Polycab Wins Legal Battle: NCLAT Quashes Insolvency Proceedings
NCLAT sets aside insolvency proceedings against Polycab India Ltd over a Rs 2.78 crore debt, citing a genuine pre-existing dispute.
In a significant legal victory, the National Company Law Appellate Tribunal (NCLAT) has set aside the insolvency proceedings initiated against Polycab India Limited. The appellate tribunal has ordered the company's immediate release from the Corporate Insolvency Resolution Process (CIRP), allowing it to resume independent operations through its Board of Directors.
The Core of the Conflict
The legal turmoil began when Asier Metals Private Limited filed an insolvency petition claiming an operational debt of approximately Rs 2.78 crore. The dispute centered on business transactions involving the supply of non-ferrous metal ingots. Asier Metals alleged that Polycab had failed to pay the full invoiced amounts, leading the National Company Law Tribunal (NCLT) in Ahmedabad to admit the insolvency petition on October 7.
However, Polycab challenged this move, arguing that the debt was not undisputed. The company contended that there were several unresolved issues, including:
- Pending credit notes and premium discounts.
- Detention and demurrage charges.
- Provisional billing discrepancies.
- The need for a comprehensive reconciliation of accounts.
NCLAT's Critical Findings
A three-member bench, led by Officiating Chairperson Justice Yogesh Khanna and Technical Members Barun Mitra and Ajai Das Mehrotra, overturned the NCLT's decision. The NCLAT ruled that the lower tribunal had failed to properly analyze the correspondence between the two companies prior to the issuance of the statutory demand notice.
The appellate tribunal observed that the evidence pointed toward a "genuine pre-existing dispute," stating that Polycab's arguments were not merely feeble legal claims but were supported by factual evidence.
The Paper Trail of Disputes
The NCLAT highlighted a series of communications that proved the dispute existed long before the insolvency petition was filed:
- January 19, 2026: Polycab sought a deduction of Rs 80 lakh for detention charges, which Asier Metals had reportedly agreed to adjust.
- February 2026: Emails revealed Polycab's concerns over delayed ingot deliveries and subsequent commercial losses, with Asier Metals promising to resolve demurrage charges in current supplies.
- June and July 2026: WhatsApp exchanges showed Polycab repeatedly requesting credit notes and account reconciliation.
- July 22, 2026: An email sent by Polycab explicitly disputed the outstanding amount and reminded Asier Metals of pending credit notes.
Timing and Legal Precedence
The tribunal noted that these disputes were active until July 2026, just before Asier Metals issued the demand notice on August 6, 2026. The NCLAT also dismissed the argument that Polycab's detailed response to the demand notice—sent on September 2, 2026—was irrelevant because it arrived after the insolvency petition was filed on August 24.
By setting aside the CIRP and all consequential orders, the NCLAT has restored the governance of Polycab India Limited to its suspended directors and the board, effectively ending the threat of forced insolvency over this specific operational debt.