There could be a rush of tea plantation companies to the resolution court once the appellate authority rules on a case filed by one of the creditors of Duncans Industries, the flagship entity of GP Goenka.
The Kolkata bench of National Company Law Tribunal in October had rejected the move of AJ Agrochem, an operational creditor of Duncans, a premier tea plantation company that owns some of the prized gardens in Darjeeling, on the grounds that Insolvency and Bankruptcy Code (IBC) doesn’t apply to tea gardens governed by the Tea Act of 1953, which overrides the insolvency rules.
AJ Agrochem subsequently moved the National Company Law Appellate Tribunal (NCLAT) and the judgement is expected any day as the hearing has been concluded.
NCLT, which is hearing another insolvency case filed by Asset Reconstruction Company (India) Ltd against Duncans, would take a view once the NCLAT order is out.
“Counsel for the corporate debtor submits that NCLAT is seized with same point of matter, which is involved in this proceeding,” NCLT has recently said, adding that the judgement is reserved by the appellate authority.
“This tribunal has taken a view in other matter relating to same point that permission from Central government is required to initiate proceeding against the tea estate companies. This point is pending in appeal for adjudication by Hon’ble NCLAT,” the court had said while hearing the case in March referring to the ruling on the previous insolvency case filed by AJ Agrochem.
“Section 238 of I&B Code states that the provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of such law. However, in my considered opinion, Tea Act 1953 is a special legislation that governs the tea industries,” NCLT had ruled while dismissing plea of Duncans’s creditor who subsequently moved the appellate authority.
“Both the statues do not occupy one and same field. There are no inconsistent provisions in the Tea Act, 1953 which may give overriding effect of provisions of I&B Code,” NCLT ruled upholding the applicability of the Tea Act.
Despite owning some of the prized gardens, Duncans, as well as several tea plantation companies, have been suffering because of worsening weather conditions, erratic yields and rising labour costs. “Tea production depends on agro-climatic conditions, which subject it to agro-climatic risks. Moreover, tea estate costs are primarily fixed with labour-related costs,” the ratings company said.
A TEST CASE
- NCLAT judgement is expected any day as the hearing has been concluded
- NCLT, which is hearing insolvency case filed by Arcil against Duncans, would take a view once the NCLAT order is out
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