The Chennai Bench of National Company Law Appellate Tribunal (NCLAT) has stayed the admission of corporate insolvency case brought by National Company Law Tribunal (NCLT) Bengaluru against the coffee chain firm, Cafe Coffee Day (CCD) on Friday.
The NCLT order against CCD has been put on hold until the next hearing of the appeal filed by Malavika Hedge, the former director of CCD, by Justice Rakesh Kumar Jain, a judicial member, and Shreehsa Merla, a technical member, according to NCLT’s notice issued on Friday.
IndusInd Bank, the financial creditor whose application the NCLT order was based on has also received notice at the same time. The interim order stay has been passed Friday morning.
“Since, we have found that there are arguable points involved in this appeal, therefore, we issue a formal notice to the Respondents who is already on caveat, enabling it to file its reply.
Let the reply be filed within two weeks i.e. up to 25th August, 2023 and rejoinder, if any, be filed by the Appellant within two weeks thereafter i.e. up to 14th September, 2023. List for hearing on 20th September, 2023.
In the meanwhile, till the next date of hearing, operation of the impugned order shall remain stayed,” said the NCLT order.
Malavika Hegde, former director of Coffee Day and the late VG Siddhartha’s wife filed an appeal against this order before the NCLAT.
In Hegde’s appeal, the issue of whether CCD would fall under the COVID-19 pandemic-related insolvency moratorium imposed by the Central government is at stake.
According to Hegde, the date of default, which occurs between March 25, 2020 and March 25, 2021, occurs during the moratorium period that the Central government set forth in its June 5, 2020 circular. She has argued that the insolvency petition against CCD was therefore invalid to begin with.
In July, IndusInd Bank filed a complaint with the NCLT, stating that CCD had defaulted on a loan of more than ₹94 crore. The NCLT approved the bankruptcy petition based on the petition.
According to a regulatory filing by Coffee Day Enterprises, parent company of Coffee Day Global from July, the Bengaluru bench of the NCLT passed an order over a plea brought by a financial creditor of the business who sought payment of ₹94 crore in unpaid debts.
“The application filed by one of the lenders against the material subsidiary Coffee Day Global before NCLT, Bengaluru, has been admitted (oral order) under Section 7 of Insolvency and Bankruptcy Code, 2016 for initiating CIRP for ₹94 crore,” the regulatory filing said from July.