NCLAT New Delhi Rejects Pre-Existing Dispute Defence, Restores Ingram Micro Insolvency Plea

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 21 May held that counterclaims relating to unrelated transactions cannot constitute a genuine pre-existing dispute under the Mobilox test and cannot defeat an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC).

Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra set aside the National Company Law Tribunal (NCLT), Delhi order rejecting Ingram Micro India Private Limited's Section 9 application against Bathla Teletech Pvt. Ltd. and directed that it be given an opportunity to settle the dues. The Bench observed:

“The sequence of events and facts brought on the record in the proceeding under Section 9 clearly indicated that Appellant has successfully proved existence of debt and default committed by Corporate Debtor. Rejection of the Section 9 application on the ground that there is pre-existing dispute is unsustainable.”

Ingram Micro India Private Limited supplied iPhones and iPads worth Rs. 7.33 crore to Bathla Teletech between 3 March 2021 and 16 March 2021. Bathla Teletech accepted the supplies without protest, and the invoices provided payment terms of 21–30 days.

When Bathla Teletech failed to clear the dues, Ingram invoked bank guarantees worth Rs. 2 crore towards part payment of the outstanding amount. It later received two post-dated cheques totalling Rs. 5.39 crore, which were dishonoured on 28 May 2021 with the remark “Payment Stopped by Drawer.” Ingram issued a notice under Section 138 of the Negotiable Instruments Act, 1881.

In its reply dated 21 June 2021, Bathla Teletech asserted a right to return unsold iPhone 8 inventory purchased in 2018 and claimed backend discounts allegedly due under its arrangement with Apple India Pvt. Ltd. It raised counterclaims amounting to Rs. 7.05 crore and initiated arbitration proceedings against Apple India, initially impleading Ingram Micro, which the Delhi High Court later deleted from the proceedings.

Ingram issued a demand notice under Section 8 of the IBC and filed a Section 9 application before the NCLT on 24 September 2021. The NCLT rejected the application, holding that a pre-existing dispute existed.

In appeal, Ingram Micro contended that no dispute existed regarding the invoices raised between 3 March 2021 and 16 March 2021, which Bathla Teletech accepted without protest. It further argued that invocation of bank guarantees and issuance of post-dated cheques amounted to clear acknowledgment of liability. It submitted that counterclaims relating to 2018 inventory and alleged backend discounts constituted moonshine defences unrelated to the transaction in question.

Bathla Teletech opposed the appeal and argued that a pre-existing dispute existed prior to the issuance of the demand notice. It relied on a Local Commissioner's report stating that 562 devices were inoperative and contended that Ingram Micro attempted to misuse the IBC as a recovery mechanism. It also argued that the application was barred under Section 10A of the IBC.

The NCLAT applied the test laid down by the Supreme Court in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, which requires that a dispute must be genuine, pre-existing, and not spurious, illusory, or a mere assertion.

The Tribunal held that contemporaneous emails exchanged in May 2021 showed Bathla Teletech acknowledging its liability and assuring payment after relaxation of lockdown restrictions. It treated issuance of post-dated cheques as an acknowledgment of debt.

It further held that Bathla Teletech's counterclaims relating to iPhone 8 inventory supplied in 2018 and alleged backend discounts under Apple's reseller arrangement were wholly unconnected with the invoices forming the basis of the Section 9 application. It also noted that the Local Commissioner's report was not part of the NCLT record and that reliance on arbitration proceedings involving Apple India was misplaced, as Ingram was not a party.

Accordingly, the NCLAT allowed the appeal, set aside the NCLT order, and permitted Bathla Teletech to settle the outstanding dues. It directed that, failing settlement, the NCLT may proceed to admit the CIRP against the corporate debtor.

For Appellants: Senior Advocate Krishnendu Dutta with Advocates Sudhir Kumar, Anand Shankar Jha, Sumeet Vankadkar, Niharika Sharma, Siddharth Kumar and Abhilekh Tiwari

For Respondents: Advocates Bhavya Sethi, Manish Gupta, Apurva A and Karthik KR