NCLT Rejects Insolvency Plea Against Eicher Motors: NCLT Delhi

The National Company Law Tribunal (NCLT), Special Bench, comprising of Shri Bachu Venkat Balaram Das (Judicial Member) and Shri L. N. Gupta (Technical Member), while adjudicating an application in DHL Supply Chain Pvt. Ltd. v Eicher Motors Ltd., has declined to admit Eicher Motors Ltd. into insolvency since there are pre-existing disputes between the parties.

Brief background

DHL Supply Chain Pvt. Ltd. (“Applicant/DHL”) is an Indian division of Deutsche Post DHL group and is engaged in the business of logistic operations. Eicher Motors Ltd. (“Respondent/Eicher”) is the listed parent of Royal Enfield motorcycles, which is the world’s oldest motorcycle brand. The Respondent is a multinational company with its operation in over 60 countries worldwide and its flagship product in India has been the ‘Royal Enfield Bullet’.

In 2019, Eicher had availed logistic and warehousing services of DHL and accordingly a Service Agreement for Warehouse was executed. However, Eicher could not meet its payment obligations. Consequently, DHL filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Eicher, over a default of Rs. 8,28,86,046/-.

Eicher opposed the application and contended that the service of Section 8 Demand Notice was defective and there were pre-existing disputes between the parties.

NCLT VERDICT

The Bench observed that the demand notice under Section 8 of IBC was served through email addressed to Eicher as “Attention to its Managing Director”. The Section 5 of IBC provides that a demand notice can be served by email to a whole-time director or designated partner or key managerial personnel of the Corporate Debtor. Since the Managing Director is a “Key Managerial Personnel” of Eicher, there was no deficiency in service of Section 8 notice.

The Bench further observed that the email communication between the Parties clearly demonstrate pre-existing disputes between them. It was held as under:

“In the instant case, the correspondence on record prodigiously establishes severe disputes between the parties inter-se, with each party having claims/counter-claims against the other. The Respondent too has raised plausible contentions, which require further investigation. In view of the above we conclude that there being pre-existing disputes between the parties, the Application is dismissed.”

The application for initiation of CIRP against Eicher has been dismissed.

Case Title: DHL Supply Chain Pvt. Ltd. v Eicher Motors Ltd.

Case No.: Company Petition No. (IB)-272(ND)2022

Counsel for the Applicant: Adv. Amit Dayal

Counsel for the Respondent: Adv. Anoop Dawar

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