Key facts
- The National Company Law Tribunal (NCLT) dismissed an insolvency petition filed by Empire Transport Services Ltd (ETSL) against Noida Metro Rail Corporation (NMRC).
- The NCLT found that genuine pre-existing disputes existed between ETSL and NMRC regarding service quality and payment deductions.
- ETSL had claimed operational dues of approximately Rs 7.09 crore arising from a bus operators agreement.
- NMRC argued that ETSL had committed multiple breaches of the agreement, including inadequate fleet deployment and system failures.
- The tribunal cited the Supreme Court's ruling in Mobilox Innovations Pvt Ltd vs Kirusa Software Pvt Ltd, stating insolvency applications cannot be admitted if a real dispute exists prior to the demand notice.
The National Company Law Tribunal (NCLT) has dismissed an insolvency petition filed by Empire Transport Services Ltd (ETSL) against Noida Metro Rail Corporation (NMRC). The tribunal determined that genuine pre-existing disputes existed between the parties concerning service quality, contractual obligations, and payment deductions, thus preventing the initiation of insolvency proceedings.
ETSL had approached the NCLT seeking to initiate Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC), claiming operational dues of approximately Rs 7.09 crore. These dues stemmed from a bus operators agreement signed on January 15, 2016, wherein ETSL was contracted to provide 100 low-floor AC CNG buses. ETSL alleged that NMRC failed to make payments for invoices raised between April 25, 2019, and March 16, 2020, and did not respond to requests for deploying the remaining 50 buses.
NMRC, represented by Senior Advocate Sunil Fernandes and advocates Abhishek Prasad and Kaushlendra Nath Singh, defended the petition by arguing that no payment default had occurred under the IBC. They contended that ETSL had repeatedly failed to meet contractual specifications, citing multiple breaches communicated through show-cause notices. These notices, which highlighted issues such as malfunctioning GPS systems, defective ramps, route deviations, and lapses in statutory compliances, were also presented to the Allahabad High Court in a dismissed writ petition filed by ETSL.
The NCLT bench, comprising members Ashish Verma and Praveen Gupta, agreed with NMRC's defense. The tribunal noted that the dispute involved substantial disagreements beyond mere non-payment, including service standards and penalty deductions. Citing the Supreme Court's ruling in Mobilox Innovations Pvt Ltd vs Kirusa Software Pvt Ltd, the NCLT reiterated that insolvency applications are inadmissible if a real and bona fide dispute predates the demand notice. Consequently, the application was dismissed.