Tribunal Admits Insolvency Petition, Declares Moratorium & Appoints Resolution Professional

The Tribunal admitted the petition under Section 9 of the Insolvency & Bankruptcy Code, declared a moratorium, and appointed an Interim Resolution Professional. The Corporate Debtor's objections were dismissed as the Tribunal found no dispute regarding the relevant purchase orders and invoices, establishing the default of operational debt. The moratorium would be in effect until the completion of the Corporate Insolvency Resolution Process, approval of the Resolution Plan, or an order for liquidation, whichever is earlier. The public announcement of the initiation of the Corporate Insolvency Resolution Process was mandated.

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Issues Involved:
1. Default in payment by Corporate Debtor.
2. Pre-existing dispute raised by Corporate Debtor.
3. Compliance with terms of purchase orders.
4. Appointment of Interim Resolution Professional and declaration of moratorium.

Issue-Wise Detailed Analysis:

1. Default in Payment by Corporate Debtor:
The Operational Creditor filed a petition under Section 9 of the Insolvency & Bankruptcy Code, 2016, stating that the Corporate Debtor defaulted in payments amounting to Rs. 60,74,330/-, which includes interest at 18% till 28.10.2018. The Operational Creditor supplied spare parts and rendered services to the Corporate Debtor, raising 54 invoices totaling Rs. 96,18,418/-. The Corporate Debtor made part payment of Rs. 46,10,126/-, leaving an outstanding balance of Rs. 50,08,292/-. Despite several reminders, the Corporate Debtor failed to make the remaining payment, leading to the issuance of a Demand Notice on 30.10.2018.

2. Pre-existing Dispute Raised by Corporate Debtor:
The Corporate Debtor contested the petition, alleging that the Operational Creditor did not adhere to the terms of the purchase orders, resulting in a substantial loss. The Corporate Debtor claimed to have paid Rs. 12,94,33,420/- (92% of the project cost) and attributed a loss of Rs. 40 crores due to delays and defective machinery supplied by the Operational Creditor. The Corporate Debtor argued that there was a pre-existing dispute before the issuance of the demand notice, referencing purchase orders from 2016 and alleging that the Operational Creditor owed them Rs. 38 crores.

3. Compliance with Terms of Purchase Orders:
The Operational Creditor rebutted the Corporate Debtor's claims, emphasizing that the Corporate Debtor did not specifically deny the supply and services related to the purchase orders filed in the petition. The Operational Creditor argued that the Corporate Debtor was attempting to create a "moonshine dispute" by mixing facts from other purchase orders. The Tribunal noted that the Corporate Debtor's objections pertained to purchase orders from 2016, which were not the subject of the present petition. The Tribunal found that the Corporate Debtor did not raise any dispute regarding the purchase orders and invoices relevant to the petition, thus establishing the default of operational debt.

4. Appointment of Interim Resolution Professional and Declaration of Moratorium:
The Tribunal admitted the petition under Section 9 of the Insolvency & Bankruptcy Code, 2016, and declared a moratorium as per Section 14 of the Code. The Tribunal prohibited the institution or continuation of suits or proceedings against the Corporate Debtor, transfer or disposal of assets, and recovery actions. The supply of essential goods or services to the Corporate Debtor was to continue without interruption during the moratorium period. The Tribunal appointed Shri Kranthi Kumar Kedari as the Interim Resolution Professional to carry out the functions under the Insolvency & Bankruptcy Code. The Tribunal also directed the public announcement of the initiation of the Corporate Insolvency Resolution Process and communicated the order to the Registrar of Companies and the Interim Resolution Professional.

Order:
The Tribunal admitted the petition, declared a moratorium, and appointed an Interim Resolution Professional. The moratorium would remain effective until the completion of the Corporate Insolvency Resolution Process, approval of the Resolution Plan, or an order for liquidation, whichever is earlier. The public announcement of the initiation of the Corporate Insolvency Resolution Process was to be made immediately.

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