In the matter of Om Besco Rail Products Limited

Inthematterof: AnapplicationforinitiationofCorporateInsolvencyResolutionProcessunder Section9oftheInsolvencyandBankruptcyCode,2016readwithRule6ofthe InsolvencyandBankruptcy(ApplicationtoAdjudicatingAuthority)Rules,2016; And IntheMatterof: FosecoIndiaLimited,havingitsofficeatGateNo.922and923,Sanasawadi, TalukShirur,DistrictPune,Maharashtra–412208. ….….Applicant/OperationalCreditor And IntheMatterof: OmBosecoRailProductsLimited,havingitsregisteredofficeatMerlinAcropolis, UnitNo.9/3,9thFloor,1858/1,RajdangaMainRoad,Kolkata-700017,West Bengal. ..……CorporateDebtor Coram: 1.ShriJinanK.R.,Hon’bleMember(J)

DateofHearing13thMarch2020 OrderDeliveredon20thMay2020 PartiesPresentatthroughVideoConference

FortheOperationalCreditor :Mr.AnjanKumarRoy,FCS

FortheCorporateDebtor :1.Mr.DhirendraNathSharma,Advocate 2.S.DuttaMajumdar,Advocate 3.Ms.PubaliSinhaChoudury pd

CP(IB)No.1735/KB/2019

ORDER PresentJinanK.R.,Member(Judicial)

TheapplicantFosecoIndiaLimited,filedthisapplicationunderSec.9of theInsolvencyandBankruptcyCode,2016(inshortIBCode)forinitiationof corporateinsolvencyresolutionprocessagainstthecorporatedebtor,viz.,Om BosecoRailProductsLimitedfortheallegeddefaultinpaymentofoperational debttothetuneofRs.90,00,919.10(RupeesNinetylakhninehundrednineteen andpaisetenonly). 2. Brieffactsofthecase,forourconsiderationoftheapplicationarethe following:- TheOperationalCreditorisacompanyengagedinteralia,inthebusiness ofmanufacturingandsupplyofchemicalsandalliedproductsrelatedtofoundry and steelindustries,suchas,resins,coatingforferrousand non-ferrous foundries,sleeves,fluxes,metaltreatmentproductsoffoundries.Thecorporate debtorregularlypurchasedvariousfoundryandchemicalsgenerallyoncreditor basis,thecreditperiodbeing30dayswhichwasrelaxedforanother15days beyondtheusualcreditperiodasmentionedintheinvoices.Theoperational creditoralsogranted7daysastransitperiodforpaymentbypostdatedcheques. However,thecorporatedebtorfailedtomakeanypaymentagainstoutstanding debt. 3. Itappearsfrom therecordthatthematerialssuppliedtothecorporate debtorwereretainedandusedbythecorporatedebtor.Allthesearereflectedin theinvoices,thedetailsofwhichareprovidedinAnnexureAannexedwiththe pd 2| Page

CP(IB)No.1735/KB/2019 application.Theseareasfollows:- Invoicedate Duedate Invoiceamount Balancedue 12/3/2018 11/4/2018 28,32,000.00 10,82,000.00 29/3/2018 28/4/2018 28,01,320.00 28,01,320.00 18/5/2018 17/6/2018 26,88,512.00 26,88,512.00 11/7/2019 31/8/2019 12,80,831.00 12,80,831.00

4. Thecorporatedebtorneverraisedanygrievancesregardingqualityor specificationoranyotheraspectsofthematerialsuppliedtothem bythe operationalcreditor.Thecorporatedebtorhasfailedtomakepaymentsagainst severalinvoicesraisedbytheoperationcreditorfrom 3/12/2018to11/7/2019 againstsupplyofthematerials. 5. Thetotaloutstandingdebtreceivablefrom thecorporatedebtorason 31/7/2019isRs.90,00,919.10(i.e.PrincipalamountofRs.78,52,663.00+interest Rs.11,48,256.10)onthebasisofwhichademandnoticewasissued.Itappears from therecordthattherehavebeenaseriesofcorrespondencebetweenthe operationalcreditorandcorporatedebtorinrespectoftheaforesaiddebt,copies ofwhichareannexedwiththeapplicationasAnnexure10Ato10L.Itappears from thesaidcorrespondencesthatthecorporatedebtorhasalwaysaccepted andagreedtomakepaymentoftheoutstandingdebtandhasneverraisedany disputewhatsoever. 6. Thecorporatedebtorfailedtomakepaymentoftherelevantdebtand,as such,theoperationalcreditorservedademandnoticeasprescribedunderthe Rule.Thedemandnoticewasservedonthecorporatedebtoron1/8/2019.

