NCLT Bengaluru Issues Notice to Flipkart in ₹4.37 Crore Insolvency Plea Filed by Operational Creditor

NCLT Bengaluru Issues Notice to Flipkart in ₹4.37 Crore Insolvency Plea Filed by Operational Creditor

Introduction

The National Company Law Tribunal (NCLT) has issued notice to Flipkart Internet Pvt. Ltd. in an insolvency petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), alleging a default of ₹4.37 crore. The petition was filed by operational creditor Netambit Value First Services Pvt. Ltd., which claimed that the alleged default arose from unpaid invoices relating to affiliate marketing services provided to Flipkart.

Factual Background

Netambit Value First Services Pvt. Ltd. entered into an affiliate marketing services arrangement with Flipkart Internet Pvt. Ltd. under which the operational creditor provided marketing and promotional services. According to the petition, the operational creditor raised multiple invoices pursuant to purchase orders issued by Flipkart under the contract. While several invoices were paid by Flipkart, Netambit alleged that dues relating to ten invoices remained outstanding, resulting in an operational debt of ₹4.37 crore. Before initiating insolvency proceedings, Netambit issued a demand notice under Section 8 of the IBC seeking payment of the alleged outstanding amount.

Procedural Background

Following non-payment of the alleged dues, Netambit filed an application under Section 9 of the IBC before the NCLT Bengaluru seeking initiation of the Corporate Insolvency Resolution Process against Flipkart. During the initial stage of the proceedings, the matter was referred to the President of the NCLT for constitution of another bench after the original Judicial Member recused himself citing a family member’s association with the petitioner company.

Subsequently, the matter was listed before a bench comprising Judicial Member Mahendra Khandelwal and Technical Member Ravindra Chaturvedi.

Issues

1. Whether the operational creditor has established a prima facie case of operational debt and default against the corporate debtor.

2. Whether notice should be issued to the corporate debtor to respond to the insolvency petition filed under Section 9 of the IBC.

Contentions of the Parties

The petitioner contended that Flipkart had defaulted in payment of ₹4.37 crore relating to ten invoices issued under the affiliate marketing services agreement. It argued that despite the issuance of a demand notice under Section 8 of the IBC, the outstanding amounts remained unpaid.

At this stage of the proceedings, the tribunal primarily heard submissions from the petitioner while considering whether notice should be issued to the respondent corporate debtor.

Reasoning and Analysis

The NCLT observed that the petition disclosed allegations of unpaid operational debt arising from a contractual relationship between the parties. Considering the submissions made by counsel for the petitioner, the tribunal found it appropriate to issue notice to the respondent corporate debtor for filing its response to the insolvency application. The bench also directed the petitioner to file a revised affidavit in compliance with the requirement under Section 9(3)(b) of the IBC. The tribunal clarified that notice should be served through all available modes and that proof of service should be placed on record before the next hearing.

Decision

The NCLT Bengaluru issued notice to Flipkart Internet Pvt. Ltd. directing it to file its response to the insolvency petition filed by Netambit Value First Services Pvt. Ltd. The matter has been listed for further hearing on April 10.

In this case the petitioner was represented by Advocates Krishan Malhotra and NPS Chawla.