In the matter of Carnation Industries Limited

Anapplicationunder Section 9of theInsolvency andBankruptcy Code,2016read with Rule6of theInsolvencyandBankruptcy (Applicationto Adjudicating Authority)Rules, 2016. Inthematter of: LalBehari Singh ….Operational Creditor -Versus- M/s Carnation Industries Limited [CIN L27209WB1983PLC035920],having its registered office at 9/C Kumar ParaRoad 2ndFloor, Liluah, Howrah –711204. ….CorporateDebtor Dateof hearing:7/02/2023 OrderPronounced on :12/09/2023 Coram: Smt.Bidisha Banerjee, Member(Judicial) ShriBalrajJoshi,Member(Technical)

Appearances (via video conferencing / Physically) Mr. K.C. Garg, Adv. : For Operational Creditor Ms.SunitaAgarwal, Adv. Mr. Kamran Hussari, Adv. Md. Dilawar Khan, Adv. O RDE R Per BalrajJoshi,Member (Technical) 1. The Courtconvened through hybrid mode.

INTHENATIONALCOMPANYLAWTRIBUNAL KOLKATABENCH(Court-II) C.P.(IB)/12(KB)2021 LalBehariSinghv.M/sCarnationIndustriesLimited

2. This is a Company Petition filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by Mr. Lal Behari Singh, proprietor of Lalji Enterprise (‘Operational Creditor’) for initiation of Corporate Insolvency Resolution Process (‘CIRP’) against Carnation Industries Limited (‘CorporateDebtor’). 3. The present Petition was filed on 12 January, 2021 before this Adjudicating Authority. The total amount of default is Rs.10,05,566/- (Rupees Ten Lakh Five Thousand Five Hundred Sixty Six only) [Principal – Rs.6,72,629/- and Interest – 3,32,937/-] inclusiveof interest calculated @24%p.a. from the month of01April, 2017 till the payment is made; the date of default is stated to be as on 01 April, 2017. 4. In part II of the Petition the authorized share capital of the Corporate Debtor is Rs.7,00,00,000/- and paid up share capital is Rs.3,45,71,600/-.Part – IV of the Petitiondeals with theparticulars oftheOperational Debt. 5. Submissions by the Ld. Counsel appearing on behalf of the Operational Creditor. 5.1 The Operational Creditor supplied Bricks Fire, Fire Clay and other products to the Corporate Debtor and subsequently raised Invoices and Challans for the same which were also acknowledged by the Corporate Debtor. The Operational Creditorand theCorporate Debtorhad been runninga continuous account. 5.2 Several invoices were raised by the Operational Creditor upon the Corporate Debtor, total of which amounted to Rs.7,72,629/- (Rupees Seven Lakh Seventy Two Thousand Six Hundred Twenty Nine) Only as on 19 May 2018, out of which the Corporate Debtor has paid Rs.1,00,000/- (Rupees One Lakh) Only on 19 May 2018 as the Corporate Debtor made cumulative payments with regard to the invoices raised against them. 5.3 The last payment which was received by the Operational Creditor from the Corporate Debtor was on19May 2018.

INTHENATIONALCOMPANYLAWTRIBUNAL KOLKATABENCH(Court-II) C.P.(IB)/12(KB)2021 LalBehariSinghv.M/sCarnationIndustriesLimited

