusind Bank Ltd. & Anr., has stayed the Corporate Insolvency Resolution Process (CIRP) of M/s Coffee Day Global Ltd. which was initiated by the NCLT on 20.07.2023. M/s Coffee Day Global Ltd. is the parent company of the Coffee Day Group and Coffee Day Enterprises Ltd., which runs a multinational coffeeshop named ‘Café Coffee Day’. Background Facts Coffee Day Global Limited (“Corporate Debtor”) is a company promoted by Late Mr. V.G. Siddharth and belongs to the Coffee Day group. The Corporate Debtor is engaged in the retail business of coffee and is also the parent company of Coffee Day Enterprises Ltd, which runs a multinational chain of coffeeshops named Café Coffee Day. The Corporate Debtor had availed credit facilities from the Indus Ind Bank Limited (“Financial Creditor”). The account of Corporate Debtor was declared a Non-Performing Asset (“NPA”) in 2020 and the loan could not be repaid to the Financial Creditor. The Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor, over a default of Rs. 94 Crores. The NCLT noted that the Corporate Debtor has not disputed the default amount, the petition is within limitation and crosses the threshold limit of Rs. 1 Crores. Accordingly, on 20.07.2023 the NCLT admitted the Corporate Debtor into CIRP and appointed Mr. Shailendra Ajmera as the Interim Resolution Professional. Ms. Malavika Hegde (“Appellant”) being the suspended management of the Corporate Debtor, filed an appeal before NCLAT against the order dated 20.07.2023. Proceedings Before NCLAT The Bench noted that the twin issues before it is as under: Whether the date of default once mentioned in Part IV by the Financial Creditor can be changed in view of the Supreme Court’s decision in Ramesh Kymal Vs. Siemens Gamesa Renewable Power Pvt. Ltd., (2021) 3 SCC 224; andWhether the Financial Creditor (Bank) who has already furnished Record of Default (“ROD”), can change the date of default by a subsequent ROD on the basis of circular dated 03.04.2023 issued by the NCLT? The Bench observed that the issues involve arguable points and has therefore directed the Financial Creditor to file its reply to the appeal. The CIRP of the Corporate Debtor has been stayed by the Bench till the next date of hearing i.e. 20.09.2023. “In the meanwhile, till the next date of hearing, operation of the impugned order shall remain stayed.” Case Title: Malavika Hegde v Indusind Bank Ltd. & Anr. Case No.: Company Appeal (AT) (CH) (Ins) No.235/2023 Counsel for Appellant: Mr. P.H. Arvindh Pandian, Sr. Advocate. Counsel For the Respondent: Ms. Chithra Nirmala, Advocate for R-1. ClickHere To Read/Download Order

NCLAT Chennai Stays Insolvency Proceedings Against Café Coffee Day’s Parent Company

Pallavi Mishra

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