TVS Supply Chain Settles Debt Row with ZTE Telecom India, Withdraws NCLAT Appeal

New Delhi: TVS Supply Chain Solutions has put an end to its prolonged financial dispute with ZTE Telecom India by reaching a settlement and formally withdrawing its appeal before the National Company Law Appellate Tribunal (NCLAT). The withdrawal brings to a close a legal battle that had its roots in unpaid invoices stretching back more than a decade.

Earlier this week, counsel representing TVS Supply Chain informed the NCLAT bench about the out-of-court settlement and sought permission to withdraw the appeal. A two-member bench, comprising Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra, granted the request without objection.

"Counsel for the appellant (TVS) submits that the matter has been settled between the parties and he may be permitted to withdraw this appeal. Permission is granted," the tribunal stated in its order.

The case traces its origins to a commercial arrangement between TVS Supply Chain Solutions — formerly known as TVS Logistics Services — and ZTE Telecom India. The two companies had entered into two Master Service Agreements (MSAs) under which TVS Supply Chain provided logistics and supply chain services to ZTE, raising invoices at regular intervals that were contractually payable within 30 days.

However, TVS alleged that ZTE consistently failed to honor those payment terms. According to TVS Supply Chain, ZTE either made partial payments against raised invoices or delayed payments entirely, citing dissatisfaction with invoice quality. As a result, TVS claimed that certain amounts remained continuously outstanding since as far back as 2012. By September 2015, the total outstanding amount had grown to Rs 7.04 crore across multiple projects.

The situation became more complicated when ZTE raised an audit query over the billing, contending discrepancies in earlier invoices. A series of emails were exchanged between the two parties as they attempted to resolve the differences.

Then, on January 29, 2018, ZTE sent a formal letter to TVS claiming purported discrepancies in invoices to the tune of Rs 5.60 crore — though the company did not provide any supporting documents to substantiate this claim.

After efforts at reconciliation failed to produce results, TVS Supply Chain issued a demand notice on July 9, 2018, under Section 8 of the Insolvency and Bankruptcy Code (IBC), demanding payment of Rs 4.27 crore as the principal amount along with interest at 12 per cent per annum. ZTE responded by contending a pre-existing dispute, alleging that excess amounts had already been paid to TVS.

Undeterred, TVS Supply Chain escalated the matter legally by filing an insolvency petition against ZTE before the NCLT on May 7, 2019, under Section 9 of the IBC. The petition covered the dispute period from June 2012 to February 2019.

In October last year, a Chandigarh-based bench of the National Company Law Tribunal dismissed TVS Supply Chain's insolvency plea, observing that a pre-existing dispute existed between the parties that predated the statutory demand notice. The NCLT noted that the debt claimed by TVS had never been formally admitted by ZTE and that the matter had been under reconciliation since 2017, involving multiple audit objections and reconciliation exercises. These factors, the tribunal held, disqualified the case from being admitted as an insolvency proceeding.

TVS Supply Chain then challenged the NCLT's dismissal by filing an appeal before the NCLAT. However, with a settlement now having been reached between the parties, that appeal has been withdrawn, effectively closing the chapter on what had been a contentious and drawn-out dispute.

ZTE Telecom India is a subsidiary of Chinese telecom giant ZTE Corporation and has been a supplier of telecom equipment and infrastructure to major Indian telecom operators including Reliance, Tata, Aircel, and BSNL. TVS Supply Chain Solutions, part of the TVS Group, is one of India's leading integrated supply chain service providers, offering services ranging from warehousing and distribution to freight and value-added logistics.