In the matter of Powerforge Engineering Private Limited

{under Section 9 of the Insclvency and Bankruptcy Code, ?016 Read rvith Rule 6 of the Insolvency and Bankruptcy {Application to Adudicating Authority) Rules,20l6)

IN THE MATTER OF: $STSS STEEL INDUSTRIES TRIVATE LIMITED OFERATIONAL CRII}ITOI* . .. APPLICAIIiiT

\iERS [:S

[ l-t]II'rli] p{}\tr' L_RrOI{t Iir{{;m{E[I{I XG I}lU \',{.]'Ii; coRPoRA.['E, l]EB"rO Al. .. RHSPONI)E}iT Applicant : F'crr the Divesh Sh*rnra, Adv. BMSS Steel Industries Private Limited Versrs \3I-{ Porveriorge Engineering Pri'r,ate Lirnited --g

? : For the Respondent Amol Yyas, Adv. $affiopF PARTTES BMSS STETL INDUSTRIES PRIVATT LIMITEN 366, S.V.P, Road, Frsthana Samaj, Mumbai - 40000{ ., Op€rational CrerlitorlAppl ica n t

YERSUS

POWERTORGE INGINEERING PRTYATE LIIIIItED Hf-603/603, RIICO Industrial Area, Chopanki, Rhiwadi, Distrirf Alwar, Rajasth*n - 30I$19. . "Corporate Debtor/Responden t grdrr Pronou ncgg r*f".#2020 .On thr / ORI}ER Pqr: Shri Raghu Nayyar. Te:phnicel Megnber 1. This Application has been filed under $ection 9 of the Insolvency and Bankrupcy cd'e ('IBC'), ?016 read with Rule 6 of Insolvency and Bankruptcy (Application to Adjudicaring Authority) Rules, 2016 by BMSS steel Industries Private Limited ('Applicant'), claiming to be an Operational Creditor witlr a prayer for initiation of Corporate Insolvency BMSS Stesl lndustxies Private Limitod G^lr Versus Powerfbrge Engineering Private Llmited

Resolution Process against Powerfbrge Engineering Private Limited ('Respondent'), the Corporate Debtor herein. This Application is filed through Mr. Rajiv Himatlal Coradia, an Authorised Representative of the Applicant, authsrised vide letter dated 22,S5.?0i9. ) The Applicant is a Privats Limited Company, registered with Regi*trar of Companies, tufumbai, with CIN: U74999MH1987PTC030023 and its Registered Offic.e is at 366, S.V.P. Road, Prathana Samaj, Mumbai 400004. J. The Respondent is a Private Limited Cnmpany incorporated under the provisions of the Companies Act, 1956 on I1.10.301l, duly registered with Registrar of Companies, Jaipuro bearing CIN: U?81l?zu?011PTC063297 and the Registered Office of the Respondent is at Hl-603/603, zuICO Industrial AreA Chopanki, Bhiwadi, District Alwarn Rajasfhan - 301019. The authorized share capital of the cornpany is Rs" ?,00,00,000/- {R*pees Two Crores Only) and paid up share capital is Rs. Rs. 1,78,00,000/- (Rupees One Crore Seventy Eight Lakhs Only), as per Master Data of the Cornpany. 4. It is the case of the Applicant that the Applicant used to supply tools and die steel ta the Respondent and raised its invoices worth Rs. 18,25,181/-against purchase orders pertaining to such transacti$ns" The commercial

BMSS Steel Industries Private Limited Yersus Powerforge Enginerring Private Limited relationship thus sustained between the parties. The Respondent had been making payments periodically, henee rxaintaining a continuous account.

5. The Applicant further submitted that as per the terms and conditions of the invoices, an interest *f 24Ya p.a. would be applicable in case of delayed payment against the said invoices. The Respondent made part paymenrs against the outstanding arnount, but later stopped making payments against these invoices.

6. The Applicant furtherrnore stated that the first incidence of default had occurred on 18.03.?018. The Applicant sent a Demand Notice in Fonn J dated 12.04.?019, through e-mail to the Respondent on their registered e-mail id on the website of Ministry of Corporate Affairs and on the e-rnail id of the whole-time director of the Respondent. The Applicant still did not receive any payment towards the outstanding amount.

