# In the matter of Coffee Day Enterprises Limited

> NCLT judgment dated 2024-08-08. Citation: TCN-2024-NCLT-00848. IDBI Trusteeship Services Limited, acting as a Debenture Trustee, filed a petition under…

- **Court:** NCLT
- **Order date:** 8 Aug 2024
- **Citation:** TCN-2024-NCLT-00848
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/coffee-day-enterprises-limited-bd268e53

## Summary

### Background

IDBI Trusteeship Services Limited, acting as a Debenture Trustee, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Coffee Day Enterprises Limited, the Corporate Debtor, seeking to initiate Corporate Insolvency Resolution Process (CIRP) due to a default on debenture payments. The default pertains to non-payment of accrued aggregate Coupon Payments for the periods ending 30/09/2019, 31/12/2019, 31/03/2020, and 30/06/2020, amounting to a total outstanding default of Rs. 2,284,574,180/-. The Corporate Debtor issued unlisted, unrated, secured, redeemable non-convertible debentures (NCDs) and entered into a debenture trust agreement with IDBI Trusteeship Services Limited. The Financial Creditor subscribed to 1,000 NCDs, paying Rs

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## Facts

Coffee Day Enterprises Limited (CDEL), the Corporate Debtor, is the parent company of the Coffee Day Group, engaged in various businesses including coffee retail, exports, leasing, financial services, and hospitality. To raise capital, CDEL proposed issuing 2000 unlisted, unrated, secured, redeemable non-convertible debentures (NCDs) with a nominal value of Rs 10,00,000 each, totaling Rs 200,00,00,000. IDBI Trusteeship Services Limited (IDBITSL) was appointed as the Debenture Trustee. The Financial Creditor subscribed to 1,000 NCDs, investing Rs 1,000,000,000. CDEL defaulted on coupon payments due on 30/09/2019, 31/12/2019, 31/03/2020, and 30/06/2020. IDBITSL issued a notice of default and acceleration on 28/07/2020. IDBITSL filed a Section 7 application under the IBC

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## Issues and analysis

### Issue 1: Whether the application filed by IDBI Trusteeship Services Limited under Section 7 of the IBC, …

**Ratio:** Section 7 of the IBC allows a financial creditor to initiate CIRP against a corporate

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**Reasoning:** The NCLT found that a debt existed based on the Debenture Trust Deed and the subscription

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**Interpretation:** Section 7 is interpreted to mean that if a financial debt exists and a default

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**Application:** The NCLT applied Section 7 to the facts, finding that the debt and default were

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## Parties

- **Judges:** K. Bi…; Manoj Kumar…
- **Appellants:** IDBI Trusteeship…
- **Respondents:** Coffee Day…

## Timeline

- **2018-09-27 — Board Reso…**: Corporate Debtor obtained authority to issue…
- **2019-03-22 — Debenture Trust…**: Corporate Debtor entered into a debenture trust agreement with IDBI Trusteeship Services…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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