The National Company Law Tribunal (NCLT) on May 29 dismissed an insolvency plea by DHL Supply Chain Limited against Royal Enfield bicycle maker Eicher Motors Limited over some unpaid dues.

DHL filed for insolvency plea in 2022, claiming that Eicher failed to pay dues worth Rs 8.3 crore under the terms of a service agreement signed between the parties in August 2019 for a warehouse to store certain goods. Under the terms of the agreement, the lock-in period is three years, from October 2019 to October 2022, without termination.

According to DHL, Eicher has hired its service to use its warehouses to store genuine motorcycle accessories and clothing. However, the two-wheeler maker later wanted to use it to store bikes and spare parts. DHL claims Eicher did not use the warehouse to store the bikes and decided to terminate the agreement in February 2021. DHL said it had written to reject the proposal to terminate the agreement because the lock-up period was still not over, but Eichel did not respond.

DHL claimed that Eicher owed Rs 8.3 crore are expenses incurred due to early termination, such as third-party logistics fees, interest and debts arising from early termination.

Eichel argued in court that there was a dispute with DHL because they had repeatedly expressed dissatisfaction with the warehouse service. The company further produced various email correspondences to the court to demonstrate that there was indeed a pre-existing dispute.

In perusing the documents, the arbitral tribunal noted that “the correspondence on record substantially demonstrates a serious dispute between the parties, each with a claim/counterclaim against the other. Respondent (Eicher) also advanced plausible arguments, this requires further investigation.”

The tribunal dismissed the insolvency application, saying it did not need to examine the merits of the dispute as long as it was satisfied that the pre-existing dispute was not false, hypothetical or imaginary.

Based on the above reasons, NCLT dismissed the insolvency petition against Eicher. However, it clarified that the content of the order should not be interpreted as an opinion on disputes between any other forums.