In a somewhat tense hearing this week, the Supreme Court set aside a National Company Law Appellate Tribunal (NCLAT) ruling and revived insolvency proceedings against Dhanlaxmi Electricals Pvt. Ltd., calling the company’s defence “mere moonshine” and unsupported by real evidence. The bench, led by Justice Sanjay Kumar, repeatedly questioned why the appellate tribunal had overlooked the corporate debtor’s own ledger entries showing dues exceeding ₹1.79 crore.
Background
The dispute began when M/s Saraswati Wire and Cable Industries, a partnership firm, invoked Section 9 of the Insolvency and Bankruptcy Code (IBC) to recover unpaid dues for cables and pipes supplied over several years. Although the National Company Law Tribunal (NCLT), Mumbai, admitted the case in December 2023, a suspended director of the debtor company approached NCLAT and succeeded in getting that order overturned.
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What made the matter complicated-and honestly confusing even for observers in court-was that a separate insolvency process had already been initiated against the company in September 2021. During that time, a suspended director still responded to the firm’s demand notice, even though he legally had no authority to do so after the Interim Resolution Professional (IRP) took charge.
Court’s Observations
The Supreme Court took a sharp view of the alleged “pre-existing disputes” that the corporate debtor kept repeating. When counsel for the company pointed to old disagreements about short supply and defective materials, the bench pushed back.
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“The bench observed, ‘These so-called disputes are not only unsubstantiated but appear to be a mere afterthought. There was no real impediment to payment.’”
The judges noted that:
- The company continued paying the supplier even after the demand notice-₹61 lakh in total-something that wouldn't happen if genuine disputes existed.
- The ledger emailed by the debtor in August 2021 clearly acknowledged a debit balance of ₹2.49 crore, later reduced to ₹1.79 crore after part-payments.
- No documentary evidence was ever produced regarding the alleged threat of blacklisting or huge financial losses due to the cables.
At one point, the bench remarked that it was “hardly believable” that a supplier would fabricate delivery challans and e-way bills back in 2019 anticipating future litigation.
The Court also noted that NCLAT had not been informed about the earlier CIRP already underway, which explained why the firm waited before filing its own insolvency petition. The judges said this fact “could not be held against the creditor.”
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Decision
Concluding that the NCLAT had “lost sight of critical facts,” the Supreme Court restored the NCLT’s order admitting the creditor’s Section 9 petition. The justices directed that insolvency proceedings be resumed from the stage at which the matter originally stood.
With that, the bench allowed the appeal and closed the matter, leaving the resolution process to continue strictly as per law.
Case Title: M/s Saraswati Wire and Cable Industries vs. Mohammad Moinuddin Khan & Others
Case No.: Civil Appeal No. 12261 of 2024
Case Type: Civil Appeal (IBC – Section 9 Operational Creditor Insolvency)
Decision Date: December 10, 2025
