The NCLAT has set aside initiation of insolvency proceedings against Polycab India Limited over a dispute involving ₹2.78 crore in alleged operational dues. The decision underscores scrutiny of operational creditor claims under IBC.
NCLAT Sets Aside Insolvency Proceedings Against Polycab
The National Company Law Appellate Tribunal (NCLAT) on Friday set aside the initiation of insolvency proceedings against cable manufacturer Polycab India Limited in connection with a disputed claim of ₹2.78 crore in operational dues by Asier Metals Private Limited. A bench comprising officiating Chairperson Justice Yogesh Khanna and technical members Barun Mitra and Ajai Das Mehrotra allowed the appeal filed by Bharat Ajay Jaisinghani, a suspended director of Polycab.
The tribunal held that the impugned order admitting the insolvency application failed to consider material contradictions in the creditor’s claim and documentation. The NCLAT emphasized that under Section 9 of the Insolvency and Bankruptcy Code, 2016, an operational creditor must establish a 'debt' and 'default' with documentary evidence. The bench found that Asier Metals failed to produce a contractual or statutory basis for the claimed amount, and no invoice or notice under Section 8 was properly served.
The ruling reaffirms the NCLAT’s strict approach to procedural compliance in IBC proceedings. For practitioners, it underscores the need for operational creditors to substantiate claims with contemporaneous records. The decision may also impact corporate strategy in defending against frivolous or exaggerated claims aimed at initiating coercive proceedings.
