In its December 20 order, the Delhi bench of the NCLT stated that Hero Electric had not successfully established the existence of any pre-dispute with Metro Tyres. “In the facts and circumstances of the instant case, we are of the view that the Corporate Debtor has not been able to raise a plausible contention regarding the pre-existence of ‘dispute’ between the parties. Hence, the present petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 ought to be admitted,” the tribunal noted.
Metro Tyres had supplied goods to Hero Electric worth ₹3.69 crore, out of which ₹4.27 lakh was paid. Despite repeated follow-ups, ₹1.85 crore remained unpaid. Hero Electric claimed it withheld payments due to alleged defects in the supplied tyres and tubes, including issues like tread separation, bubbles, and air leakage. However, the tribunal found that Hero Electric raised these quality concerns only nine months after the last consignment was delivered.
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The tribunal emphasised that Hero Electric had failed to notify Metro Tyres of any issues at the time of supply or during its internal quality control processes. It observed: “It is amply clear from the records that the Corporate Debtor (Hero Electric), being the purchaser of goods, never raised any quality issue or any sort of dispute in any manner whatsoever as per their own inspection/quality control policies immediately after the receipt of the goods and continued to purchase goods.”
Hero Electric also argued that there were discrepancies in account reconciliation and claimed to have made a payment of ₹5 lakh in March 2023, which Metro Tyres allegedly did not account for. However, the tribunal found these claims unsupported by adequate evidence.
The tribunal dismissed Hero Electric’s arguments as a “moonshine defence” and an afterthought, pointing out that the company’s user manuals and warranty policies explicitly excluded tyres and tubes from warranty coverage.
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The NCLT appointed Bhoopesh Gupta as the Interim Resolution Professional (IRP) to oversee Hero Electric’s operations during the insolvency process. The company’s board has been suspended, and a moratorium has been declared, barring the transfer, encumbrance, or disposal of Hero Electric’s assets.
Hero Electric has been instructed to deposit ₹2 lakh with the IRP for initial expenses and provide all necessary documentation within a week. The IRP has been tasked with making a public announcement of the insolvency process within three days and forming a Committee of Creditors.
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First Published: Dec 27, 2024 6:11 PM IST
