NCLAT Upholds Rejection of Insolvency Plea Against Indorama Ventures Over Pre-Existing Contractual Disputes

May 6, 2026 : The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) has upheld the rejection of an insolvency application filed against Indorama Ventures Yarns Private Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016, holding that substantial pre-existing disputes between the parties barred initiation of Corporate Insolvency Resolution Process (CIRP).

A Bench comprising Justice Ashok Bhushan, Chairperson, and Technical Member Indevar Pandey dismissed the appeal filed by Rattan Singh Builders Private Limited challenging the National Company Law Tribunal (NCLT), Mumbai Bench-V order dated January 14, 2026, which had rejected its insolvency plea.

The dispute arose from a work order issued by Indorama Ventures in July 2022 for execution of civil and structural works relating to its DTY Project at Nagpur. The original contract value of ₹43.25 crore was later revised to ₹49.46 crore through an amended work order executed in June 2023. Payments under the contract were linked to Running Account (RA) Bills certified by the Project Management Consultant (PMC) and company engineers.

Rattan Singh Builders claimed that it had completed the project work and raised RA Bills up to RA-32, including the final bill. According to the contractor, despite certification of the bills, Indorama Ventures failed to release approximately ₹4.88 crore towards unpaid dues, retention money and contractual interest. The contractor argued that the debt stood crystallised through certified bills and acknowledgments exchanged between the parties.

However, Indorama Ventures disputed the claim, alleging repeated delays, incomplete work and poor workmanship on the part of the contractor. The company relied on a series of contemporaneous communications exchanged during execution of the project to show that disputes regarding delay, defective work and deficiencies persisted throughout the contract period. It further pointed out that the contractor itself had repeatedly sought extensions for completion of the project, thereby admitting incomplete performance.

The company also issued a termination notice dated June 12, 2024, terminating the contract and imposing liquidated damages of ₹2.16 crore. It further deducted Building and Other Construction Workers (BOCW) cess amounting to ₹49.46 lakh and an alleged mismatch amount of ₹53.29 lakh. After accounting for these deductions, the company admitted liability only to the extent of ₹15.32 lakh.

Following a demand notice issued under Section 8 of the IBC in August 2024, the contractor initiated insolvency proceedings before the NCLT seeking commencement of CIRP against Indorama Ventures. The NCLT rejected the plea after concluding that genuine disputes existed prior to issuance of the demand notice.

Before the Appellate Tribunal, the contractor argued that the disputes raised by the company were an afterthought and that certification of RA Bills by the PMC amounted to admission of liability. It also contended that liability for BOCW cess rested on the employer and not the contractor.

Rejecting these submissions, the NCLAT observed that the disputes were neither illusory nor belated. The Tribunal noted that the record contained repeated communications regarding delays in execution, incomplete work, poor quality and levy of liquidated damages. It held that such disputes remained unresolved throughout the subsistence of the contract and ultimately culminated in termination of the agreement on June 12, 2024.

The Tribunal observed: “The record clearly reflects repeated communications regarding delay in completion, incomplete execution of work, poor quality and workmanship, levy of liquidated damages, and statutory obligations such as BOCW cess, all of which remained unresolved throughout the subsistence of the contract and ultimately culminated in its termination on 12.06.2024.”

The Bench further held that certification of RA Bills by the PMC did not amount to final admission of liability because the contract expressly provided that completion and quality of work remained subject to the satisfaction of the company. Referring to Clause 3(F) of the work order, the Tribunal also held that compliance with labour laws and liabilities relating to the workforce, including BOCW cess, were contractually placed upon the contractor.

The Appellate Tribunal also relied on a communication dated August 12, 2024 issued by the contractor after termination of the contract and even after issuance of the Section 8 demand notice, wherein the contractor expressed willingness to complete pending works and rectify deficiencies. According to the Tribunal, this itself demonstrated that disputes regarding performance and completion remained unresolved.

Relying on the Supreme Court judgment in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., the NCLAT reiterated that once a genuine pre-existing dispute is established, proceedings under Section 9 of the IBC cannot be maintained. Holding that the disputes in the present matter were substantial and supported by contemporaneous material, the Tribunal dismissed the appeal and upheld the NCLT’s order rejecting initiation of CIRP against Indorama Ventures Yarns Pvt. Ltd.

Case Title: Rattan Singh Builders Private Limited v. Indorama Ventures Yarns Private Limited

Case No.: Company Appeal (AT) (Insolvency) No. 453 of 2026