Case Note & Summary
The appeal was filed by the suspended director of Polycab India Limited against the order of the National Company Law Tribunal (NCLT) admitting a Section 9 petition by Asier Metals Private Limited, an operational creditor. The dispute arose from a business relationship established in December 2019 for the supply of non-ferrous metals, where the operational creditor claimed an outstanding debt of Rs. 2.78 crore. The operational creditor issued a Section 8 demand notice on 06.08.2026, to which the corporate debtor responded with a holding reply on 19.08.2026, denying the debt and asserting pre-existing disputes. The corporate debtor filed a detailed reply on 02.09.2026, after the operational creditor had already filed the Section 9 application on 24.08.2026. The NCLT admitted the application, leading to the appeal. The appellant contended that the NCLT ignored evidence of pre-existing disputes, including email communications and WhatsApp messages, which indicated ongoing negotiations and disagreements regarding payments and credit notes. The operational creditor admitted that the communications were not examined by the NCLT. The Tribunal analyzed the statutory provisions under Sections 8 and 9 of the IBC and referenced the Supreme Court's ruling in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. The Tribunal concluded that the NCLT had erred in admitting the application without properly considering the evidence of disputes, thus setting aside the impugned order and releasing the corporate debtor from the CIRP.
Headnote
A) Insolvency Law - Admission of CIRP - Pre-existing Dispute - Section 9 of the Insolvency and Bankruptcy Code, 2016 - The Adjudicating Authority erroneously admitted the Section 9 application despite the existence of pre-existing disputes evidenced by communications between the parties. The Tribunal held that the application should have been rejected as per Section 9(5)(ii)(d) due to the established disputes prior to the demand notice (Paras 29).
Issue of Consideration
Whether there were communications manifesting pre-existing disputes between the parties within the meaning of the Insolvency and Bankruptcy Code, 2016.
Final Decision
The Tribunal allowed the appeal, set aside the impugned order, and released the corporate debtor from the rigours of CIRP, allowing it to function independently through its board of directors.
Law Points
- Insolvency and Bankruptcy
- Corporate Insolvency Resolution Process
- Pre-existing Dispute
- Demand Notice
- Operational Debt
