Tribunal Admits Petition: Debt & Default Confirmed, IRP Appointed, Moratorium Declared

The Tribunal admitted the petition under Section 9 of the Insolvency & Bankruptcy Code, 2016, confirming the existence of debt and default by the Corporate Debtor. It established the creditor-debtor relationship between the Operational Creditor and the Corporate Debtor, dismissing attempts to imply a non-creditor-debtor relationship. Mrs. Jayashree S Iyer was appointed as the Interim Resolution Professional (IRP) for efficiency. A moratorium was declared under Section 14 of the Code to prohibit actions against the Corporate Debtor until completion of the Corporate Insolvency Resolution Process (CIRP), resolution plan approval, or liquidation order.

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Issues Involved:
1. Existence of debt and default.
2. Relationship between the Operational Creditor and the Corporate Debtor.
3. Validity of the transaction and agreements between the parties.
4. Appointment of the Interim Resolution Professional (IRP).
5. Declaration of moratorium.

Detailed Analysis:

1. Existence of Debt and Default:
The Operational Creditor filed a petition under Section 9 of the Insolvency & Bankruptcy Code, 2016, for initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on payment of Rs. 27,49,11,497, which includes the amount of Rs. 24,27,64,004 for the supply of 38,000 MTs of 'A' Grade Barites Lumps and interest of Rs. 3,17,47,493. The Operational Creditor provided evidence of invoices raised and confirmed by the Corporate Debtor, establishing the existence of an operational debt and default.

2. Relationship Between the Operational Creditor and the Corporate Debtor:
The Corporate Debtor attempted to interpose agreements between Sojitz Corporation (SJC) and itself to imply a non-creditor-debtor relationship. However, the Tribunal found that the Operational Creditor, although part of the Sojitz Group, was not a party to those agreements and the transaction in question was independent. The Operational Creditor provided a letter of credit to APMDC for the supply of Barites, and the Corporate Debtor raised purchase orders and confirmed the debt, thus affirming the creditor-debtor relationship.

3. Validity of the Transaction and Agreements Between the Parties:
The Tribunal examined the email correspondence and agreements, concluding that the transaction between the Operational Creditor and the Corporate Debtor was separate from any previous agreements involving SJC. The Corporate Debtor's attempt to link the transaction to earlier agreements was dismissed as irrelevant. The Tribunal emphasized that the transaction was initiated through a specific proposal and correspondence in July 2017, confirming its independence.

4. Appointment of the Interim Resolution Professional (IRP):
The Tribunal rejected the Operational Creditor's suggested IRP from Delhi due to logistical concerns and potential delays. Instead, Mrs. Jayashree S Iyer, a local professional, was appointed as the IRP to ensure efficiency and minimize the burden on the stressed company.

5. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, prohibiting various actions against the Corporate Debtor, including the institution or continuation of suits, transferring assets, and foreclosing security interests. The moratorium will be effective from 12.02.2019 until the completion of the CIRP, approval of a resolution plan, or liquidation order. The Tribunal also directed the public announcement of the CIRP and immediate communication of the order to relevant parties.

Conclusion:
The Tribunal admitted the petition, confirming the existence of debt and default, and established the creditor-debtor relationship. The transaction was validated as independent and separate from previous agreements. Mrs. Jayashree S Iyer was appointed as the IRP, and a moratorium was declared to facilitate the CIRP. The order was to be communicated immediately to all relevant parties.

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