Authority: National Company Law Appellate Tribunal (NCLAT) Principal Bench, New Delhi

Order Date: 30 October 2026

Case Overview

This appeal was filed by Bharat Ajay Jaisinghani, a suspended director of Polycab India Limited (Corporate Debtor), against an order dated 07.10.2026 from the National Company Law Tribunal (NCLT), Ahmedabad Bench. The NCLT had admitted a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, filed by Asier Metals Private Limited (Operational Creditor), initiating Corporate Insolvency Resolution Process (CIRP) against Polycab India. The dispute arose from a business relationship for the supply of non-ferrous metal ingots, commencing around December 2019. The Operational Creditor claimed an outstanding operational debt of ₹2.78 Crore for supplied aluminum ingots, for which it alleged it had received only partial payments. A demand notice under Section 8 of the IBC was sent by Asier Metals on 06.08.2026. The Corporate Debtor sent a preliminary 'without prejudice' holding response on 19.08.2026, denying the debt, followed by a detailed reply on 02.09.2026. However, the Operational Creditor had already filed the Section 9 application with the NCLT on 24.08.2026. The principal dispute considered by the NCLAT was whether pre-existing disputes between the parties, evidenced by communications prior to the demand notice, were sufficient to warrant the rejection of the Section 9 application under Section 9(5)(ii)(d) of the IBC.

The Adjudicating Authority (NCLT) in its impugned order had acknowledged the existence of prior communications but concluded they pertained to older transactions and did not establish a dispute relevant to the debt in question. It held that no evidence was presented to dispute the quantity, quality, or charges for the specific supplies mentioned in the petition, and thus admitted the application.

The Appellant argued before the NCLAT that the NCLT erred by ignoring a series of contemporaneous communications, including emails and WhatsApp messages from January to July 2026. These communications explicitly raised disputes over provisional billing, pending credit notes for discounts and detention/demurrage charges, and the need for account reconciliation. A key email dated 22.07.2026 was highlighted, which directly disputed the amount claimed by Asier Metals and demanded the issuance of an ₹80 lakh credit note for agreed-upon detention charges. The Appellant contended that these communications demonstrated a plausible, pre-existing dispute that was not spurious or illusory, meeting the test established by the Supreme Court in the Mobilox Innovations case. It was also argued that Polycab India is a solvent, listed company with substantial operations.

The Respondent (Operational Creditor) conceded that the Adjudicating Authority had not examined these pre-demand notice communications.

Final Outcome

The NCLAT allowed the appeal and set aside the NCLT's impugned order. The tribunal held that the Adjudicating Authority committed a patent legal error by failing to properly examine the evidence of pre-existing disputes, which included acknowledgments and assurances from the Operational Creditor regarding the resolution of detention charges and issuance of credit notes. Applying the legal principles from Mobilox Innovations and Rajratan Babulal Agarwal judgments, the NCLAT found that the defence raised a plausible contention requiring further investigation and that the dispute was not patently feeble. Consequently, the initiation of CIRP against Polycab India Limited was declared erroneous. The company was released from the CIRP process with immediate effect, and it was permitted to revert to being managed by its board of directors. All orders consequent to the impugned order were also set aside.

Topics: Insolvency Law, Pre-Existing Dispute, Operational Debt