New Delhi : The National Company Law Appellate Tribunal (NCLAT) has rejected the plea of beverage giant Pepsico India Holdings seeking to release its machines from Oceanic Tropical Fruits, which is in the process of insolvency.
The drinks major had moved NCLAT against the order passed on May 28, 2019 by the Chennai Bench of the National Company Law Tribunal (NCLT) which refused permission for PepsiCo to take back its machines that were at Oceanic Tropical Fruits.
NCLAT found that Pepsico India Holding cannot exercise its own agreement with Oceanic Tropical Fruits over the Insolvency & Insolutions Code (IBC), which provides for termination in the event of bankruptcy or liquidation or similar situation to recover the assets.
The Appellate Tribunal also considered that there were claims and counterclaims from Oceanic Tropical Fruits and PepsiCo over the money to be paid to each other.
"From the above fact, it is obvious that the company's debtor (Oceanic Tropical Fruits) and the complainant- Pepsico India Holdings, until it has been decided, the issue of surrender of all assets, ie Machines to the complainant does not arise," said a bench with three members under the chairmanship of the fair justice SJ Mukhopadhaya.
"Even during the liquidation process, the liquidator is to ensure that the debtor of the companies remains a continuing business," NCLAT said.
Resolution Professional / Liquidator submitted before NCLAT that after the opening of the insolvency, it was not open to PepsiCo to terminate the agreement because IBC assigns him to do everything possible to protect and preserve the value of the company's debtor and manage its business as a continuing activity.
However, NCLAT also stated that if the corporate debtor is not sold in full with the employees and there is no alternative but to sell their assets and distribute the same among the creditors, then at that stage, Pepsico India Inhaven can ask the liquidator to return facilities and machines, "if it belongs to third parties."
Oceanic Tropical Fruits is facing insolvency proceedings after NCLT allowed the foundation of the leading private sector lender ICICI Bank which demanded a standard of around Rs 100 crore.
PepsiCo India 2011 had signed a ten-year contract with Oceanic Tropical to manufacture, process and package its mango-based beverage Slice.
According to PepsiCo India, under their agreement, either party had the right to terminate the agreement if the other party went bankrupt, liquidated or in the event that its business or assets were confiscated or seized or a liquidation petition was adopted.
PepsiCo had sent a notice of termination on November 28, 2017, after the insolvency was filed against Oceanic Tropical Fruits and had sought permission to take back its machines that were in the company's debtors' factory.
Get the best of News18 delivered to your inbox – subscribe to News18 Daybreak. Follow News18.com on Twitter Instagram, Facebook, Telegram, TikTok and on YouTube, and keep up to date with what's happening in the world around you – in real time.