NCLAT stays insolvency proceedings against HCL Tech

NCLAT stays insolvency proceedings against HCL Tech

In a major relief to the IT services company, HCL Technologies, the National Company Law Appellate Tribunal NCLAT stayed the order passed by the National Company Law Tribunal NCLT on January 17,2022, which had ordered the initiation of insolvency proceedings against the tech giant.

The NCLAT observed that the NCLT's observation to decide the dispute between the parties like a civil court shouldn't have been done. The next hearing date is set for February 16th, 2022, which is the next date of the hearing, while the appellate tribunal grants interim relief to HCL Tech.

On January 17th, the National Company Law Tribunal NCLT passed an injunction to start a corporate insolvency resolution proceeding against India's fourth largest IT services company, HCL Technologies, with respect to alleged default of payments worth Rs 3.54 crore to a transport company, Sahaj Bharti Travels.

The two parties had entered a service agreement on November 19, 2015, for a period of three years. The transport company claims that HCL Tech has defaulted on its payments under the minimum guarantee clause of the agreement, amounting to Rs 3.54 crore.

The transport firm applied to initiate insolvency proceedings against HCL Tech under Insolvency Bankruptcy Code IBC NCLT on January 17th, 2019 and appointed an Insolvency Resolution Professional IRP to take over the functions of HCL Tech with immediate suspension of the company's board.

This NCLT order was stayed by NCLAT. The NCLAT order copy was seen by BT.

The NCLAT ordered that the bench led by Judge Ashok Bhushan has looked at the email exchanges between the two parties HCL Tech and Sahaj Bharti and the denial of payment claims by HCL Tech, which shows that there was a genuine dispute between the two parties over the settlement of alleged debt of Rs 3,54, 10,565 Rs 3.54 crore that HCL Tech had submitted to the NCLAT.

In its submission to the NCLAT, HCL Tech said that it did not make payments with respect to claims where no invoices were raised, because the conditions of the agreement under the minimum guarantee clause were violated by Sahaj Bharti Travels.

On August 6, 2019, Delhi-based lawyer Pragyan Sharma, along with advocates Mohit Arora and Paramanand Yadav, had submitted an application to the NCLT on behalf of Sahaj Bharti.

As regards to the non-issuance of invoices, the agreement had already decided the payment of minimum guarantees, so the transport firm was not obliged to raise new invoices, as per HCL Tech's claims before the NCLAT.

He said that HCL Tech had offered to pay a full and final settlement of Rs 20,58, 818 against the pending dues, which was rejected by his client, Sahaj Bharti Travels.