NCLAT Upholds NCLT's Decision in Favor of PepsiCo: No Insolvency for Disputed Interest Claims

The National Company Law Appellate Tribunal (NCLAT) dismissed an insolvency petition against PepsiCo India Holdings, ruling that the Insolvency & Bankruptcy Code cannot serve as a debt-recovery mechanism. The petition by SNJ Synthetics was deemed inadmissible as the principal debt had been repaid, leaving only a contested interest claim.

The National Company Law Appellate Tribunal (NCLAT) has dismissed an insolvency petition against PepsiCo India Holdings. This decision comes after observing that the Insolvency & Bankruptcy Code cannot be repurposed as a tool for debt recovery, reinforcing the boundaries of the code's application.

The appellate tribunal backed a prior ruling from the Chandigarh bench of the National Company Law Tribunal (NCLT), which had refused a plea from SNJ Synthetics. NCLAT maintained that SNJ's use of IBC's operational creditor clause was invalid, as the principal amount was already paid, leaving only a contested interest claim.

SNJ Synthetics, engaged in PET Preform manufacturing, had accused PepsiCo of outstanding interest debts. However, NCLT noted discrepancies, citing that the principal amount settlement indicated the insolvency plea's non-compliance. The tribunal also highlighted the settlement between parties on February 10, 2023, as well as an unsigned agreement impacting credibility.

(With inputs from agencies.)