NCLAT dismisses insolvency plea against PepsiCo India-OxBig News Network

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The National Company Law Appellate Tribunal (NCLAT) has dismissed an insolvency petition against PepsiCo India Holdings after observing that provisions of IBC cannot be turned into a debt-recovery proceeding.

The appellate insolvency tribunal has upheld the earlier order passed by the Chandigarh bench of the National Company Law Tribunal (NCLT), which had rejected SNJ Synthetics’s plea.

“The adjudicating authority (NCLT) has not committed any infirmity in not allowing the CIRP of the corporate debtor [PepsiCo] to be initiated solely on the basis of the claim of the contested and unsubstantiated interest component,” said a three-member NCLAT bench.

The NCLAT held that SNJ’s insolvency petition, filed under Section 9 of IBC as an operational creditor was not maintainable since the principal amount of the debt claimed from PepsiCo had already been repaid and only a disputed claim for interest remained.

“The provisions of Insolvency & Bankruptcy Code (IBC) cannot be turned into a debt-recovery proceedings and to commend any such course of action would tantamount to pushing the corporate debtor to face the perils of corporate death instead of being rejuvenated and revived,” NCLAT said in its order passed on May 7, 2025.

The NCLAT direction came over a petition filed against the NCLT order.

The Chandigarh bench of NCLT on January 5, 2025, dismissed the Section 9 plea filed by SNJ Synthetics against PepsiCo India Holdings after observing that in the present case, the principal amount stands paid, therefore the CIRP (corporate insolvency resolution process) cannot be initiated solely on the basis of the claim of interest component.

SNJ Synthetics had claimed a due of ₹1.96 crore in which the principal amount was at ₹91.63 lakh and had calculated interest at the rate of 24% per annum of ₹1.05 crore as on February 28, 2021.

The parties on February 10, 2023 settled the amount of principal outstanding with the reconciled amount of ₹77.73 lakh. Thereafter, the petitioner has submitted that its claim now is for the outstanding interest amount of ₹1.05 crore.

However, this was dismissed by NCLT observing that the principal amount has been paid during the pendency of the petition, therefore a requirement of Section 9(5)(i)(b) of IBC is not complied with.

The NCLT also said the reconciled amount was ₹77.73 lakh — 84.83% of ₹91.63 lakh, which is the principal amount claimed in the petition — and if the same ratio is applied presuming the proportional reduction of each of the principal amount due from PepsiCo, the interest amount works out to ₹89.21 lakh, which would be below the threshold amount of ₹1 crore, and thus the petition may not be maintainable for the interest amount.

Moreover, the supply agreement dated October 9, 2018, did not have the signature of both the parties, said NCLT.

SNJ Synthetics is in the business of PET Preform manufacturing. It entered into a supply agreement with PepsiCo, wherein it was to manufacture products to be supplied to the beverages major for the production of PET bottles for carbonated soft drinks, and non-carbonated beverages.

PepsiCo had transferred the business to Varun Beverages under a business transfer agreement on February 18, 2019, and the dispute is before that period.