NCLT Rejects CIRP Plea against Steel Exchange India Over ₹162 Cr Disputed Delayed Charges [Read Order]

In a recent ruling, the National Company Law Tribunal (NCLT) has rejected a corporate insolvencyresolution process (CIRP) plea against Steel Exchange India Ltd., ruling that the claimed ₹162 crore in delayed and extension charges did not constitute operational debt under the Insolvency and Bankruptcy Code (IBC).

The petitioner, Shakti International LLP, a supplier of steel rebars, entered into a Master Supply Agreement in 2016 and supplementary agreements with Steel Exchange India Ltd. and its nominee companies. The supplier alleged that payments were delayed and, under the contract, additional charges were applicable, those are 2% per month after 90 days, 2.5% per month after 97 days, and a 2% trade margin every 30 days.

Based on these clauses, Shakti International raised a claim of ₹162.57 crore against Steel Exchange India Ltd., asserting that the company remained liable even when nominee entities defaulted.

The petitioner argued that the delayed charges were contractually agreed and enforceable, and that Steel Exchange India Ltd. was responsible for defaults by its nominees.

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On the other hand, the respondent argued that the petition was not for unpaid invoices but for penalty-like charges, which do not constitute “operational debt” under the IBC. It pointed out that no invoices, debit notes, or ledger entries reflected these charges, only a calculation sheet prepared later.

The respondent also argued that Shakti International had waived such claims during negotiations in 2022, and that related petitions against nominee companies had already been withdrawn after principal dues were settled.

After hearing both sides, the tribunal observed that while the supply transactions were genuine, the dispute centered solely on delayed charges. Since no supporting invoices or records substantiated these charges, the claim was not crystallised.

The bench, Rajeev Bharadwaj (judicial member), Sjay Puri (Technical Member ), relied on the Supreme Court’s ruling in Mobilox Innovations v. Kirusa Software, which held that insolvency proceedings cannot be admitted if a bona fide dispute exists. The tribunal concluded that the delayed charges did not amount to operational debt and that the dispute was genuine and pre-existing.

The tribunal observed that “In view of the foregoing discussion, we hold that the claim raised by the Operational Creditor, insofar as it relates to the extension / delayed charges component forming the substantial basis of the petition, is the subject matter of a bona fide and pre-existing dispute.”

Accordingly, the application was dismissed.

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