5.4 The Corporate Debtor had failed and neglected to pay a sum of Rs.6,72,629/- Rupees Six Lacs Seventy-Two Thousand six hundred and twenty-nine) and interest thereon @24%per annum. 5.5 Thereafter the Operational Creditor through its Advocate, sent a demand letter dated 17 November, 2018 to the Corporate Debtor. The Corporate Debtor accepted and admitted its liability vide letter dated 24 November, 2018 with regard to the outstanding amount and stated that it requires 45 days’ time to clear theoutstanding dues to theOperational Creditor. 5.6 The Operational Creditor had sent a Form 3 Demand Notice dated 06 January, 2020, to the Corporate Debtor, demanding an amount of Rs.10,05,566/ - (Rupees Ten Lakh Five Thousand Five Hundred Sixty Six only. The Corporate Debtor replied to the Form 3 Demand Notice vide letter dated 20 January, 2020 wherein they raised certain disputes for the very first time just in order to evade their liabilityto pay the operational debt owed totheOperational Creditor. 5.7 The said reply letter by the Corporate Debtor was received by the Operational Creditor and the same was duly replied by the Operational Creditor vide letter dated 3rd February, 2020. 6. SubmissionsbytheLd. Counsel appearing onbehalf oftheCorporateDebtor. 6.1 Goods supplied by the Operational Creditor were never delivered on time; details ofwhich are as follows; PurchaseOrder No Needed by date Delivery date 23133 03March, 2017 07March, 2017& 10march, 2017 23329 22March, 2017 04April, 2017 24025 16May, 2017 20May, 2017 24523 26June,2017 28June, 2017 24863 26July, 2017 No delivery dategiven 24887 01August, 2017 03August, 2017 24910 27July, 2017 05August, 2017 25770 26June,2017 18November, 2017 26147 13November, 2017 21November, 2017 26926 28April, 2018 01June, 2018

INTHENATIONALCOMPANYLAWTRIBUNAL KOLKATABENCH(Court-II) C.P.(IB)/12(KB)2021 LalBehariSinghv.M/sCarnationIndustriesLimited

With regard to the aforesaid late deliveries by the Operational Creditor, the Corporate Debtor suffered loss 6.2 As per section 37 of Indian Contract Act, 1872 it is an obligation on the parties to the contract to perform or to offer the performance of their respective promises. Operational Creditorhad failed to perform his respectiveobligation which is again in contravention ofsection 37ofIndian Contract Act, 1872. 6.3 The Corporate Debtor has immediately on receipt of material raised the dispute about the inferior quality in series of conversation but no action was taken by the Operational Creditor. 6.4 Besides Operational Creditor had always assured that he will take the proper step to compensate the loss incurred by Corporate Debtor. The Operational Creditor having failed to discharge its obligation to compensate the loss to Corporate Debtor which has incurred as because of supply of defective material and also with late delivery despite several assurance. Hence, Operational Creditor is not entitled to claim the balance of Rs. 6.72.629/- ( Six Lac Ninety Seventy Two Thousand Six Hundred Twenty Nine only). 6.5 On the contrary, the Operational Creditor is liable to compensate Corporate Debtor for the loss and damages suffered by Corporate Debtor for supply of such defective materials which resulted in damage to the furnace of Corporate Debtor and had also led to lesser output, quality deviation in finished products and increase ofcost in theproduction. 6.6 The Corporate Debtor has suffered substantial loss and damage in view of the inferior and deficient quality ofmaterials supplied bytheOperational Creditors. Analysis&Findings 7. We’ve heard the Ld. Counsel appearing on behalf of the Operational creditor. The Ld. Counsel appearing for the Corporate Debtor last appeared on 07 November, 2022. The matter was thereafter listed on 09 December, 2022, 27 December, 2022 and 07 February, 2023 but none appeared on behalf of the Corporate Debtor. Be that as it may, we have also taken into record of the Reply filed by the Corporate Debtor.

INTHENATIONALCOMPANYLAWTRIBUNAL KOLKATABENCH(Court-II) C.P.(IB)/12(KB)2021 LalBehariSinghv.M/sCarnationIndustriesLimited

