The National Company Law Tribunal, Chandigarh Bench, in CP (IB) No. 157/Chd/Hry/2021 (SNJ Synthetics Ltd v. PepsiCo India Holdings Pvt Ltd), decided on 02.01.2025, dismissed the petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditor, SNJ Synthetics Ltd, against PepsiCo India Holdings Pvt Ltd.
Background
SNJ Synthetics Ltd, the Operational Creditor, had supplied PET preforms used in the manufacture of carbonated soft drink bottles to PepsiCo India Holdings Pvt Ltd pursuant to a supply agreement. The original claim was Rs.1,96,80,953, comprising principal of Rs.91,63,886 and interest of Rs.1,05,17,067 calculated at 24% per annum. PepsiCo’s beverage business was subsequently transferred to Varun Beverages Ltd by way of a Business Transfer Agreement dated 18.02.2019. During the pendency of the proceedings, the parties reconciled their accounts and the principal was reduced to Rs.77,73,886, which was paid by PepsiCo on 10.02.2023. After payment of the principal, the Operational Creditor continued to press the petition solely for the recovery of interest.
The Tribunal’s Analysis
The Tribunal examined whether a Section 9 petition could be sustained where the principal operational debt had been paid in full and the only remaining claim was for interest. The Tribunal held that it could not, for several reasons.
First, the principal debt having been paid, the condition under Section 9(5)(i)(b) of the IBC, which requires proof of an existing operational debt exceeding the threshold, was no longer satisfied. Second, the supply agreement between the parties was silent on the question of interest. The interest claimed by the Operational Creditor was computed at 24% per annum on the basis of unsigned invoices, which could not form a valid basis for the claim. Third, the reconciled principal amount (Rs.77,73,886) was approximately 84.83% of the originally claimed principal (Rs.91,63,886). If interest were to be proportionately reduced, the total claim would fall below the threshold of Rs.1 crore prescribed under the IBC for initiation of CIRP proceedings.
Precedents Relied Upon
The Tribunal relied on the NCLAT’s decisions in Rohit Motawat v. Madhu Sharma, S.S. Polymers v. Kanodia Technoplast, and Permali Wallace, as well as this Bench’s own decision in Oswal Cable Products v. Jindal Speciality Textiles, to hold that a petition under Section 9 cannot be maintained solely for recovery of interest where the principal operational debt stands satisfied.
The Order
The petition was dismissed without costs.
Mrs. Munisha Gandhi, Senior Counsel, assisted by Ms. Salina Chalana, Advocate, appeared for the Corporate Debtor, i.e., M/s PepsiCo India Holdings Pvt Ltd.