Operational Creditor Granted Moratorium, IRP Appointed for Insolvency Process

The application filed by the operational creditor was admitted, and a moratorium was declared under Sections 13 and 15 of the Insolvency and Bankruptcy Code, 2016. Shri Amit Choraria was appointed as the Interim Resolution Professional (IRP), and the operational creditor was directed to deposit Rs. 1,00,000 for preliminary expenses. The IRP was tasked with conducting the Corporate Insolvency Resolution Process (CIRP) in a time-bound manner, with the matter scheduled for a progress report filing on 30th June, 2020.

---

---

Issues Involved:
1. Default in payment of operational debt.
2. Quality or specification disputes regarding supplied materials.
3. Pre-existing disputes or pending suits.
4. Retrospective application of amended pecuniary jurisdiction.
5. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC), 2016.

Detailed Analysis:

Issue 1: Default in Payment of Operational Debt
The applicant, Foseco India Limited, filed for initiation of corporate insolvency resolution process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 due to a default in payment of Rs. 90,00,919.10 by the corporate debtor, Om Boseco Rail Products Limited. The corporate debtor regularly purchased chemicals on a credit basis but failed to make payments for the supplied materials, as reflected in the invoices.

Issue 2: Quality or Specification Disputes
The corporate debtor did not raise any grievances regarding the quality or specification of the materials supplied by the operational creditor. The materials were retained and used by the corporate debtor without any disputes, as evidenced by the invoices and correspondences annexed with the application.

Issue 3: Pre-existing Disputes or Pending Suits
The operational creditor asserted that there were no pre-existing disputes or pending suits related to the debt. Despite receiving a demand notice on 1/8/2019, the corporate debtor did not reply or contest the debt, nor did it raise any disputes or initiate arbitration proceedings.

Issue 4: Retrospective Application of Amended Pecuniary Jurisdiction
The corporate debtor argued that the amendment to Section 4 of the IBC, which raised the minimum default limit to Rs. 1 crore, should be applied retrospectively. However, the tribunal held that the amendment is prospective and does not affect applications pending for admission. The cited judgments by the corporate debtor were found not applicable to the present case.

Issue 5: Compliance with Procedural Requirements
The operational creditor complied with all procedural requirements under Section 9 of the IBC. An affidavit and a statement of bank account were produced, and a Resolution Professional (RP) was proposed. The tribunal found that the application was complete, there was no payment of the unpaid operational debt, and there was service of the demand notice with invoices. No pre-existing disputes were alleged or proved by the corporate debtor.

Order:
The application filed by the operational creditor was admitted, and a moratorium was declared under Sections 13 and 15 of the IBC, 2016. The tribunal appointed Shri Amit Choraria as the Interim Resolution Professional (IRP) and directed the operational creditor to deposit Rs. 1,00,000 for preliminary expenses. The IRP was instructed to conduct the CIRP in a time-bound manner, and the registry was directed to communicate the order to all concerned parties. The matter was listed for filing of the progress report on 30th June, 2020.

---