7. The details of the unpaid invoices, as stated by the Applicant, are given below:

*-N" *t"--*

BMSS Steel Indusries Private Limited Versus Pr:rverforge h,n gineering Private L inr i teci

I nvoice Ilated Ameiunt 00303 08"05.20i 7 26,757.66/- r 00204 08.05.?01 7 2,54,9171- i oozs 08.07,:017 I,65,910/- 03.1 0.?0 r 7 1,08,350/- 02.10.?017 : 0390 i 2^2s.r44t- .20t7 i 0se7 16.11 i 2,42,030 0675 02.1?.?01 7 4,19"2981- 0763 18.t2.24fi 1,07,3191- Totnl 15.49,7?5/- 8. As a consequence of non-payment of the due amount and interest, this Application was filed. As claimed by the Applicant, the Respondent is Iiable to pay an amount of Rs, 22,73,4311 (Rupees Twenty Two Lakhs Seventl' Three Thousand Four Hundred Thiny One Only), as an outstanding amount. as reflected in Part lV of the Form - 5 liled which is as tabulated hereinbelow:

PART IV -].l Particulars of Operational Debt i --1i Total amount of debt, Outstanding Principai Amount Rs. 15,49.?25 l-details of transactions Add: Interest @18% Rs. 6,23.7061- t:n account of which Add: Legal expenses &s. 1.00.000/-debt fell due, and the i Total llebt Amounf &h 32.73,431/-date lrorr: w'hich such I : _l-_ it _ debt fell due.

Gr'r" d..*

BMSS Steel lndustries Private Limited Versus Powerfcrge Engineering llrivate Limited i i Amount claimed to be I I Total amounr of debt clainred to be in de&ult is I I I in default and the date Rs. 23,73,4311- {Rupees Twenty Two Lakhs i i on rvhich the detault Seventy Three Thousand Four Hundred Thirty One Only) including interest €t l8% per mCInth occurred and leg*l expenses"

Date af default: 18.fi3"?01S bilote: In part IV of the Application, interest is shprvxr & be rharged G; 18% F.&., however after perusing the computation sheet annexed with the application, it is naticed that the interest is calculated @ 24a& p.a. in accordance with the invoices attached. 9. Various allegations and counter-allegations seem to have been raised in respect of the claimed and other invoices, which have been weaved into an intermingled narrative by the Respondentn in portrayal of alleged clispute and its expanded projection. Hence, it is best to analyse the position of the Applicantl Operational Creditor and the Respondent with respect ta these invoices in the following manner: I" Claimed tlvoices A. The Respondent vid* e-rnail dated 30.S4.2019 raised a dispute in respect of crack in die block supplied vide invoice no" 204 dated 08.05.2017. The Applicant/ Operational Creditor vide response e-mail of the same date informed the Respondent that crack on die GFr BMSS Steel lndustries Private Limited Versus ***'t"* Por*.erfcrge Engineering Private Limit*d block occurred due to reasons at their end like improper/ incorrect die se*ing, excessive load on die, etc. The die block was supplied as per the Test Certificate u,hich had been accepted by the Respondent. The said e-mail exchange is part of annexure 4 of the Applicati$n. The Respondent still allegedly raised a debit note fcr Rs. 5,78,200r-on 05.05.2019, which is more than the elnount mentioned in the invoice no" 204, i.e. Rs. ?,54,917. It is relevant to note here that almost after 2 years of supply of the die block and after receipt of the demand notice, the Respondent had raised this dispute which implies that the Respondent is trying to create a dispute and delay the matter. The Respondent clairns to have put a specific handwriuen note in the purchase order, in view of the claimed breaking of the die blocks and cracks appearing therein, stating, "Material must be written guaranteed against crack, life or any other defbct". However, no such noting has been endorsed on the corresponding purchase order related to invoice no. 204.

B. The Respondent submitted that the die block purchased vide invoice no. 26 dated 08.07.2017, broke during production and the same was reported to the Applicant by e-mail dated 11.08.2017. In this regard, the Respondent raised a debit note of Rs. 2,16,701/- on 14.09.7Q17. It was mutually agreed by both the parties to send the die biocks for IIMSS Steel Indusfiies Private Limited (J(*r'-.f Versus *f, Porverfinrge Engineering Private l-imited

