New Delhi [India], October 30 (ANI): The National Company Law Appellate Tribunal (NCLAT) has set aside the insolvency proceedings initiated against Polycab India Limited over an alleged operational debt of Rs 2.78 crore, directing that the company be released from the Corporate Insolvency Resolution Process (CIRP) and allowed to function independently through its board of directors with immediate effect.
A three-member bench headed by Officiating Chairperson Justice Yogesh Khanna, along with Technical Members Barun Mitra and Ajai Das Mehrotra, allowed an appeal filed by Polycab's suspended director Bharat Ajay Jaisinghani and set aside the October 7 order of the National Company Law Tribunal (NCLT), Ahmedabad, which had admitted an insolvency petition filed by Asier Metals Private Limited.
The appellate tribunal also set aside the orders passed by the NCLT initiating CIRP against Polycab and all consequential orders.
The dispute arose from business transactions between Polycab and Asier Metals concerning the supply of non-ferrous metal ingots. Asier Metals had claimed outstanding operational dues of approximately Rs 2.78 crore, alleging that Polycab had made payments lower than the invoiced amounts.
However, Polycab disputed the claim, contending that several issues relating to credit notes, discounts, detention and demurrage charges, provisional billing and reconciliation of accounts remained unresolved between the parties.
Setting aside the insolvency admission, the NCLAT held that the NCLT had failed to properly examine the contemporaneous correspondence exchanged between the parties before the issuance of the statutory demand notice.
The tribunal observed that the communications demonstrated the existence of a genuine pre-existing dispute concerning credit notes, detention and demurrage charges and reconciliation of accounts, which required further examination.
"The disputes in the given factual matrix cannot be viewed as a patently feeble legal argument or an assertion of fact unsupported by evidence," the tribunal observed.
The NCLAT noted that Polycab had issued a communication on January 19, 2026, seeking deduction of Rs 80 lakh towards detention charges from the payment. Asier Metals had assured the company that the adjustment would be made.
It further referred to email exchanges in February 2026, wherein Polycab raised concerns over delayed delivery of ingots and the resulting commercial losses. Asier Metals had responded that detention and demurrage charges would be worked out and resolved in the current supplies.
The tribunal also took note of WhatsApp exchanges in June and July 2026, in which Polycab repeatedly sought credit notes towards detention and demurrage charges and premium discounts, besides requesting reconciliation of accounts.
Significantly, the NCLAT referred to an email dated July 22, 2026, sent by Polycab to Asier Metals, disputing the outstanding amount and stating that certain mutually agreed credit notes were still pending issuance.
Polycab had also sought a credit note of Rs 80 lakh towards detention and demurrage charges and requested reconciliation of the ledgers to settle the outstanding balances.
The tribunal observed that these communications clearly established that the dispute over credit notes and other adjustments continued between the parties until July 2026, before the operational creditor issued its demand notice on August 6, 2026.
It also rejected the reasoning that Polycab could not rely on its detailed response to the demand notice as it had been filed after Asier Metals initiated insolvency proceedings.
The tribunal noted that although Polycab had initially sent a holding response on August 19, 2026, stating that nothing in the demand notice should be treated as admitted, its detailed reply followed on September 2, 2026.
Asier Metals had filed its Section 9 insolvency petition on August 24, 2026.
Relying on earlier judicial precedents, the NCLAT held that even if a corporate debtor does not submit a detailed reply within the prescribed 10-day period under Section 8 of the Insolvency and Bankruptcy Code, it is not precluded from placing material before the adjudicating authority to establish the existence of a pre-existing dispute.
The tribunal reiterated the Supreme Court's ruling in Mobilox Innovations Pvt Ltd vs Kirusa Software Pvt Ltd, observing that the adjudicating authority is required to examine whether a plausible dispute exists and whether it requires further investigation, rather than determine whether the defence is ultimately likely to succeed.
It also relied on the Supreme Court's judgment in Rajratan Babulal Agarwal vs Solartex India Pvt Ltd, which cautioned against exceeding the limited scope of examination at the stage of determining the existence of a pre-existing dispute under the IBC.
The NCLAT held that the NCLT had brushed aside the correspondence without undertaking the necessary analysis and had erroneously concluded that no pre-existing dispute existed between the parties.
Senior Advocate Arun Kathpalia and advocate Anuj Tiwari appeared for Polycab. Senior Advocate Krishnendu Datta represented Asier Metals. (ANI)
NCLAT sets aside Polycab’s insolvency proceedings, allows company to function independently through Board of Directors
