NCLT Chandigarh Rejects Insolvency Plea Against ZTE Telecom India, Cites Pre-Existing Dispute

The National Company Law Tribunal (NCLT) at Chandigarh has recently rejected an insolvency application filed by TVS Supply Chain Solutions Limited against ZTE Telecom India Private Limited, the Indian subsidiary of Chinese telecom giant ZTE Corporation.The Tribunal held that a clear dispute existed between the parties before the insolvency proceedings began.The order was passed by a two-member coram comprising Judicial Member Khetrabasi Biswal and Technical Member Kaushalendra Kumar Singh. The Tribunal observed, “In view of these facts, we hold that this being a case of pre existing dispute, the Application under Section 9 is not at all maintainable.”It also remarked on the voluminous filing by the applicant, stating, “The petitioner has struggled to bring the issue under the provisions of the Code,” noting that the petition ran into 66 volumes and more than 19,000 pages.The dispute arose from a business relationship that began in 2012. TVS entered into two Master Service Agreements with ZTE for logistics and infrastructure support in telecom projects involving clients like Reliance, TATA, BSNL and Aircel. TVS claimed that it was not paid for services rendered, stating that an amount of ₹4.27 crore in principal, along with ₹75.77 lakh in interest, remained outstanding despite repeated reconciliations. A demand notice was issued on July 9, 2018, and the insolvency petition was filed in May 2019.ZTE opposed the petition, arguing that it had raised several objections about overbilling and unsatisfactory work long before the demand notice was served. The company referred to an internal audit of the BSNL Phase-VII project, and an email dated September 18, 2017, in which TVS was informed about billing discrepancies for uninstalled or cancelled sites and inflated workloads. ZTE gave TVS a deadline of September 21, 2017, to respond. When TVS failed to justify the claims, ZTE issued follow-up emails and, ultimately, a formal letter in January 2018 denying liability. In response, TVS only stated, “We are working on the same,” and promised to revert in a week, without contesting the audit findings. ZTE later issued a debit note for ₹5.64 crore in July 2018, which it said was only for accounting purposes, as the dispute had already been raised in 2017.The tribunal agreed with ZTE's version. It held that the correspondence beginning September 2017 showed the existence of a real and substantial dispute. It noted that the parties even met in person between November 3 and 9, 2017, to reconcile the accounts. The tribunal concluded that “conduct of the Applicant (Operational Debtor) further substantiates the fact that the alleged debt was disputed and under reconciliation, and therefore, is not at all an undisputed liability.”Case Title: TVS Supply Chain Solutions Limited v ZTE Telecom India Private LimitedCase Number: CP (IB) No. 168/Chd/Hry/2019 For the Applicant : Senior Advocate Anand Chhibbar with advocate Vaibhav Sahni, For the Respondent : Senior Advocate Munisha Gandhi with advocates Daizy Chawla Jatin Kapoor, Salina Chalana and Rahul K KanojiaClick here to read/download order

NCLT Chandigarh Rejects Insolvency Plea Against ZTE Telecom India, Cites Pre-Existing Dispute

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NCLT Chandigarh Rejects Insolvency Plea Against ZTE Telecom India, Cites Pre-Existing Dispute

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