The National Company Law Tribunal (NCLT) Cuttack Bench dismissed the corporate insolvency resolution process (CIRP) application filed by Bhushan Power & Steel Limited against Nova Iron & Steel Limited. The adjudicating authority ruled that the transaction did not qualify as a financial debt under the Insolvency and Bankruptcy Code (IBC), 2016, but was instead part of a broader strategic investment and project funding arrangement.

Ruling on Financial Debt Status

The tribunal examined an unsecured loan agreement dated July 20, 2011, under which Bhushan Power & Steel (BPSL) advanced ₹150 crore to Nova Iron & Steel. The lender claimed a default amount of ₹306.52 crore, comprising a principal outstanding of ₹125.83 crore and interest of ₹180.68 crore as on February 1, 2024.

However, the NCLT found that the loan was intrinsically linked to multiple Memoranda of Understanding (MoUs) executed between the parties and the Government of Chhattisgarh for integrated steel and power projects. The tribunal noted that BPSL had acquired a substantial stake in Nova Iron & Steel, holding 25.65% shareholding as on March 31, 2022, making it a related party.

Key Findings

The adjudicating authority highlighted several factors supporting its decision:

• The loan was designated as "project funding" in BPSL’s balance sheets from FY18 to FY20.
• BPSL wrote off the entire loan amount from its books during the financial year ending March 31, 2020.
• No provision for interest or principal recovery was made by BPSL post-FY20.
• The Serious Fraud Investigation Office (SFIO) investigation report identified the transaction as part of a collusive arrangement involving fund siphoning.

Absence of Enforceable Debt

The tribunal further observed that since BPSL had written off the debt in its financial statements for FY20, no legally enforceable claim existed at the time of filing the petition in April 2024. The Resolution Plan approved for BPSL’s own CIRP in September 2019 explicitly terminated all previous agreements with Nova Iron & Steel unless specifically notified otherwise.

Additionally, the Record of Default issued by the National e-Governance Services Limited (NeSL) stated that "the debt is disputed." The NCLT concluded that without a subsisting right to payment reflected in the lender’s books, the essential ingredients of financial debt and default under the IBC were not established.

What the Numbers Show

The divergence between the claimed default amount of ₹306.52 crore and the complete write-off of the asset in BPSL’s FY20 balance sheet indicates a lack of contemporaneous recognition of the debt as recoverable. While interest accruals pushed the claimed liability more than double the original ₹150 crore disbursement, the lender’s own accounting treatment—classifying it as doubtful and subsequently removing it from assets—undermined the existence of a legally enforceable financial debt required to initiate insolvency proceedings.

Nova Iron & Steel Ltd has appointed Palak Jindal as an Additional Director in the category of Non-Executive Independent Director (Woman), effective August 8, 2026. The appointment was approved by the Board of Directors during a meeting held on the same day and is subject to shareholder approval at the next general meeting. This governance update coincides with a disclosure regarding significant delays in the submission of the company’s statutory financial results for the fiscal year ended March 31, 2026.

The Board confirmed that Palak Jindal has not been debarred from holding the office of Director by virtue of any SEBI Order or other authority, in compliance with SEBI Letter dated June 14, 2018, and BSE Circular LIST/COMP/14/2018-19 dated June 20, 2018. Her term is set for five years. The Company Secretary, Dheeraj Kumar, signed the disclosure submitted to the Bombay Stock Exchange Limited.

Director Appointment Details

Palak Jindal joins the Board pending shareholder ratification. Her appointment aligns with regulatory requirements for independent director representation. Key details of her profile are outlined below:

Regulatory Compliance and Status

In compliance with Regulation 30 read with Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI Master Circular HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated January 30, 2026, the company disclosed the brief profile of the new director. The Board confirmed that there are no relationships between the directors that would affect independence.

The Board noted that the company was required to submit its Audited Financial Results, along with the Auditor's Report, for the quarter and financial year ended March 31, 2026, on or before May 30, 2026, pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Nova Iron & Steel had previously intimated the stock exchanges on May 30, 2026, regarding the anticipated delay. The management attributed this lag to the consequential impact of delays in submitting Unaudited Financial Results for the quarter and half-year ended September 30, 2025, and the quarter and nine months ended December 31, 2025.

What the Numbers Show

While no financial metrics were disclosed in this specific filing, the pattern of delayed submissions highlights operational bottlenecks in the company’s financial reporting cycle. The delay in the final audited results for FY26 is directly linked to earlier failures to meet deadlines for interim unaudited reports in Q1FY26 and Q2FY26. This suggests a systemic issue in the finalization process rather than an isolated incident, potentially impacting investor confidence and regulatory standing until the filings are completed. The company stated it is taking all necessary steps to submit the Audited Financial Results at the earliest.