NCLT admits Hero Electric to insolvency process over unpaid dues of ₹1.8 crore

The National Company Law Tribunal (NCLT) at Delhi on December 20 passed an order admitting Hero Electric to the Corporate Insolvency Resolution Process (CIRP) on a petition filed by an operational creditor called Metro Tyres over unpaid dues of ₹1.8 crore (Metro Tyres Ltd v. Hero Electric Vehicles Pvt Ltd)..A coram of Judicial Member Bachu Venkat Balram Das and Technical Member Atul Chaturvedi said, "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 petition was filed by Metro Tyres Limited over dues of ₹1,85,25,373 towards goods supplied between August and December 2022. Hero Electric contended that the petition is not maintainable due to a pre-existing dispute over the quality of the goods supplied after September 2022. According to Hero Electric, these quality issues, identified through customer feedback, justified withholding payment. Additionally, the company alleged discrepancies in account reconciliation and accused Metro Tyres of suppressing material facts and presenting incomplete or misleading documentation to the Tribunal..The Tribunal found that Hero Electric had not raised any dispute over the quality of goods until nine months after the supply. It said, "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. It is only after nine months from the last invoice, the Corporate Debtor sent an E-mail dated 09.09.2023, on the basis of field feedback received by the Corporate Debtor."It labeled Hero Electric's contention on quality of the goods supplied a 'moonshine defence' and an 'afterthought'..On the issue of accounts reconciliation, the Tribunal found that Hero Electric did not support this claim with enough evidence. It was Hero Electric's contention that it had paid ₹5 lakh in March 2023, but Metro Tyres had has only adjusted a sum of ₹4,27,698. Metro Tyres contended that it had done so in lieu of certain pre-existing dues..It thus appointed Bhoopesh Gupta as the Interim Resolution Professional (IRP) to take charge of the operations of Hero Electric till a Committee of Creditors (CoC) is formed. The IRP has been directed to make a public announcement regarding the admission of this petition within three days and will assume control over Hero Electric's assets immediately. The NCLT has further directed all officers and managers of Hero Electric to provide necessary documentation to the IRP within one week. Hero Electric has been instructed to deposit ₹2,00,000 with the IRP to cover initial expenses..Metro Tyres was represented by Advocates Pallav Saxena, Syed Arsalan, Prateek Khaitan and Chaitanya Sharma.Hero Electric was represented by Advocates Alok Dhir, Varsha Banerjee and Udita Singh..[Read order]