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The has admitted an against , clearing the way for the initiation of the over unpaid operational dues of ₹26.20 crore owed to . The order, passed on by a bench comprising Judicial Member Chitra Hankare and Technical Member Dr V G Venkata Chalapathy, noted that the debt had been acknowledged by the company but remained unpaid due to liquidity constraints.
Naksh Steel, an , approached the tribunal under after repeated reminders failed to secure payment for supplies made between January 16 and 20, 2025. The supplies were made pursuant to a supply agreement dated , and invoices were raised for the consignments. After the company failed to pay, Naksh Steel issued a under on .
Gujarat Toolroom responded nearly a month later, on , acknowledging the debt and requesting Naksh Steel not to initiate insolvency proceedings. The company expressed willingness to pay the outstanding amount and attributed the non-payment to liquidity constraints arising from outstanding receivables from its own suppliers and business counterparties. It emphasised that it remained a and was complying with applicable , stock exchange, and statutory filing requirements. Gujarat Toolroom also placed its latest financial statements and a list of creditors as of , on record.
The tribunal, after examining the evidence, concluded that the debt was due and payable. It noted that there was no between the parties at the time the demand notice was issued. The bench observed, “The date of default is reckoned as . It is admitted to have not been paid due to liquidity constraints of the CD respondent.”
Court rejects liquidity defence
Gujarat Toolroom’s primary argument was that its inability to pay was temporary and stemmed from liquidity issues, not a genuine dispute over the debt. The company sought an opportunity to reach a mutually acceptable payment arrangement with Naksh Steel. However, the NCLT did not accept this as a valid ground to dismiss the petition. Under the IBC, once a debt is admitted and remains unpaid, the existence of liquidity constraints does not bar the admission of the insolvency application, provided there is no . The tribunal’s order reaffirms that financial difficulty does not shield a corporate debtor from CIRP if the is due and payable.
The NCLT accordingly allowed the petition and directed the commencement of CIRP against Gujarat Toolroom. It imposed a under , which prohibits the institution or continuation of suits or proceedings against the corporate debtor, as well as the transfer of assets or enforcement of security interests during the period.
IRP appointed, initial costs ordered
To oversee the resolution process, the tribunal appointed Iqbalsingh Gandhi as the . The IRP will take over the management of Gujarat Toolroom, issue a public notice inviting claims from all creditors, and convene the first meeting of the to decide on further steps, including his own fees and expenses. The tribunal also directed Naksh Steel to deposit ₹2 lakh with the IRP within seven days to cover initial costs, including the issuance of the public notice and invitation of claims, until the CoC determines his remuneration.
The ruling underscores the NCLT’s readiness to admit petitions where the debt is undisputed, regardless of the corporate debtor’s claims of temporary cash flow problems. Legal experts note that the decision serves as a reminder to companies that acknowledging a debt while pleading liquidity issues will not prevent a CIRP admission. The process will now proceed with the IRP taking control, and creditors will have the opportunity to submit their claims. Gujarat Toolroom’s future will depend on whether a can be successfully implemented or if the company faces .
The next procedural steps involve the IRP consolidating claims, assessing the financial position, and presenting the company’s affairs to the CoC. The will remain in effect until the completion of the CIRP or until the tribunal otherwise orders.