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CP(IB)No.1735/KB/2019

Copiesofthedemandnotice,speedpostreceiptandproofofdeliveryofservice areannexedwiththeapplicationasAnnexure12. 7. Inresponsetothesaiddemandnotice,theoperationalcreditorhasnot receivedanyreplyfrom thecorporatedebtor.Theoperationalcreditorfurther submitsthatthereisnopreexistenceofanydisputeorpendencyofanysuitor arbitrationproceedingsfiledbeforebythecorporatedebtorinrelationtoany suchdispute. 8. CorporateDebtorthoughwascalledabsentanddeclaredex-parte,vide orderdated17th January,2020theapplicationCA(IB)No.107/KB/2020was allowedbysettingasideandtheex-parteorderwithadirectiontopaycostofRs. Onelakhandsubmitsreplywithin10daysfrom thedateoftheorder.Despite grantingtimetheCDhaschosennottocontestthisapplicationforthereasonnot broughttothenoticeofthisbench. Thiscasewasagaincameupfor considerationon3rdFebruary,2020.OnthatdayalsotheCDhasnotchosento filereply,butpaidcostandpraysfurthertimetofilereplywithoutassigningany validreasonandthematterwaspostedforhearingon13.03.2020.Whenthis casewastakenupforfinalhearing,theLd.CounselfortheCDrequested7days’ timeforenablingtheCDtosettlethematter.However,thematterwasheard, givingassurancetotheCDthatIwillnotpronouncetheorderswithin7days,but reservedthematterfororders.InthemeanwhileCoronaVirusPandemichas disruptedtheentireworkingofthecountryincludingjudicialworkandtherebyI wasunabletopronouncethejudgmentimmediatelyafter7daysorwithinone month. Tilldatethisbenchwasnotinreceiptofanycommunicationfromeither ofthepartiesthatthematterwassettledoutoftheTribunal.OntheotherhandI pd 4| Page

CP(IB)No.1735/KB/2019 wasinreceiptofanemailsentbyLd.AdvocateMr.SushovitDuttMajumder, addressedtotheKolkataBenchreferringtwojudgmentsandthemailissilentas tothesubmissiononthesideoftheCDrecordedbymeon13.05.2020.However Ld.CounselfortheCDbeingrepresentedtheCDontoday,hewaspermittedto submitastothereasonforbringingtomynoticetheJudgmentscitedbelowon thedaywhenthismatterwaslistedforpronouncementofordersandnotfor hearingorforre-hearing. i). SriMunisuvrataAgriInternationalPvt.Ltd.Vs1.BankofBarodaand Ors.[CompanyAppeal(AT)(Insolvency)No.84of2019] ii) SleepwellIndustriesLtdandOrs.[CP(IB)No.615/KB/2018]

9. Referringtotheabovereferredjudgments,thelateattemptonthesideof theCDisthatbecauseoftheamendmenttosection4oftheCodeintroducinga provisotoSection4that“ProvidedthattheCentralGovernmentmay,by notification,specifytheminimumamountofdefaultofhighervaluewhichshall notbemorethanonecrorerupees."isretrospectiveinoperationandtherefore thisapplicationaftertheamendmentnotmaintainableforwantofpecuniary jurisdictionofthisTribunalastheamountinvolvedinthematterislessthan OneCrore. Accordingtohim similaramendmenttosection10(4)(c)was introducedbytheGovernmentwhereinIholdinthematterofSleepWell IndustriesLtd.citedabovethattheoperationof10(4)(c)isretrospectiveand therefore,theoperationoftheaboveprovisotosection4oftheCodeistobe heldasretrospective.Ifsothisapplicationisliabletobedismissed.Submitted bytheLd.CounselMr.D.N.Sharma.

