# In the matter of BEML Midwest Ltd. IA (IBC) 546-2022 in CP(IB) No. 237-9-HDB-2020

> NCLT judgment dated 2022-09-26. Citation: TCN-2022-NCLT-00939. The case involves an application filed by Action Group Associates, the Operational Creditor,…

- **Court:** NCLT
- **Order date:** 26 Sept 2022
- **Citation:** TCN-2022-NCLT-00939
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/beml-midwest-ltd-ia-ibc-546-2022-in-cpib-no-237-9-hdb-2020-0e4843a1

## Summary

### Background

The case involves an application filed by Action Group Associates, the Operational Creditor, under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against BEML Midwest Limited, the Corporate Debtor, for failing to discharge a debt of Rs. 8,29,32,271. The debt includes a principal amount of Rs. 3,76,12,176 and interest of Rs. 4,53,20,096 at 12% per annum from the date of default, initially stated as March 31, 2009, but later construed as October 11, 2018, based on an arbitral award. The Operational Creditor had supplied iron ore fines to the Corporate Debtor for export, leading to outstanding payments. Arbitration proceedings were initiated, resulting in awards in favor of the Operational

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## Facts

Action Group Associates, the Operational Creditor, filed a petition against BEML Midwest Limited, the Corporate Debtor, under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP. The claim was for Rs. 8,29,32,271, including principal and interest, arising from unpaid supplies of iron ore fines for export. The initial default date was March 31, 2009, but was later considered to be October 11, 2018, based on an arbitral award. The Operational Creditor had supplied iron ore fines to the Corporate Debtor as per agreements and purchase orders. The Corporate Debtor made partial payments, leaving a balance of Rs. 3,76,12,176 as of March 31, 2009. The Operational Creditor invoked the arbitration clause, leading to an arbitral award in their favor.

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## Issues and analysis

### Issue 1: Whether an Operational Debt as …

**Ratio:** An operational debt exists when a claim arises from the provision of goods or services.

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**Reasoning:** The Adjudicating Authority relied on the arbitral award dated 05.01.2009, which clearly

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**Interpretation:** The existence of an arbitral award solidifies the claim as a valid operational

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**Application:** The arbitral award in favor of Action Group Associates against BEML Midwest

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. VEERA BRAHMA…
- **Appellants:** Action Group…
- **Respondents:** BEML Midwe…
- **Advocates:** Mr.G. Kalyan…

## Timeline

- **2008-01-25 — Agreement for Exporting…**: M/s.BEML Limited and M/s.BEML Midwest Limited/Joint Venture Company entered into an…
- **2008-03-17 — Tripartite Ag…**: Corporate Debtor executed Tripartite…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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