NCLAT Dismisses Appeal Against CIRP Admission, Holds Consequence Sheet Signed by Corporate Debtor Crystallises Undisputed Debt of Rs 3.84 Crore
NCLAT Principal Bench finds no pre-existing dispute where the corporate debtor itself prepared and signed a consequence sheet quantifying the undisputed amount owed to the operational creditor.
The National Company Law Appellate Tribunal's Principal Bench at New Delhi dismissed an appeal filed by Rakesh Dalpatram Panchal, ex-director of M/s Gemini Engi. Fab. Private Limited, challenging the admission of a Section 9 application under the Insolvency and Bankruptcy Code, 2016 by the NCLT Mumbai Bench. The operational creditor, M/s Kisaan Steels Pvt. Ltd., had claimed an outstanding amount of Rs. 6,13,53,270/- for supply of steel forgings and related materials. The Appellate Tribunal, in a judgment authored by Arun Baroka, Member (Technical), held that the corporate debtor's own consequence sheet — prepared, signed, and shared with the operational creditor — crystallised an undisputed amount of Rs. 3.84 crore, and that conditioning payment on the operational creditor's acceptance of that sheet amounted to holding the creditor “under a gun.” The appeal was dismissed and insolvency proceedings were directed to restart forthwith.
The Dispute Before the Tribunal
Kisaan Steels supplied steel forgings, tube sheets, and related materials to Gemini Engi. Fab. under purchase orders issued between December 2021 and June 2022, with a total purchase order value of Rs. 8,40,01,413/-. After repeated follow-ups, Kisaan Steels issued a demand notice under Section 8 of the Code on 01.07.2023, claiming an outstanding balance of Rs. 6,13,53,270/-.
The corporate debtor replied on 14.07.2023, denying liability and citing pre-existing disputes over defective goods and delayed delivery. Kisaan Steels subsequently filed a Section 9 petition before NCLT Mumbai, restricting the claimed debt and default to the amount the corporate debtor had itself acknowledged — Rs. 3,97,44,173.70/-. The NCLT admitted the petition by order dated 24.03.2025, relying in part on an email dated 01.11.2023 in which the corporate debtor stated it would make payment and, in case of default, the operational creditor could proceed with arbitration. The NCLT found no mention of any pre-existing dispute in that email and held that the corporate debtor had failed to demonstrate a genuine dispute under Section 5(6) of the Code.
Panchal, as ex-director of the corporate debtor, appealed to NCLAT under Company Appeal (AT) (Insolvency) No. 526 of 2025.
The Appellant's Case
Senior Advocate Mr. Gopal Jain, appearing for the appellant, advanced several grounds. First, he argued that extensive pre-existing disputes over quality and delivery timelines had been raised well before the demand notice, supported by documentary correspondence including communications dated 21.11.2022, 25.01.2023, and the consequence sheet shared on 02.03.2023. He submitted that the NCLT had itself recorded at paragraphs 29 to 37 of the impugned order that disputes regarding quality and delays were supported by documentary evidence and could not be characterised as spurious, hypothetical, or illusionary — yet had still admitted the petition.
Second, the appellant contended that the email dated 01.11.2023 had been misread. The corporate debtor's stated intention to pay was explicitly conditional on the operational creditor accepting the consequence sheet, and the NCLT had impermissibly isolated a single sentence from that email. The appellant relied on Mobilox Innovations Private Limited v. Kirusa Software Private Limited [(2018) 1 SCC 352], Sabarmati Gas Limited v. Shah Alloys Limited [(2023) 3 SCC 229], and M/s S.S. Engineers v. Hindustan Petroleum Corporation Ltd. & Ors. [Civil Appeal No. 4583 of 2022] for the proposition that an operational creditor can trigger CIRP only where the debt is undisputed, and that the Code is not a debt recovery forum.