8. It has been submitted by the Operational Creditor that it was a running and continuous account to which certain payments have been made and the last payment being made on 19 May, 2018 which is discernible from the bank statements annexed with the petition at Annexure-E. Notice under Section 8 of IBC, 2016 was sent by the Operational Creditor on 06 January, 2020 claiming the above amount. The same has been replied by the Ld. Counsel for the petitioner on 03February, 2020. 9. It is relevant to mention here that Advocate’s notice was also sent on 17 of November, 2018 pursuant to which by a letter dated 24 November, 2018 (page 95 of the petition) the Corporate Debtor has admitted delay in payment and had requested for time of 45 days to clear the amount due which as per the letter dated 17February, 2018was Rs.11,08,582/-. 10. In the reply affidavit, the Corporate Debtor has tried to conjure up some weak defence in a bid to raise the issue of pre-existing dispute. However, considering that no communication has been exchanged between the parties on this accord before hand. No proof of any such pre-existing dispute could be seen. This petition has been filed on 12/01/2021, whereas the date of default considering the nature ofthe transactions and theaccount being a‘running &continuous account’, could be taken as the date of the last payment which was 19 of May, 2018. As such, the petition should have been filed by 18 May, 2021. Therefore, this petition is well withinlimitation. 11. In view of the above facts and circumstances, we are satisfied that the present petition made by the Operational Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. Further, nodisputes were ever raised bytheCorporate Debtor. 12. It is, accordingly, hereby ordered as follows:- a. Theapplication bearing CP(IB)No. 12/KB/2021 filed byMr. Lal Behari Singh, proprietor of Lalji Enterprise, the Operational Creditor, under section 9of the Code read with rule 6(1) of the Insolvency & Bankruptcy

INTHENATIONALCOMPANYLAWTRIBUNAL KOLKATABENCH(Court-II) C.P.(IB)/12(KB)2021 LalBehariSinghv.M/sCarnationIndustriesLimited (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against Carnation Industries Limited,is admitted. b. There shall beamoratorium under section 14oftheIBC. c. The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of Corporate Debtor under section 33 of the IBC, as thecase may be. d. Publicannouncement of theCIRP shall be madeimmediately as specified under section 13 of the Code read with regulation 6 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)Regulations, 2016. e. Mr Anubrata Gangoly registration number IBBI/IPA001/IP- P02662/2022-2023/1407, email: ca.a.gangoly@gmail.com, Mobile no. 9836688828,is hereby appointed as Interim Resolution Professional (IRP) of the Corporate Debtor to carry out the functions as per the Code subject to submission of a valid Authorisation of Assignment in terms of regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016. The fee payable to IRP or the RP, as the case may be, shall be compliant with such Regulations, Circulars and Directions as may be issued by the Insolvency & Bankruptcy Board of India (IBBI). The IRP shall carry out his functions as contemplated bysections 15,17,18,19,20and21of theCode. f. During the CIRP period, the management of the Corporate Debtor shall vest in the IRP or the RP, as the case may be, in terms of section 17 of the Code. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within one week from the date of receipt of thisOrder, in default ofwhich coercive steps will follow.

INTHENATIONALCOMPANYLAWTRIBUNAL KOLKATABENCH(Court-II) C.P.(IB)/12(KB)2021 LalBehariSinghv.M/sCarnationIndustriesLimited g. TheIRP/RP shall submitto this Adjudicating Authority periodical reports with regard to the progress of the CIRP in respect of the Corporate Debtor. h. The Operational Creditor shall deposit a sum of Rs.2,00,000/- (Rupees Two Lakh only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval bytheCommitteeof Creditors (CoC). i. In terms of section 7(5)(a) of the Code, Court Officer of this Court is hereby directed to communicate this Order to the Operational Creditor, the Corporate Debtor and the IRP by Speed Post and email immediately, and in any case,not later than two days from thedateof thisOrder. j. Additionally, the Operational Creditor shall serve a copy of this Order on the IRP and on the Registrar of Companies, West Bengal, Kolkata by all available means for updating the Master Data of the Corporate Debtor. The said Registrar of Companies shall send a compliance report in this regard to the Registry of this Court within seven days from the date of receipt ofa copy ofthis order. 13. CP (IB) No. 12/KB/2021 to come up on 11.10.2023 for filing the periodical report. 14. A certified copy of this order may be issued, if applied for, upon compliance with all requisiteformalities.

BalrajJoshi Bidisha Banerjee Member (Technical) Member (Judicial)

TheOrder is pronounced on12th day ofSeptember, 2023 SA(LRA)/ZIA(STENO)