NCLT admits Howrah wagon rebuilder Oscorp Industries to insolvency, rejects ‘joint venture’ defence

The National Company Law Tribunal’s Kolkata bench has admitted Oscorp Industries Private Limited, a Howrah-based railway wagon rebuilder, into the corporate insolvency resolution process on a Section 7 petition filed by Gurgaon-based Stemztech Industries Private Limited over an unpaid debt of Rs 2.74 crore, rejecting the corporate debtor’s argument that the money was an equity-style investment in a joint venture rather than a financial debt.

The order, passed on August 10 by a bench of Labh Singh, Member (Judicial), and Rekha Kantilal Shah, Member (Technical), in C.P. (I.B.) No. 126/KB/2025, was reserved after a hearing on July 17, 2026. Raj Singhania has been appointed interim resolution professional and a moratorium under Section 14 of the Insolvency and Bankruptcy Code has been declared.

The transaction

The dispute arises from a memorandum of understanding dated December 20, 2022 under which Stemztech agreed to provide financial assistance to Oscorp for bidding on tenders floated by Indian Railways, the order records. An addendum dated January 30, 2023 set out further terms for executing two existing contracts, referenced in the order as CA No. MECH/BSP/2019/005/Renewal 450 BCN and CA No. MECH/BSP/2020/005/50 BOXN — covered and open wagon types respectively in Indian Railways’ rolling stock nomenclature.

Two loan agreements followed, dated February 11 and March 10, 2023, together providing for Rs 2.5 crore at 10 per cent interest a year. Stemztech disbursed Rs 2.25 crore in tranches between February and March 2023, an amount the order says the corporate debtor confirmed.

Stemztech told the tribunal it issued a demand notice on May 30, 2023 for Rs 2,51,28,221 and, in Part VI of its application, claimed Rs 2,74,91,034.20 as due and payable.

The defence

Oscorp, represented by senior advocate Joy Saha, contended that no debtor-creditor relationship existed and that Stemztech did not qualify as a financial creditor under Section 5(8) of the Code. The real arrangement, it said, was a joint venture in which the parties agreed to share profit and loss equally over three calendar years of railway contracts, with Stemztech as the investing partner and Oscorp as the working partner.

The loan agreements, Oscorp argued, were a paper formality. It pointed to emails of January 13 and 17, 2023 in which it told Stemztech that an interest-free loan could not be advanced between two Indian companies under the Companies Act, 2013, making it difficult to record the investment in its books — and that the payments would in fact bear no interest and be adjusted within six months. It also relied on its own letter of July 17, 2024, which said Stemztech was to invest approximately Rs 4.8 crore as per an agreed cash flow against a 50:50 profit share.

Oscorp’s counsel cited the NCLAT ruling in Realpro Realty Solutions Pvt. Ltd. v. Sanskar Projects and Housing Ltd., in which the appellate tribunal held that a party pooling resources in an agreed ratio and sharing profits, losses and costs could not claim the status of a financial creditor under Section 5(7).

Oscorp further alleged that Stemztech had stopped funding the projects, forcing it to meet project costs from its own pocket and leading to suspension of work; that the Railways had threatened to terminate a tender if work did not resume from June 26, 2023; and that an escrow account agreed at a meeting on July 19, 2023 was never opened.

What the tribunal held

The bench rested its finding primarily on clause 19 of the February 11, 2023 loan agreement, which provides that the loan agreement constitutes the entire agreement between the parties and supersedes all previous oral or written communications on its subject matter.

Even assuming the MoU and addendum survived, the bench said, the addendum itself contemplated Stemztech raising invoices for project management or business consultation fees equal to 50 per cent of project profit, with interest on the loan to be adjusted from overall profits — an arrangement the tribunal read as consistent with a lending relationship rather than displacing it.

The bench also relied on two emails from Oscorp: one dated August 23, 2025 agreeing to refund the amount paid by Stemztech, and another dated September 11, 2025 acknowledging liability and asking for time until the Railways released payment.

Holding that Stemztech came within the definition of a financial creditor, that the loans had been advanced and that default had occurred, the bench found the Form I application complete and free of infirmity, with no disciplinary proceeding pending against the proposed IRP, and admitted the petition under Section 7(5)(a).

The earlier insolvency

Oscorp had argued in a supplementary affidavit that it was solvent and a healthy going concern, filing its balance sheet for the year ended March 31, 2025, and that the Code could not be used as a debt recovery mechanism against a solvent company.

Stemztech countered that Oscorp had already been admitted into CIRP once before — on January 4, 2024, on a Section 9 application by one Rajendra Kumar Agarwal — with the process closed following a settlement, the closure approved by the NCLAT on February 8, 2024. That history, it argued, undercut the solvency claim. The order does not record a separate finding by the bench on the solvency argument.

Directions

The tribunal directed Stemztech to deposit Rs 3 lakh with the IRP within three days of receipt of the order to meet initial process costs, subject to adjustment against resolution process cost. It directed the IRP to make the public announcement within three days as prescribed under Regulation 6(1), and the registry to communicate the order to the parties, the IRP and the Registrar of Companies, West Bengal within three days.

Per the Form A public announcement published on August 13 in the Kolkata edition of The Economic Times and the Bengali daily Ekdin, the insolvency commencement date is August 10, 2026 and creditors must submit claims with proof by August 24, 2026. Financial creditors must file electronically. The estimated date of closure of the process is February 6, 2027 — 180 days from commencement. (Derived: the 180-day count is this correspondent’s calculation from the two dates stated in Form A.)

Correspondence is to be addressed to the IRP at Apex Insolvency Professionals LLP, Central Plaza, 41 B. B. Ganguly Street, Kolkata-700012, or oscorp.cirp@gmail.com. No class of creditors has been ascertained under Section 21(6A)(b) and no authorised representatives have been named.

The company

Oscorp Industries, formerly Subrata Iron Foundry, describes itself as a manufacturer and upgrader of railway wagons and wagon components serving major divisions of Indian Railways, with work covering fabrication, modernisation and retrofitting. It claims more than 15 years of experience in wagon rebuilding and traces its origins to 1973. The descriptions are the company’s own and could not be independently verified.

The company was incorporated on April 17, 2013, with registration under the Registrar of Companies, Kolkata-II, and corporate identity number U74900WB2013PTC192320. Its registered office is at Balitikuri, Surkimill, Howrah-711113.

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