NCLT Indore Admits Insolvency Plea Against Auri Grow India Over Default of ₹78.04 Cr. Principal Debt

The Indore Bench of the National Company Law Tribunal (NCLT) on 18 September admitted an insolvency petition filed by Naksh Steel Limited against Auri Grow India Limited, formerly known as Godha Cabcon & Insulation Limited, over a default of Rs. 78.01 crore in principal debt.

A Bench comprising Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta held:

“Its objections to interest are primarily legal objections advanced after receipt of the Demand Notice. These objections may be relevant for determination of the exact amount ultimately recoverable, but they do not establish a pre-existing dispute concerning the underlying operational debt.”

Naksh Steel, engaged in steel manufacturing and trading, entered into a Master Supply Agreement dated 16 December 2024 with Auri Grow for the supply of industrial and construction goods intended for onward shipment to Reliance Industries Limited.

Pursuant to the agreement, Naksh Steel raised seven invoices between 22 January and 29 January 2025, aggregating to Rs. 78.01 crore. Payment was contractually due immediately upon issuance of the invoices, with interest at 18% per annum for delayed payment.

Despite issuing post-dated cheques, Auri Grow asked Naksh Steel not to deposit them and failed to clear the dues. Naksh Steel subsequently served a demand notice on 20 January 2026, claiming Rs. 91.82 crore, comprising Rs. 78.01 crore towards principal and Rs. 13.80 crore towards interest. The date of default was stated as 29 January 2025.

Auri Grow emphasised that it was a listed public company and a going concern with multiple creditors. While admitting the principal liability, it disputed the interest claim of Rs. 13.80 crore. It argued that insolvency proceedings could not be used as a recovery mechanism and sought time to settle the dues in instalments, offering to pay 10% within six months and the balance over the following twelve months.

The Tribunal noted that Auri Grow had not disputed the supply agreement, the supplies made under it or the invoices. It also found that correspondence acknowledging the debt and the issuance of post-dated cheques corroborated the liability.

The Information Utility's authenticated record of default further established non-payment. While observing that the Insolvency and Bankruptcy Code is not a recovery forum, the Bench held that the existence of other creditors or a future willingness to pay did not negate an established default.

Further, it noted that the admitted principal debt exceeded the statutory threshold for initiating insolvency proceedings. It held that Auri Grow's objections to interest, raised only after receipt of the demand notice, did not constitute a pre-existing dispute.

The Tribunal also clarified that Naksh Steel's entitlement to interest under the Micro, Small and Medium Enterprises Development Act, 2006 would be subject to verification during the Corporate Insolvency Resolution Process (CIRP). It held:

“Admission of the petition is accordingly founded on the admitted principal operational debt and not on a final adjudication of the disputed interest component.”

Accordingly, the NCLT admitted the petition, initiated CIRP against Auri Grow India Limited and appointed Rajesh Jasti as the Interim Resolution Professional. It also imposed the moratorium.