I an expert opinion but the Respondent was not satisfied with the expert opinion on the ground that it w.as not a comprehensive opinion. Subsequently, in respect of the said invoice, on 01.10.301?. the Applicant issued a credit note for 50Yo amount. i.e. fur Rs. 1,08.350/" That ,lqerningly ended eny controversy with respecr thereto, but the qF.rne seems to have beqn raked up hy the Respondent for amplification of'other alleged disputes. Thus, the Respondenr appears to be attempting to fob-off liability to pay. ..., c. Th3 Respondent submitted that ir reporred xack in die block by e-mail dated 16.02.2018. which was purchased vide invoice no. 597 dated 16.1l.?017. The Respondent further stated that the Applicant in purported reply ro the aforesaid e-mail, altegedly refused ro replace the die block vide email dated 0s.03"2018. However, after perusing the said e-mails, it is seen that only a typed copy of the alleged e-mail of Respondent to the Applicantn has been filed by the Respondent and the veracity of the same is questionable. If the e-mail in question was still available in outboxl sent items of &e Respondentl Corporate Debtor, a printout of the same could have been furnished. Else, photocopy of a paper printout record of the original e-mail sent could have been provided alongwith the typed copy. It is thus seelr that the Respondent has not furnished proper BMSS Steel lndustries Private Limited cKi'f Versus *'?t* Porverforge Engineering Private Limited

I docurnents or proof in support of its claim in respect cf alleged crack in die block bought vide invoice no. Sg?.

D. with respect to invoice nos. ?03,25, 390,6?5 and 763 as claimed by the Applisant, the Respondent/ Corporate Debtor has not raised any dispute in this regard. II. Other,lnqpises A. The Respondent stated that rhey had regularly been plaeing orders with the Applicant fur purchase of die blocks and inserts, but on few oceasions the goods/ products supptied by the Applicant did not give satisfbctory results. In this regard, the Respondent had earlier $ent an e-mail dated f lZ,Ol.ZOl5 regarding the defects in die blocks, wherein v the Applicant adjusted payments against the damaged prodtrcts and had been replacing them from time to time. Again, this pe*ains to previous time and is not related to the matter at hand. The Respondent is trying to interweave previous complaints and issues into the present proceedings rvhich is not pertinent thereto.

B" The Respondent/ Corporate Debtor also submitted that it issu*d a debit note dated l?"05,20i8 against invoice no, 1484, dared 28"02.2017, for Rs" 4,58,355 1- as a result of crack in die blocks, But the Applicant refused to accept the debit note vide email dated (3l'f BMSS Steel In{ruskies Frivate Lirnited Versus Powerforge Engineering Private Limired l0 12.05.?S18, stating that the die block was supplied as per rhe Test Certificate which was accepted by the Responderrt.'However, this invoice does not frll within the canvas cf the present proceedings. C, The RespondenV Corporate Debtor vide *-mail dated 10.09.2018, again reported breakage in the die block purchased vide invoice no" 443 dated ?5.1l.2$16. The Applicant in respon$e, senr an e-mail dated 04.1 I .2018, wherein it statcd that &e die blocks may break due to one or msre reesons at the user's end like improper die seuing, ex*essive }oad on di*, dove tail machining, etc. It is pertinent to note here that the Respondent again has raised complaint after ? years of supply fsr a consumable itern like die block. Moreover, this invoice is not related to the present case and it is not claimed by the Applicant. D. The Respcndent vide e-mail dated 25,05.2019, again reported a crack in the die block purchased vide invoice no. 104 dated 19.04.?0t?. The Applicant vide response e-mail of the same date stated that the crack that was found in the die block sold, was supplied ? years *go which shows the malafide intention of raising complaint at this juncture after receiving the demand notice. In any case, th* said invoice no. 104 is not part of the subject matrer of these proceedings. (Kr.r BMSS Sterl Industries Private Limited Versus Porverfarge Engireering Private l-im i*d

10. It is pertinent to mention here that the Applicant sent an e-mail dated 33.01"2018 to the Respondent in respect of previous dishoncured cheques and deposit of post-dated cheques, that were issued by the Respondent in lieu of outstanding payments. The Respondent in its response e-rnail dated 3l "01.3018, agreed to honsur minimum of Rs, 3-4 lakhs of cheques, as the funds would be arranged around 15tn-2gttt February. But subsequently, the Respondent issued the following debit nCIres:

Date Invoice Il*te Sehit Note No. (Rs') 25.07.2016 180 30.03.30t9 1,87,4?3 ?5.11.2016 443 01.10.3018 ?,09,880 I ?8.02"2017 r 484 1?"05.?01 4,58,355 08.05.?017 304 05.05.20t 9 5,?8,200 3l "03"201q l2_50,800 l. i The abovementioned debit nntes have been issued after a time gap of 15- 30 months of the datn of invoice in respect cf eonsumable die-blocks. There is no proof of transmission cf the said debit notes or their acceptanee by the Applicant. The debit note amounting to Rs. BMSS Steel lndustries Privpte Limited #"r{- Versus Porvrrfarge Engineering Private Limited ***i