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CP(IB)No.1735/KB/2019

10. TheCentralGovernmentbynotificationdated24.03.2020enhancedthe minimumamountofdefaultlimitfromonelacktoIcroreforinitiatingCIRPas againstsmallandmedium scaleindustries.SoquestionraisedbytheLd. CounselisthatwhetherNotificationu/s4oftheCoderaisingtheminimum defaultlimitbeapplicabletotheapplicationspendingforadmission?Itisawell-settledlawthatastatuteispresumedtobeprospectiveunlessitisheldtobe retrospective,eitherexpresslyorbynecessaryimplication.Whentheamendment tosection4ofIBCwas,insertedaprovisoenhancingthepecuniaryjurisdiction forfilingapplicationsasagainstsmallandmediumscaleindustriesnowherein thenotificationmentionedthatitsapplicationwillberetrospective.Therefore,it appearstomethattheamendmentshallbeconsideredasprospectiveandnot retrospective.Thefactsintheciteddecisionsarenotatallsimilartothefactsin thecaseinhandandhencenothelpfultostrengthenthesaidsubmissiononthe sideoftheCD.Intheviewofthematter,Idonotfindanyillegalityinpronouncing theorderontodaythroughVC. 9. ThisisanapplicationfiledunderSec.9ofIBCodeforinitiationof corporateinsolvencyresolutionprocessagainstthecompanywhoisdealingwith businessofmanufacturingandsupplyofchemicalsandalliedproductsrelatedto foundryandsteelindustries,suchas,resins,coatingforferrousandnon-ferrous foundries,sleeves,fluxes,metaltreatmentproductsoffoundries. 10. AccordingtotheLd.PCSfortheoperationalcreditor,sincethecorporate debtorfailedtopaytheamount,itisentitledtoclaimtheamountduetothetune ofRs.90,00,919.10.Noneoftheinvoicescontainsthetermsstipulatingthe corporatedebtortopayinterestforthedelayedpaymentoftheamountfound pd 6| Page

CP(IB)No.1735/KB/2019 duetotheoperationalcreditor.Thecorporatedebtorhavingnotdisputedits liability,theamountasclaimedbytheoperationalcreditortowardsthematerial costlesstheinterestisfounddueandpayablebythecorporatedebtor. 11. TheLd.PCSfortheoperationalcreditor,furthersubmitsthatdespite repeateddemands,thecorporatedebtorfailedtopaytheoperationaldebtand thereforeademandnoticeunderRule5oftheInsolvencyandBankruptcy (ApplicationtoAdjudicatingAuthorityRules),2016,wasissuedandtheCorporate Debtorwasinreceiptofthedemandnotice.TheCDneithersentareplynorpaid theamountfoundduetotheoperationalcreditorandnotraisedanydispute.The claim isalsonotbarredbythelawoflimitation.Accordingly,theclaim ofthe operationalcreditorisfoundsustainableunderthelaw. 13. IncomplianceofSec.9(3)(b)ofIBCode,2016,theapplicanthasproduced anaffidavit,andastatementofbankaccountalsoseenproducedonthesideof theoperationalcreditorincomplianceofsection9(3)(c).Therefore,allthe requirementsaremadeoutinthecaseinhand.Theoperationalcreditorhasalso proposedthenameofResolutionProfessional,ShriAmitChoraria,Registration No.IBBI/IPA-001/IP-P01345/2018-2019/12129.Written communication under Form 2revealsthatthereisnodisciplinaryproceedingspendingagainstthe proposedIRP.Thatbeingso,theoperationalcreditorsucceedsinprovingthatthe applicationundersub-sec.(2)ofSec.9ofIBCode2016iscomplete;thatthereis nopaymentoftheunpaidoperationaldebtandthatthereisserviceofdemand noticewithinvoices.Despitereceiptofthedemandnotice,thereisnopayment onthesideofthecorporatedebtor,nopre-existingdispute,alsoallegedorproved. TheLd.CounselfortheCDnotraisedanydisputeatthetimeofhearing,other pd 7| Page

CP(IB)No.1735/KB/2019 thanhisrequestfortimetosettlethematter. Thereisnodisciplinary proceedingspendingagainsttheRPproposedundersub-sec.(4)ofSec.9ofIB Code,2016andaccordinglythisapplicationiscompleteandtherefore,liableto beadmitted. 14. Inviewofwhatisstatedabove,thisapplicationisadmitteduponthe following:-

