NCLAT Dismisses Operational Creditor’s Petition Against Wipro

NCLAT Dismisses Operational Creditor's Petition Against Wipro

VoM News Desk | September 11, 2023 | 02:21 AM IST | Breaking News, Courts & Law | Follow on Google News

NCLAT Dismisses Operational Creditor’s Petition Against Wipro. Image/NDTV

The National Company Law Appellate Tribunal (NCLAT) has dismissed an operational creditor’s petition to initiate insolvency proceedings against Wipro Ltd. The Chennai bench of the appellate tribunal ruled that there was a pre-existing dispute over payment between Wipro and the petitioner, emphasizing that the Insolvency and Bankruptcy Code (IBC) was not designed as a mere recovery tool for creditors. This decision upholds the order of the National Company Law Tribunal (NCLT).

Background of the Dispute

The dispute in question revolves around a contract related to the supply of goods for a government project executed by Wipro. The project involved the design, manufacture, supply, and installation of MV Panels. Wipro had issued purchase orders totaling Rs 13.43 crore for the supply of goods by the appellant, Tricolite Electrical Industries, an operational creditor.

According to the appellant, they timely supplied the goods and raised various invoices. While Wipro made payments amounting to 97 percent of the invoice value, a significant 3 percent of the total invoice value remained unpaid. Despite multiple reminders and a Demand Notice, Wipro had not settled this outstanding amount.

Wipro, on the other hand, contested the allegations, claiming that a pre-existing dispute existed between the parties, evident from their email correspondence. They argued that the 3 percent withheld was in response to the delay in executing the job assigned to the appellant, which resulted in liquidated damages/penalties as per the contract terms.

NCLAT’s Decision

The NCLAT, comprising Justice M Venugopal and Shreesha Merla, agreed with Wipro’s position. They emphasized that Wipro had consistently maintained that 97 percent of the amount was paid, and the remaining 3 percent was withheld due to the delay caused by the appellant. The NCLAT concluded that there was indeed a pre-existing dispute, which was not merely a spurious defense but a valid contention.

The dismissal of the operational creditor’s petition highlights the importance of addressing genuine disputes before resorting to insolvency proceedings under the IBC. The IBC is intended for cases where a clear debt dispute does not exist between the parties, and the courts are cautious in initiating insolvency proceedings when disputes are evident.

This ruling underscores the need for parties involved in commercial contracts to maintain clear communication, adhere to contractual terms, and address disputes promptly to avoid the complexities of insolvency proceedings.

VoM News Desk

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