A two-member NCLAT bench headed by Acting Chairperson Justice B L Bhat said that the Kochi bench of the National Company Law Tribunal (NCLT) is yet to pass any final order over the insolvency plea filed by Tata Global Beverages Ltd (TGBL) against Kerala Ayurveda Ltd (KAL).
The appellate tribunal said it was "premature" to decide about the claim at this stage, as the NCLT would pass order over insolvency only after considering debt along with default and can appeal against that order before it.
"The appeal is accordingly, dismissed as being premature leaving it open to the learned Adjudicating Authority (NCLT) to decide the application on merit and in the event of the Appellant being aggrieved of order of admission passed under Section 7, it shall be open to the Appellant to raise all issues in appeal," said NCLAT.
KAL had challenged the order of NCLT, which had on February 10, 2020 held a default of Rs 4.25 crore claimed by TGBL as financial debt.
It has contended that the advance paid as per the terms of the agreement dated June 28, 2013 by TGBL is Inter Corporate Deposit (ICD).
KAL further contended that claim of TGBL arises out of a claim for providing goods and services, which is a share in the intellectual property of the product developed by it and cannot be classified as a financial debt but an operational debt.
Moreover, as per the agreement, disputes shall be resolved by initiating arbitration proceedings.
However, NCLT oserved that interlocutory application for referring the matter to arbitration is filed by KAL only after filing an interim counter.
TGBL had approached NCLT, filing application under section 7 of IBC to initiate insolvency proceedings against KAL.
The Tata group firm had earlier signed MoU with KAL to explore formation of a joint venture to develop products based on proven ayurvedic recipes and to market them globally on December 27, 2010.
Subsequently, a joint development agreement, effective from November 1, 2011 was entered into between the parties whereby it was agreed that KAL will develop ayurvedic products, and TGBL will have a right to hold the intellectual property over the products jointly developed, by reimbursing 50 per cent development cost to KAL. KRH MRMR