The National Company Law Tribunal (NCLT), Chandigarh Bench (Court-II), dismissed the petition filed by TVS Supply Chain Solutions Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016. The petition sought initiation of the Corporate Insolvency Resolution Process (CIRP) against ZTE Telecom India for an alleged operational debt of Rs. 4.27 crore with interest.
TVS Supply Chain Solutions, previously known as TVS Logistic Services , claimed that it provided services to ZTE under two Master Service Agreements (MSA-I dated July 25, 2012, and MSA-II dated July 1, 2017) for various telecom projects with companies such as Reliance, TATA, Aircel, and BSNL. The invoices were raised in accordance with the agreements and were payable within 30 days. TVS alleged that ZTE either delayed payments or made partial payments despite repeated requests and reconciliations. The company sent numerous emails and reminders to ZTE regarding outstanding dues, and even issued a demand notice under Section 8 of the IBC in July 2018.
ZTE, on the other hand, contended that disputes existed over the invoices and services provided. It referred to discrepancies identified in an internal audit conducted in September 2017, which highlighted overclaims and incorrect billing for various projects, including BSNL Phase-VII. ZTE communicated these concerns multiple times through emails dated September 18, 20, and 28, 2017 and requested justification from TVS. The Applicant responded only on September 29, 2017, stating they were “working on the same” but failed to provide documentary evidence. Further meetings were held from November 3 to 9, 2017, to reconcile the accounts, but the issues remained unresolved. ZTE also said that the debit note issued in July 2018 was part of routine practice and reflected pre-existing disputes, not a new acknowledgment of debt.
The Tribunal observed that the matter involved multiple reconciliations, audit objections, and communications dating back to 2017, well before the statutory demand notice. It said that Section 9 of the IBC cannot be invoked as a debt recovery tool when a genuine dispute exists. The Bench referred to the Supreme Court decision in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [(2018) 1 SCC 353], which restricts the Adjudicating Authority to determine the existence of a genuine dispute and not to examine its merits.
The NCLT further held that defects in the Section 8 notice, such as non-enclosure of invoices, were cured later. However, the central issue remained the pre-existing dispute, which made the petition under Section 9 not maintainable. The Tribunal noted that insolvency proceedings cannot be misused to recover disputed claims and noted that the authority cannot conduct a roving inquiry into the veracity of debt.
For the Applicant: Mr. Anand Chhibbar, Senior Advocate with Mr. Vaibhav Sahni, Advocate
For the Respondent: Ms. Munisha Gandhi, Senior Advocate with Ms. Daizy Chawla, Mr. Jatin Kapoor, Ms. Salina Chalana & Mr. Rahul K. Kanojia, Advocates |
