Tribunal holds no legally sufficient pre-existing dispute in Rs. 2.78 crore claim by Asier Metals Private Limited for Aluminium Ingots supply; Interim Resolution Professional appointed and moratorium declared.
In a significant ruling on 7th October 2026, the National Company Law Tribunal (NCLT), Ahmedabad Divisional Bench, comprising Mr. Shammi Khan (Member Judicial) and Mr. Sanjeev Sharma (Member Technical), admitted a petition filed by Asier Metals Private Limited against Polycab India Limited under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. The petition seeks initiation of Corporate Insolvency Resolution Process (CIRP) for an alleged operational debt amounting to Rs. 2,78,70,157.22, arising from supply of Aluminium Ingots.
The Operational Creditor, Asier Metals, contended that the Corporate Debtor, Polycab India Limited, had defaulted in payment despite receipt of goods pursuant to firm purchase orders at a fixed rate of Rs. 405 per kg. The claim included adjustments for payments made, refunds of advance, and credit notes issued by the Operational Creditor itself. The Corporate Debtor disputed the claim on grounds of provisional billing, pending reconciliation, credit notes, quantity discounts, detention and demurrage charges, and raised counterclaims exceeding Rs. 17 crore, asserting a genuine pre-existing dispute.
The Tribunal meticulously examined voluminous records including purchase orders, invoices, e-way bills, GST returns, ledger accounts, emails, and correspondence exchanged between parties prior to the demand notice. It was noted that purchase orders clearly stipulated a fixed and firm price with 100% advance payment terms, which Polycab failed to adhere to from March 2026 onwards. Substantial payments were made by Polycab, but a balance remained unpaid as per the Operational Creditor's calculations.
Addressing the issue of pre-existing dispute, the Tribunal applied the benchmark set by the Supreme Court in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. (2018), which requires that a dispute must be a plausible contention supported by evidence and must have existed prior to the issuance of the statutory demand notice. The Tribunal observed that the Corporate Debtor's defenses concerning provisional billing and reconciliation were unsupported by any final invoice or debit note, and that the credit notes cited had already been accounted for in the Operational Creditor's claim. Further, the Corporate Debtor's reliance on documents and WhatsApp communications did not establish a final or crystallized dispute before the demand notice.
The Tribunal rejected the Corporate Debtor's contention that the Operational Creditor was acting merely as a clearing agent, highlighting that purchase orders were issued directly to the Operational Creditor and payments were made to it. The plea of an Rs. 80 lakh detention/demurrage credit was also dismissed due to lack of contemporaneous evidence and clear agreement.
Consequently, the Tribunal held that the operational debt was due and payable, default had occurred, and no legally sufficient pre-existing dispute was established to bar the admission of the petition under Section 9(5)(ii)(d). The petition was admitted, and the Corporate Insolvency Resolution Process was initiated against Polycab India Limited.
In exercise of its powers under Section 14 of the IBC, the Tribunal declared a moratorium prohibiting institution or continuation of suits or proceedings against the Corporate Debtor, transfer or disposal of its assets, recovery actions, and other related activities, with exceptions as notified by the Central Government.
Since the Operational Creditor had not proposed an Interim Resolution Professional (IRP), the Tribunal appointed Mr. Sunit Jagdishchandra Shah as the IRP to conduct the CIRP in accordance with the Code and relevant regulations. The IRP is directed to take control of the Corporate Debtor's assets and documents and make public announcements inviting claims.
The Tribunal further directed the Operational Creditor to pay Rs. 5 lakh as advance to the IRP for initial costs of the CIRP. The Registrar of Companies was directed to update the Corporate Debtor's status on the MCA portal to reflect the initiation of CIRP.
This order underscores the Tribunal's approach to Section 9 petitions, emphasizing that mere assertions of reconciliation and provisional billing do not amount to a real pre-existing dispute if unsupported by substantive evidence. The judgment reiterates that IBC proceedings cannot be thwarted by illusory or unsupported defenses, thereby strengthening the efficacy of insolvency mechanisms for operational creditors.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 Section 9 petition by Operational Creditor admitted - Mere plea of reconciliation, provisional billing, credit notes and detention/demurrage adjustment, without any real contemporaneous dispute as to quantity, quality or liability and without debit note or supporting material, does not amount to a legally sufficient pre-existing dispute - IBC cannot be defeated by unsupported or illusory defence.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 5(6), 5(21), 8, 9, 9(3)(b), 9(5), 13(1)(b), 13(1)(c), 14, Companies Act, 2013 (relevant provisions for incorporation and board resolution), Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 Rule 6, IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Regulation 6(2), Regulation 33(1), Regulation 33(3).
