NCLT Hyderabad Dismisses Insolvency Plea Against Steel Exchange India Over Pre-Existing Dispute
The National Company Law Tribunal (NCLT), Hyderabad Bench, has dismissed an insolvency petition filed by Shakti International LLP against Steel Exchange India Limited, holding that the claimed operational debt of Rs. 162.57 crore was not maintainable due to a bona fide pre-existing dispute over delayed/extension charges.
The order was passed by a bench comprising Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri under Section 9 of the Insolvency and Bankruptcy Code. The tribunal observed:
“We are also unable, at this stage, to conclusively accept the Operational Creditor's submission that the delayed / extension charges by themselves constitute an admitted and undisputed “operational debt” under Section 5(21).”
The dispute arose from a Master Supply Agreement dated September 29, 2016 and subsequent agreements, under which steel rebars were supplied. Shakti International LLP, the operational creditor alleged delayed payments between January and March 2018, leading to accrual of extension charges, and issued a demand notice on December 9, 2024 claiming Rs. 162.57 crore.
The corporate debtor disputed these charges, stating they were not reflected in invoices or ledger records and were based on a unilateral calculation.
Rejecting the debtor's defence, the tribunal observed that the claim for delayed and extension charges remained unascertained, was unsupported by contemporaneous financial records, lacked reconciliation with discharged principal amounts, and was based only on a unilateral calculation sheet without backing from invoices, ledgers or debit notes. The tribunal said:
“Applying this principle, it is seen that, in the present case, a bona fide and pre-existing dispute exists between the parties. The claim for delayed and extension charges remains unascertained, unsupported by contemporaneous financial records, and lacks clear reconciliation with the principal amounts already discharged. No prior ledger, invoice, debit note, or account extract has been produced to establish that such charges were consistently levied in the ordinary course of dealings, and the claim rests only on a unilateral calculation sheet prepared for these proceedings.”
Accordingly, the tribunal dismissed the petition, granting liberty to the operational creditor to pursue other remedies in accordance with law.
For Applicant: Advocates S. K. Srivastava, Vimal Varma Vasi Reddy, U. Naveen
For Respondent: Advocates V.S.R. Avadhani, S.A. Juber Hussain