NCLT Dismisses ETSL Insolvency Plea Against Noida Metro Over Pre-Existing Disputes

The National Company Law Tribunal (NCLT), Allahabad Bench, has dismissed an insolvency petition filed by Empire Transport Services Ltd (ETSL) against Noida Metro Rail Corporation (NMRC), citing “genuine” pre-existing disputes over service quality, contractual obligations, and payment deductions.

ETSL had sought initiation of a Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC).

ETSL claimed operational dues of approximately Rs 7.09 crore arising from a bus operations agreement signed on January 15, 2016, to run 100 low-floor AC CNG buses in Noida, Greater Noida, and connecting routes.

However, only 50 buses were deployed. ETSL alleged that NMRC failed to respond to requests for the remaining buses and did not release payments for invoices raised between April 2019 and March 2020.

NMRC defended the petition, arguing that ETSL repeatedly failed to meet contractual specifications and committed multiple breaches, including malfunctioning GPS systems, defective handicap ramps, cracked windshields, route deviations, inadequate fleet deployment, air-conditioning issues, and lapses in statutory compliance such as EPF and ESI.

The corporation had issued several show-cause notices, some of which were reviewed by the Allahabad High Court, which dismissed a related writ petition in July 2021, after which arbitration proceedings were initiated.

The two-member NCLT bench, comprising Ashish Verma and Praveen Gupta, observed that the dispute extended beyond non-payment and involved substantial disagreements over service standards, performance, penalty deductions, and account reconciliation.

Relying on the Supreme Court ruling in Mobilox Innovations Pvt Ltd vs Kirusa Software Pvt Ltd, the tribunal reiterated that insolvency applications cannot be admitted if bona fide disputes exist prior to the demand notice.

Given the pre-existing disagreements under Section 5(6) of the IBC, the bench concluded that ETSL’s petition did not merit admission and was therefore dismissed.