Third, the appellant raised an authorisation objection: the board resolution annexed to the company petition authorised one Mr. Arobinda Mookherjee to take legal action against M/s Gemini Steels Private Limited — a different entity — and not against the corporate debtor. The appellant argued this defect alone warranted setting aside the admission order.
Fourth, the appellant submitted that TDS deductions and GST compliance by the corporate debtor could not constitute admissions of debt, as these are statutory obligations under the Income Tax Act, 1961 and the CGST Act, independent of any contractual liability.
The Operational Creditor's Case
Senior Advocate Mr. Ashish Mohan, for Kisaan Steels, countered that all goods had been delivered within time and accepted by the corporate debtor after inspection by an agency appointed by the corporate debtor itself. The corporate debtor had never returned any goods or raised any complaint at the time of delivery.
Kisaan Steels pointed to the corporate debtor's own pleadings before the NCLT, where it had acknowledged that Kisaan Steels had adjusted the claimed amount from Rs. 6,13,53,270/- to Rs. 3,97,44,173.70/- to align with the amount the corporate debtor had admitted. The operational creditor argued this was an unequivocal admission. It further relied on the email dated 01.11.2023 and the corporate debtor's settlement offer before the NCLT on 30.08.2024 as further evidence of acknowledgment.
On the consequence sheet, Kisaan Steels submitted that the corporate debtor had withheld the document until 01.11.2023 despite repeated requests, and that conditioning payment on acceptance of the sheet was a device to avoid paying an admitted sum.
How the Tribunal Reasoned
The Appellate Tribunal examined the consequence sheet at page 200 of the appeal paper book. It found that the sheet was prepared by the corporate debtor itself, signed by the corporate debtor, and conveyed to the operational creditor. The sheet confirmed an undisputed amount and incorporated the corporate debtor's own calculations of damages and liquidated damages for delay. The Tribunal observed that the corporate debtor could not simultaneously claim issues of quality and delay as grounds for a pre-existing dispute while having already quantified and accepted those very issues in the consequence sheet.
On the email of 01.11.2023, the Tribunal agreed with the NCLT's reading. The email contained no reference to any pre-existing dispute regarding quality or delivery. The corporate debtor's statement that it would pay, with arbitration as the remedy for default, was treated as a clear acknowledgment of liability.
The Tribunal was direct about the consequence sheet condition: requiring the operational creditor to accept the sheet before any payment would be released was characterised as holding the creditor under a gun. The Tribunal noted that the same pattern had repeated before it — the appellant offered to settle only after arguments concluded, but the settlement was not acceptable to the operational creditor.
On the pre-existing dispute argument, the Tribunal held that the corporate debtor had itself resolved the quality and delay issues by incorporating them into the consequence sheet and levying liquidated damages. Having done so, it could not revive those same issues as a shield against Section 9 proceedings. The Tribunal found the purported dispute to be hypothetical, spurious, or illusionary, and held that the judgments in Mobilox and Praveen Kumar Sharma v. Arcee Trading Corporation [NCLAT Comp Appeal No. 213 of 2020] were of no assistance to the appellant because those decisions test for a genuine pre-existing dispute, which was absent here.
The Tribunal crystallised the undisputed amount at Rs. 3.84 crore — the figure reflected in the consequence sheet signed by the corporate debtor — and held that this amount, being above the threshold, supported admission of the Section 9 application.
The authorisation objection and the TDS/GST arguments were not accepted as grounds to set aside the admission order.
Order
The Appellate Tribunal found no infirmity in the order of the Adjudicating Authority. The appeal was dismissed. All related interlocutory applications were disposed of. The Tribunal directed that insolvency proceedings against M/s Gemini Engi. Fab. Private Limited should restart forthwith. No order as to costs was made.
The judgment was delivered on 11 May 2026 by a three-member bench comprising Justice N. Seshasayee, Member (Judicial); Arun Baroka, Member (Technical); and Indevar Pandey, Member (Technical).