Tribunal says admitted principal debt and authenticated default were enough to trigger CIRP; dispute over interest raised too late to block the case
The National Company Law Tribunal (NCLT), Indore Bench, has admitted a Section 9 insolvency petition filed by Naksh Steel Limited against Auri Grow India Limited, holding that the corporate debtor’s admitted principal liability under supply invoices and authenticated default record were sufficient to commence Corporate Insolvency Resolution Process (CIRP).
The tribunal noted that Naksh Steel had supplied industrial and construction materials under a Master Supply Agreement dated December 16, 2024, and raised invoices between January 22 and January 29, 2025, totaling Rs. 78.01 crore as principal, along with interest claims taking the total operational debt to Rs. 91.82 crore. The company said the debt remained unpaid despite repeated follow-ups, issuance of post-dated cheques, and a statutory demand notice served on January 20, 2026.
Auri Grow India did not dispute the business relationship, the agreement, the supplies, or the principal amount due. Its defence was limited largely to the interest component of Rs. 13.80 crore, which it challenged on contractual and legal grounds, including the applicability of the MSMED Act and the rate of interest under the supply agreement. The corporate debtor also sought time to pay the principal in instalments, stating that it was a listed public company and a going concern.
Rejecting these objections, the NCLT held that a dispute raised for the first time in the reply to the insolvency petition, without any prior contemporaneous correspondence or supporting material, cannot be treated as a pre-existing dispute under Sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016. Relying on the Supreme Court’s ruling in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., the tribunal said it must only see whether there is a plausible dispute requiring investigation, and not a sham or moonshine defence.
The bench observed that the principal operational debt stood admitted and exceeded the statutory threshold under the Code. It further held that a unilateral offer to pay the amount in instalments does not prevent admission of a valid Section 9 petition, since the Code is not meant to be used as a recovery mechanism, but neither can a debtor avoid insolvency proceedings merely by promising future payment.
The tribunal also took note of the Record of Default issued by the Information Utility, which showed the default as “authenticated” with the date of default recorded as January 29, 2025. On that basis, it found that the existence of operational debt and default had been established.
Accordingly, the NCLT admitted CP (IB) No. 41/MP/2026, initiated CIRP against Auri Grow India Limited, and appointed Mr. Rajesh Jasti as Interim Resolution Professional. The tribunal also declared moratorium under Section 14 of the Insolvency and Bankruptcy Code, barring suits, recovery actions, and transfer of assets during the CIRP period.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Section 9 petition by Operational Creditor - Corporate Debtor admitted principal liability under invoices and disputed only interest component - Mere dispute as to interest, raised after demand notice, does not constitute a pre-existing dispute so as to defeat admission when principal operational debt is admitted and exceeds statutory threshold - Petition admitted and CIRP initiated.
Statutory provision(s): Section 5(21), Section 8, Section 9, Section 14, Section 15, Section 17, Section 18, Section 31, Section 33 of the Insolvency and Bankruptcy Code, 2016
Naksh Steel Limited v. Auri Grow India Limited, (NCLT)(Indore Bench) : Law Finder Doc id # 2987196
