NCLT held that the existence of a pre-existing bona fide dispute regarding the invoices precluded the initiation of a CIRP.
The National Company Law Tribunal (NCLT), Bengaluru Bench comprising Judicial Member Mr. K. Biswal and Technical Member Mr. Manoj Kumar Dubey addressed a petition and held that the existence of a pre-existing bona fide dispute regarding the invoices, evidenced by consistent objections and communications from Wipro, precluded the initiation of a Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016, as per the principles laid down in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, REEDLAW 2017 SC 09545.
The present case involved a Company Petition filed by Ivalua Inc. under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate a Corporate Insolvency Resolution Process (CIRP) against Wipro Limited for an alleged outstanding amount of Rs. 2,81,63,150.18 as of February 13, 2023. The petitioner asserted that the dues arose from services rendered under a Master Subscription Services Agreement (SSA) dated July 28, 2021, and related Order Form No. 1, which stipulated a subscription term from September 1, 2021, to August 31, 2024.
Ivalua Inc. contended that three invoices—dated September 30, 2021, September 1, 2022, and January 30, 2023—remained unpaid despite multiple attempts to recover the dues, including the issuance of a demand notice under Section 8 of the Code. The respondent, Wipro Limited, opposed the petition, arguing that no services were rendered after a proof-of-concept (PoC) period, which commenced on October 4, 2021, and concluded on November 9, 2021. Wipro maintained that it had instructed the petitioner to shut down the environment immediately following the PoC, and therefore no further services were availed.
Wipro further asserted that the petitioner improperly raised the first invoice dated September 30, 2021, despite the PoC being provided at no additional cost. Communications between the parties reportedly demonstrated Wipro’s objections to the validity of this invoice. The second and third invoices were also disputed on the ground that the agreement had been terminated by Ivalua through a notice dated July 5, 2022, citing Wipro’s alleged material breach. Wipro contended that no dues were payable after the termination of the SSA.
In response, Ivalua argued that the SSA’s survival clause ensured the enforceability of payment obligations even post-termination. The petitioner contended that Wipro’s claims of a pre-existing dispute were baseless and fabricated to evade liability. Reliance was placed on precedents to assert that mere correspondence or objections could not establish a legitimate dispute.
After examining the evidence, the National Company Law Tribunal (NCLT) found that there was sufficient material to demonstrate a pre-existing dispute between the parties, particularly concerning the first invoice dated September 30, 2021. The Tribunal noted Wipro’s consistent objections to the invoices and its reference to internal communications disputing the claimed dues. Applying the principles laid down by the Hon'ble Supreme Court in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, REEDLAW 2017 SC 09545, the Tribunal held that it need not delve into the merits of the dispute but only ascertain whether a plausible contention requiring investigation existed.
In light of the established pre-existing dispute and the need to separate genuine disagreements from spurious claims, the NCLT dismissed the petition filed by Ivalua Inc., thereby declining to initiate the CIRP against Wipro Limited.
Ms. Meena Venugopal and Shri Manohar, Advocates represented the Petitioner.
Shri Lomesh Kiran Nidumduri, Ms. Prashasthi Bhat and Ms Abhijna S., Advocates appeared the Respondent.
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