ORDER i. TheapplicationfiledbytheOperationalCreditorundersection9of theInsolvency&BankruptcyCode,2016forinitiatingCorporate InsolvencyResolutionProcessagainsttheCorporateDebtor,Om BosecoRailProductsLimitedisherebyadmitted. ii. Weherebydeclarea moratorium and publicannouncementin accordancewithSections13and15oftheIBC,2016.

iii.MoratoriumisdeclaredforthepurposesreferredtoinSection14of theInsolvency&BankruptcyCode,2016.TheIRPshallcauseapublic announcementoftheinitiationofCorporateInsolvencyResolution ProcessandcallforthesubmissionofclaimsunderSection15.The publicannouncementreferredtoinclause(b)ofsub-section(1)of Section15ofInsolvency&BankruptcyCode,2016shallbemade immediately.

iv.Moratorium underSection14oftheInsolvency&BankruptcyCode, 2016prohibitsthefollowing:

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CP(IB)No.1735/KB/2019 a) The institution ofsuits orcontinuation ofpending suits or proceedingsagainstthecorporatedebtorincludingexecutionofany judgment,decreeororderinanycourtoflaw,tribunal,arbitration panelorotherauthority; b) Transferring,encumbering,alienatingordisposingofbythecorporate debtoranyofitsassetsoranylegalrightorbeneficialinteresttherein; c) Anyactiontoforeclose,recoverorenforceanysecurityinterest createdbythecorporatedebtorinrespectofitspropertyincluding anyactionundertheSecuritizationandReconstructionofFinancial AssetsandEnforcementofSecurityInterestAct,2002(54of2002); d) Therecoveryofanypropertybyanownerorlessorwheresuch propertyisoccupiedbyorinthepossessionofthecorporatedebtor. v. Thesupplyofessentialgoodsorservicestothecorporatedebtoras maybespecifiedshallnotbeterminated,suspended,orinterrupted duringmoratoriumperiod. vi.Theprovisionsofsub-section(1)shallnotapplytosuchtransactions asmaybenotifiedbytheCentralGovernmentinconsultationwith anyfinancialsectorregulator. vii.Theorderofmoratoriumshallhaveeffectfromthedateofadmission tillthecompletionofthecorporateinsolvencyresolutionprocess. viii.Providedthatwhereatanytimeduringthecorporateinsolvency resolutionprocessperiod,iftheAdjudicatingAuthorityapprovesthe resolutionplanundersub-section(1)ofSection31orpassesan orderforliquidationofcorporatedebtorunderSection33,the pd 9| Page

CP(IB)No.1735/KB/2019 moratoriumshallceasetohaveeffectfromthedateofsuchapproval orliquidationorder,asthecasemaybe. ix.NecessarypublicannouncementasperSection15oftheIBC,2016 maybemade. x. ShriAmitChoraria,RegistrationNo.IBBI/IPA-001/IP-P01345/2018- 2019/12129,ContactNo.9830858715 is appointed as Interim ResolutionProfessionalforascertainingtheparticularsofcreditors andconveningaCommitteeofCreditorsforevolvingaresolution plan. xi.TheOperationalCreditortodepositasumofRs.1,00,000/-(Onelakh) intheESCROWAccountinSBItobeoperatedthroughtheRegistrar, NCLT,KolkataBench,forthepurposeofmeetingthepreliminary expensesforinitiatingtheCIRProcessbytheIRPwithintwoweekof thedateofthisorderwhichcanbeadjustedafterconstitutionofthe CoC. xii.TheResolutionProfessionalshallconductCIRP intimebound mannerasperRegulation40AofIBBI(InsolvencyResolutionProcess forCorporatePersons)Regulation,2016. xiii.Registryisherebydirectedundersection9(5)oftheI.B.Code,2016to communicatetheordertotheOperationalCreditor,theCorporate DebtorandtotheI.R.P.bySpeedPostaswellasthroughe-mail.

15. Listthematteron30thJune,2020forfilingoftheprogressreport.

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16. RegistryisdirectedtoforthwithservecopytothepartiesandtotheIRPby wayofemail. 16. Certifiedcopyoftheordermaybeissuedtoalltheconcernedparties,if appliedfor,uponcompliancewithallrequisiteformalities.

(JinanKR) Member(J)

Pronouncedon20thMay2020,throughVideoConference.

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