The National Company Law Tribunal (NCLT) on May 29 dismissed DHL Supply Chain Limited's insolvency plea against Eicher Motors limited, the manufacturer of Royal Enfield bikes, over some unpaid dues.
DHL had filed the insolvency plea in 2022, claiming that Eicher had not paid dues worth Rs. 8.3 crore in accordance to the terms of the service agreement the two parties entered into in August 2019, regarding warehouse for storing certain goods. As per the terms of the agreement, there was a three year lock-in period effective from October 2019 to October 2022, wherein it could not be terminated.
The background
According to DHL, Eicher had engaged its services to use its warehouse for storing genuine motorbike accessories and apparels. However, the two-wheeler maker later wanted to use it to store bikes and spare parts. DHL claimed that Eicher did not use the warehouse for storing bikes either, and decided to terminate the agreement in February 2021. DHL said it wrote a communication rejecting the proposal to terminate the agreement on the ground that the lock-in period was still not over but Eicher did not respond.
DHL claimed that Eicher owed it Rs. 8.3 crore as a result of the premature termination, with the costs incurring under various heads such as third party logistics charge, interest, and debt on account of the premature termination.
Eicher argued in the tribunal that there was a pre-existing dispute with DHL as they had on many occasions expressed their dissatisfaction about the warehouse service. The company further showed various email exchanges to the tribunal to prove that there was indeed a pre-existing dispute.
Grounds for rejection
The tribunal, on perusing the documents, noted that "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 (Eicher) too has raised plausible contentions, which require further investigation."
The tribunal rejected the application for insolvency and stated there was no need to examine the merits of the dispute as long as it is satisfied that the pre-existing dispute is not spurious, hypothetical, or illusory.
The NCLT on the above grounds rejected the plea for insolvency against Eicher. It, however, clarified that the contents of the order should not construed as an opinion on dispute between any other forum.
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