NCLT Bengaluru Dismisses Insolvency Plea By Operational Creditor Against Wipro Over Pre-Existing Dispute

The National Company Law Tribunal (NCLT) at Bengaluru on Wednesday dismissed an insolvency petition filed against Wipro Ltd, holding that a pre-existing dispute regarding the supply and quality of biometric devices barred initiation of the Corporate Insolvency Resolution Process.

A coram of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada held that insolvency proceedings cannot be invoked as a substitute for recovery of disputed contractual claims.

“The insolvency framework is not intended to be used as a substitute for recovery of disputed contractual claims,” the tribunal emphasised.

The petition was filed by Biomatiques Identification Solutions Pvt Ltd alleging default of Rs 6.36 crore arising from the supply of IRIS biometric devices to Wipro Ltd.

Biomatiques contended that the devices were supplied, accepted, and partially paid for, but a substantial amount remained outstanding despite repeated demands.

Wipro opposed the petition, stating that payments were on a back-to-back basis and contingent upon receipt of funds from the end customer, APTS. It further stated that complaints regarding defective devices led to partial cancellation of purchase orders and withholding of payments by APTS.

The Tribunal observed that there were discussions between the parties regarding the return and replacement of certain devices as well as the impact of issues raised by APTS.

“These documents sufficiently demonstrate that dispute regarding the quality and functionality of the devices existed between the parties much prior to the issuance of the demand notice dated 12.03.2019,” it noted.

The tribunal held that the dispute involved contractual obligations, quality of goods and payment terms, which require detailed adjudication and cannot be determined in summary proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016.

“The existence of such arbitration clauses further indicates that the disputes between the parties arise out of contractual obligations and are capable of adjudication through appropriate proceedings,” the tribunal observed.

Holding that a pre-existing dispute existed between the parties, the tribunal dismissed the insolvency petition and clarified that the order would not preclude the parties from pursuing other remedies available to them in accordance with law.

For Petitioner: Advocates Aditi Avashia and Natasha Dhruman Shah

For Respondent: Advocate Lomesh Kiran