4. The NCLAT, in Sterling and Wilson Private Limited v. Embassy Energy Private Limited (Comp. App. (AT) (CH) (Ins.) No. 161 of 2022), held that where the agreement between the principal employer and the contractor specified that a sub-contractor of the contractor would not have any contractual relationship with the principal employer and would not be entitled to prefer any claims against the principal employer, a sub-contractor who is not a party to the principal agreement would not be entitled to maintain a claim for recovery of unpaid dues on the basis of a letter of comfort issued by the principal employer in favour of the sub-contractor, agreeing therein to directly pay the sub-contractor any amount remaining due from the contractor.
The NCLAT further noted that the scope and objective of the Code is not to send a commercially solvent company, like the corporate debtor, to insolvency and on basis the above the NCLAT rejected the appeal.
Source: Barandbench
