NCLT Ahmedabad Dismisses Insolvency Plea Against Polycab India As Claim Fell Below ₹1 Crore After Adjustments

The National Company Law Tribunal (NCLT), Ahmedabad, has dismissed an insolvency petition against Polycab India Limited, one of India's largest manufacturers of electrical wires, cables and fast-moving electrical goods, holding that the alleged default fell below the Rs 1 crore threshold prescribed under the Insolvency and Bankruptcy Code (IBC).

A bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma, in an order dated December 15, 2025, held that pre-existing disputes between the parties and statutory exclusions under the IBC rendered the petition filed by Leena Powertech Engineers not maintainable.

Leena Powertech and Polycab had entered into joint ventures for government power distribution projects in Patna in 2013 and Ranchi in 2015. Leena raised invoices for the Patna project between July 2014 and March 2021, and for the Ranchi project between January 2017 and April 2021.

It later issued a demand notice under Section 8 of the IBC on April 21, 2025, claiming Rs 5.66 crore with interest.

Polycab denied any default and relied on email exchanges from May 2023 in which Leena alleged manipulations, frauds, and serious misdemeanors and sought arbitration, to show that disputes existed well before the insolvency notice. The tribunal accepted this contention and held that the requirement of a pre-existing dispute stood satisfied.

A key issue concerned a payment of Rs 3 crore made by Polycab on August 3, 2021. While Leena claimed it was towards consultancy services for a separate Maharashtra electricity project, Polycab said the amount was an advance for the Patna and Ranchi projects.

Referring to Leena's email dated August 2, 2021 seeking Rs 3 crore with respect to the closure of the Ranchi and Patna Project, the tribunal held that Leena “could not provide any underlying document to demonstrate that the amount of Rs. 3 crore was for any other purpose, including the Maharashtra Project”.

The tribunal ruled that Polycab had not accepted the invoice raised for the alleged Maharashtra project and that the Rs 3 crore payment had to be adjusted against the Patna and Ranchi dues.

It also excluded invoices barred by Section 10A of the IBC, which prohibits insolvency proceedings for defaults between March 25, 2020 and March 25, 2021 (Covid 19 exemption). Invoices of Rs 1.28 crore for Patna and ₹1.01 crore for Ranchi fell within this protected period, reducing the claim to Rs 2.38 crore.

After crediting the Rs 3 crore payment, the tribunal found that Leena actually owed Polycab Rs 61.92 lakh. It concluded that “the due amount in default falls short of rupees one crore as required by section 4 of the Code and therefore we hold that the petition is not maintainable”.

The tribunal reiterated that insolvency proceedings cannot be used as a debt recovery tool where serious disputes exist and dismissed the petition without costs.

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