\2 i?,50,8001- dated 31.03.2019 has been allegedly raised by the Respondent but it does not correspond to any invoic.e or any supporting documeniation. It seems like an accounting entry added to the accounts of the imnrediately preceding linancial year ending 31.03.2019. It is seen that the demand notice of tl:e Applican# Operational Creditor was headed to the Respcndent and was received around the same tirne as on I ?.04.2019. 12. The Respondent also claims to have sent a letter dated 3l .05.?Sl8 to the Applicant and requested them to visit the plant of the Respondent in order to aseertain the real cause of thc cracks appearing in the die blocks and resolve the technical/ comnnercial issues" This does not seertl to have been a bottleneck between the Respondent and Appiicant, who has submitted that if this was an issue, the Respondent would not have efTected payments of Rs, 2,31,5?2"341-, which is shown as paid on ?8.08"2018 in the ledger account submitted by the Applicant and nor denied by the Respondent. Further, payments of Rs. 45,000/- each were made by the Respondent in December, z0l8 and February, ?01g. From e-mails of the Respondent, it seems that it was facing cash flow problems

13. The Applicant demandetl the outstanding amCIunt vide norice dated l?.04.2019. In response to tlre demand notice, the Respondent sent a (3J'.f BMSS St€el lndustries Privare Limited Versus Powerfiorge Engineering Private Limited

1l reply dated 02.05.2019, stating rhat the Respondent is nor liable ro pay any arnount to rhe Applicant and rather the Applicanr i* liable to pay a sum of Rs. 6,00,0001- approximately towards darnage caused to the Respondent, due to supply of defeetive goods. Such claim arose for the first time and there is no antecsdent narrative in this regard. 14. The Applicanti Operational Creditor has filed wri*en submissions stating that the complaint raised by the Respondent towards the quatity of die blocks was raised after the receipt of earlier notice under Section 138 of I'Jegotiable Instruments Act for cheque bouncing, which clearly indicates the intentions of the Respondent to avoid *nd delay the legitimatc claim and legal liability towards the Applicant. It is also submitted that fieslr complaints pertaining to quality were lodged after the demand nstice was issued ta the Respondent,

15. The Applicant submitted that the Respondent had previously placed orders of die blocks on regular intervals and made payments of yarious invoices consistently and also issued post-dated cheques against rhe supplies. The Respondent stopped buying cnly after the Applicent insisted that further products will be supplied only after the payments are made for the good# produets already supplied. 16. In rebuttal of the Respondent's assertions about the terms and conditions, the Applicant submitred thar rhe clauses pe*aining to tenns and conditions qKrr BMS$ Steel lndustries Private Limited Yersus Fowerfarge Engineering Private Limited were printed at the reverse side of the purchase ordcr, but the Applicant claims ta have received only the front pege af the purchase arder copy by mail and the Respondent never insisted on the aaceptance by the Applicant of all the terms and conditions as printed on the reyerse side" The Applicant subrnitted that die blocks are consumables and the issue of cracks, ete. therein arises due to usage conditions as per industry pracdce. 17. The Applicant further submitted that the material supplied was always accompanied with a test eertificate and the Respo*dent accepted the material as per the terms and conditions and then took it for use.

If tlre Respondent had any doubt wi& respect to the quality of die blocks rhen it should not have bought or accepted the same flom the Applicanr. Idoreover, as a gesture of goodrviil and to maintain cordial business relationship, the Applicant had entertained the Respondent's first two complaints regarding crack in the die blocks and also alleviated the same through pa* adjustment. 18. Furthero the Applicanl claims that there was no correspondence from the Respondent regarding issue of various aileged debit nstes u'ofih Rs. ?2,26,3531-, which neither the Applicant received, nor w&s aware cf till the Applicant received a reply to the Application {inm rhe Respondent. 19. On the scrutiny of the files and averments it is found thar, when shorn off interweaving and extrapolation of disputes, a tenuous defence has been put SMSS Steel lndustries Privare Limired #${- Versus Porverforge Engineerirrg Frivate Limited */"** t5 together by the Respondent. It dcesn't need a very deep dissectiqn but just needs a simple correlation of the relevant invoices and rheir dstes alongwith colresponding purchase orders, rvith linkage to the claimed e-mails, to analyse the same.

