NCLT Hyderabad Rejects Section 9 Plea Against Steel Exchange India Over Pre-Existing Dispute

April 21, 2026 : The Hyderabad Bench-II of the National Company Law Tribunal (NCLT) has dismissed a Section 9 application filed by Shakti International LLP seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Steel Exchange India Limited, holding that the claim was vitiated by a bona fide pre-existing dispute.

A Bench comprising Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri found that the alleged operational debt of ₹162.57 crore largely pertained to delayed and extension charges arising out of a Master Supply Agreement dated 29.09.2016 and subsequent supplementary agreements. While the supply of steel rebars was not in dispute, the Tribunal held that the liability towards such charges was neither crystallised nor supported by contemporaneous records.

The Operational Creditor contended that delayed payment charges were contractually embedded, including through Annexure A of the agreement, and formed part of the outstanding dues reflected in the demand notice issued under Section 8 of the Insolvency and Bankruptcy Code, 2016. However, the Corporate Debtor disputed the claim, arguing that such charges were never reflected in invoices or ledger accounts and were instead based on a unilateral calculation sheet prepared for the proceedings.

Accepting this contention, the Tribunal observed that the absence of supporting documents such as invoices, debit notes, or ledger entries raised serious doubts about whether the charges had ever crystallised as payable dues. It noted that over ₹143 crore of the claim was based solely on such disputed charges, making the foundation of the claim inherently contentious.

Reiterating the limited scope of enquiry under Section 9, the Bench relied on the Supreme Court’s ruling in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., emphasising that the Adjudicating Authority is only required to determine the existence of a real dispute, not adjudicate the merits of the claim. It also referred to the NCLAT decision in Attluru Sreenivasulu Reddy v. AS Met Corp Pvt. Ltd., which held that a plausible defence raised prior to the demand notice is sufficient to reject a Section 9 petition.

The Tribunal concluded that the dispute raised by the Corporate Debtor was genuine, substantial, and required detailed examination of contractual terms and financial records, which falls outside the summary jurisdiction under Section 9. Accordingly, the application was dismissed, with liberty granted to the Operational Creditor to pursue appropriate remedies under law.

Cause Title: Shakti International LLP v. Steel Exchange India Limited
Case No.: CP (IB) No. 30/9/HDB/2025
Coram: Rajeev Bhardwaj (Judicial Member) & Sanjay Puri (Technical Member)