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of <h1>IBC Petition Admitted: Corporate Insolvency Resolution Process Initiated</h1> <h3>ZTE Corporation, China Versus Smartron India Private Limited</h3> ZTE Corporation, China Versus Smartron India Private Limited - TMI Issues Involved:1. Default in repayment by Corporate Debtor.2. Existence of pre-existing dispute.3. Validity and rejection of Letters of Credit.4. Alleged ban on Operational Creditor's products.5. Appointment of Interim Resolution Professional.Detailed Analysis:1. Default in Repayment by Corporate Debtor:The Operational Creditor, M/s. ZTE Corporation, claimed that the Corporate Debtor, M/s. Smartron India Private Limited, defaulted in repaying USD 1,397,166. The claim was based on two Purchase Orders (POs) for the supply of Tphone units. The Operational Creditor supplied the units and raised invoices, but the Corporate Debtor failed to make the payments. The invoices included:- Invoice No. ZTESMT201712001 dated 28.12.2017 for USD 132,000.- Invoice No. ZTESMT201803008 dated 28.03.2018 for USD 577,500.- Invoice No. ZTESMT201804009 dated 07.04.2018 for USD 522,500.2. Existence of Pre-existing Dispute:The Corporate Debtor argued that there was a pre-existing dispute based on the arbitration clause in the Supply Agreement and alleged non-performance by the Operational Creditor. However, the Tribunal found no evidence of any dispute raised by the Corporate Debtor prior to the demand notice. The Corporate Debtor had acknowledged receipt of the Tphone units and had not raised any issues regarding quality or delay before the notice.3. Validity and Rejection of Letters of Credit:The Letters of Credit (LCs) issued by the Corporate Debtor were rejected by the banks on grounds of 'LC Overdrawn,' 'LC Expired,' and 'LC Closed.' The Operational Creditor had requested the Corporate Debtor to issue fresh LCs due to changes in shipment destinations and other reasons, but the Corporate Debtor failed to do so. The Tribunal noted that the Corporate Debtor had assured the Operational Creditor of resolving the LC issues but did not fulfill its commitments.4. Alleged Ban on Operational Creditor's Products:The Corporate Debtor contended that the Operational Creditor's products were banned in the USA, causing losses. The Tribunal dismissed this argument, noting that the Tphone units were delivered to India and were available for sale on platforms like Flipkart. The alleged ban was not considered a valid ground for dispute.5. Appointment of Interim Resolution Professional:The Tribunal appointed Mr. Ganapati Ram Appana as the Interim Resolution Professional (IRP) for the Corporate Insolvency Resolution Process (CIRP). The IRP was directed to perform his duties as per the Insolvency and Bankruptcy Code (IBC) and related regulations. The Tribunal also declared a moratorium, prohibiting any suits or proceedings against the Corporate Debtor and ensuring the continuation of essential goods and services.Conclusion:The Tribunal admitted the petition under Section 9 of the IBC, 2016, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The moratorium was declared, and the IRP was appointed to manage the process. The Tribunal found no pre-existing dispute and held that the Corporate Debtor had defaulted in its payment obligations.
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