The Respondent's defenee, as sought to be built uP, $eems tenuous when the relevant facts are cogently viewed in a structured manner" 2S. Upon a detailed consideration of the Application and documents filed, it is evident that befcre the issuanee of demand notice, there doesn't $sem to be & pre-existing dispute with respect tCI the invoices claimed by the Applicant. In the matter of fu{obilox Innovations Private Limited p. r(irrsa So{t**re Privute Limited reported ix {2018} r JjJ, the Supreme ^sCC *Pkat Court observed that, is important is thu the existence of the dispute andl or the saif or arbirration proceeding n k$t be pre-existing* r"e. it musr exm, before the receipt of the demand rlotice or invoice, as the case msy be." The supreme court further stated that, "'Thsrdore, all tlzar &e adiadicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently fbeble tegal argurneryt or an csserr;bn af fact unsapported by evidence. It is important to separ*te the grainfrarn fke chaffand to rejeet a spurious defence whiclt is mere bluster.

" It is apparent that the Respondent has not been able to establish that there was a pre-existing dispute in (KFr BMSS Steel Indusries Privste Limited Versus P*u'erforge Engineering Private timited

I6 respect nf the claimed amount befbre the issuance nf tl:e demand n*tice. The Respandent h*d raised some complaints about t>l# unrelated invoices after issuance of demand notice which raises doubts about the intentions of the Respondent to portray that payment is not made due to quality is.sues.

21. Therefare" the payment of claim &mount {excluding legal exprnses} as mentioned in Part lV ofForm 5 has been defbulted by the Corporare Debtor. Hence, this Tribunal is inclined to initiate Corporare Insolvency Resalution Process (CfRp) against the Corporate Debtor as envisaged under the provisions of IBC, ?016. 'l-his 'l'ribunal ??. appoints Mr. Lalit Mohan Shanna, rvith Registrarior: No. IBBIIIPA-00:/Ip-I'{0t}7701?0 I 8-20 I 911 13 ?9 {email: lalitsharma?324@gmail.com)" &s the Interim Resolution Prafessional ('IRp') of the Cctporate Debtor. The IRP is directed ro take all s,rch steps a$ are required under relevant provisions of the Code.

23. Consequences of initiation af CIRP shall be inter-alia as follows: {i) The Resolution Proftssional Mr. I-alit M*han Sharma. with the No. Registration IBBI/IPA-00zllr-l'i00?70/zCIl g-2019/i?j?9 (eniail: lalitshanna?32a@gmail.corn], is hereby appointed as the Insolvency Resolution Professional {lRp} to rake over the affairs of the corporate Debtr:r and discharge duties as required to be perfinrmed by him under the provisions of lBC, ?016 including (KJ''.r BMSS Steel Industries Prir,arc Limiterl Versus Powsrfbrge fi,ngine*ring Private Lirn iteti

L7 issue of publication in widely circulated Newspaper as contemplated under the pravisicns of IBC, ?016, and calling tbr the *laims from the creditors of corporate Debtor and collation of the same. tii) Further, es a sequel of admission: moratorium as envisaged under section 14 of IBC, i0l6 is invoked in rel*tisn to the corporate Debtor which will be in vogue during the corporate Insolvency Resolution Prucess of the corporcte Debtor. The IR-p shall carry out cIRP strictly as per the timelines specified and as envisaged under rhe provisions of IBC, ?016 in rslation to the corporate Debtor. { iii) The said IRP shall act strictly in compliance with tj:e provisians of IBC, 2015 and with a view to de&ay his expenses ro be incurred and fees on &ccount, the Appricant is directed to deposit a sum of fts. ?,00,0001- (Two Lacs only) ro the aecounr of IRP within three days from the date of this order. The IRp shall duly file a shtus report flom tirne to time apprising this Tribunal about rhe progress of clRP unfolding in relation to the corporate Debrr. In tenns of section 17 &. 19 of IBC, ?016 all personnel of the Corporate Debtnr including prCIrnoters and Board of Directors, whose powers shall stand suspended, shall extend all cooperation to the IRp ffhr BMSS Steel Industries Priv*te Limited \iersus *-'** Porverforge Engineering Frivete Limited l8 during his tenure as such and the management of the affairs of the Corporate Debtor shall vest with the IRp. (iv) In terms of section I of IBC, 201f, this order shall be communicated to the Applicant, Corporate Debtor as well as the Interim Resolution Professional (IRP) appoir*ed by this Tribunal to carry out the CIRP at the earliest, not exceeding one week &om today" A copy of this order shall also be communicated to IBBI for its records" 24, Acgg-rdingly, X9. (IB)- I 5 I /9/JPRI20 I 9 is admitted. _ . "Sr, 5d l*** 5d, l****- -t / I SII. RAGHU NAYYAR, SH. P.S.N PRASAD, ]I{EMBER (TECH${[CAL} MEMBER PUDICIAL}

BMSS Steel Industries Frivate Limited Versus Po*erfbrgc f; ngineering Private Lirnited