TVS Supply settles loan dispute
TVS Supply Chain Solutions has settled its debt dispute with ZTE Telecom India and withdrawn its appeal in NCLAT against the order dismissing insolvency proceedings against the telecom gear maker.
Earlier this week, counsel for TVS Supply Chain informed the National Company Law Appellate Tribunal (NCLAT) about the settlement and requested to withdraw the appeal.
A two-member NCLAT bench comprising Chairman Justice Ashok Bhushan and Member (Technical) Barun Mitra allowed withdrawal of the petition.
“Counsel for the appellant (TVS) submits that the matter has been settled between both the parties and he may be allowed to withdraw this appeal. Permission is granted,” the NCLAT said.
In October last year, the Chandigarh-based bench of the National Company Law Tribunal (NCLT) had dismissed the insolvency petition filed by TVS Supply Chain after noting the pre-existing dispute between the parties.
NCLT, in its order, had said that the debt claimed by TVS Supply Chain is in dispute since 2017 and is subject to reconciliation.
TVS Supply Chain Solutions, formerly known as TVS Logistics Services, had moved the NCLT claiming default of Rs 4.27 crore from ZTE by filing a petition under Section 9 of the Insolvency and Bankruptcy Code. This dispute is from the period from June 2012 to February 2019.
ZTE, a telecom equipment supplier to companies like Reliance, Tata, Aircel and BSNL, had entered into two master service agreements (MSAs) with TVS Supply Chain.
According to the MSA, TVS supply chain used to issue invoices at regular intervals, which were required to be paid within 30 days of issuing the invoice.
However, TVS Supply Chain alleged that ZTE generally either made partial payment against the invoices or delayed payment under the pretext that the invoices were not satisfactory, and that certain amounts remained due and payable at all times since 2012.
As of September 2015, an amount of Rs 7.04 crore was outstanding for payment by ZTE for various projects.
However, ZTE had sent an audit query on the bills, and was contesting discrepancies in earlier invoices. Later, some emails were exchanged between the parties.
Ultimately, on January 29, 2018, ZTE wrote a letter to TVS, in which it said there were alleged discrepancies in TVS’s invoices amounting to Rs 5.60 crore.
However, ZTE did not share any supporting documents.
On July 9, 2018, TVS issued a demand notice under Section 8 of the IBC, demanding payment of Rs 4.27 crore as principal and interest at the rate of 12 per cent per annum. In its response, ZTE argued there was a pre-existing dispute, accusing TVS of paying additional amounts.
Later, on May 7, 2019, TVS filed a bankruptcy petition against ZTE in NCLT.
The NCLT observed that the case involved multiple reconciliations and audit objections before the statutory demand notice. NCLT rejected TVS’s plea saying that ZTE never accepted the loan.
