The debt claimed by TVS Supply Chain Solutions, a Chandigarh-based bench of the National Company Law Tribunal (NCLT), was disputed and reconciled since 2017, well before the statutory notice.
“Considering these facts, we are of the considered opinion that this is a case of pre-existing dispute and the application under Section 9 is not maintainable at all,” the NCLT bench comprising members Kaushalendra Kumar Singh and Khetrabasi Biswal said.
TVS Supply Chain Solutions, formerly known as TVS Logistics Services, had moved the insolvency tribunal seeking a default of Rs 4.27 crore from ZTE Telecom India by filing a plea under Section 9 of the Insolvency & Bankruptcy Code. The dispute concerns the period from June 2012 to February 2019.
ZTE, a supplier of telecom equipment to companies like Reliance, Tata, Aircel and BSNL, had entered into two Master Service Agreements (MSAs) with TVS Supply Chain.
According to the MSAs, TVS Supply Chain Solutions issued invoices at regular intervals, which were payable within 30 days of issuing the invoice. However, TVS Supply Chain Solutions alleged that ZTE has generally made partial payments on invoices issued or delayed payment under the pretext that the invoices are not satisfactory, and that certain amounts have remained due at all times since 2012. Till September 2015, an amount of Rs 7.04 crore was outstanding for payment by ZTE for various projects.
However, ZTE had sent an audit request on the invoices and was experiencing discrepancies in previous invoices. Later, several emails were exchanged between the parties.
Finally, on January 29, 2018, ZTE addressed a letter to TVS stating that there are alleged discrepancies in TVS’s invoices worth Rs 5.60 crore.
However, ZTE had not shared any supporting documents.
On July 9, 2018, TVS issued a notice under Section 8 of the IBC, demanding payment of Rs 4.27 crore as principal and interest at the rate of 12 percent per annum.
In its response, ZTE raised a pre-existing dispute alleging overpayment to TVS.
Later, on May 7, 2019, TVS moved the NCLT by filing a bankruptcy petition against ZTE.
ZTE, represented by S&A Law Offices, has filed this via multiple written communications, including emails and letters, expressing its concerns over the disputed invoices and its intention to issue a debit note in case the issues remain unresolved by TVS.
The NCLT noted that the case involved multiple reconciliation and audit objections before the statutory notice. The guilt was never acknowledged by ZTE.
The tribunal noted that insolvency proceedings cannot be abused to collect disputed claims, pointing out that the authority cannot conduct in-depth investigations into the correctness of debts.
“Further, it is a settled legal position that the Tribunal cannot inquire into fundamental principles relating to debts, defaults and disputes, to which only summary jurisdiction is conferred and not the jurisdiction of the court to inquire into the veracity of debts and disputes by examining documents running into thousands of pages, so as to arrive at a conclusion on the issue of debts and disputes,” the NCLT said while rejecting the TVS plea.
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