Voltage Drop in the EV NCLT Admits Insolvency Plea Against Tork Motors
Voltage Drop in the EV NCLT Admits Insolvency Plea Against Tork Motors
Introduction
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Judicial Member Nilesh Sharma and Technical Member Sameer Kakar, has admitted an insolvency application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Tork Motors Private Limited, a Pune-based electric vehicle start-up once backed by Ratan Tata, Bharat Forge, and Ola’s Bhavish Aggarwal. The petition was filed by Unaprime Investment Advisors Private Limited for an unpaid operational debt of ₹1.29 crore. The Tribunal appointed Ms. Anagha Anasingaraju as the Interim Resolution Professional (IRP) until a Resolution Professional is formally appointed.
Factual Background
Unaprime Investment Advisors entered into an agreement with Tork Motors in September 2022 to assist in raising up to USD 50 million in funding. As per the agreement, Unaprime was entitled to a 3% success fee upon successful deal closure. Following Tork’s execution of investment and advertising agreements with Bennett Coleman & Company Ltd. (BCCL)—including a ₹3.25 crore share subscription warrant and a ₹32.5 crore advertising credit line—Unaprime raised invoices for its fee. Despite repeated reminders up to February 2024, no payment was received. Consequently, Unaprime filed the present application in January 2025 seeking initiation of Corporate Insolvency Resolution Process (CIRP).
Issues
1. Whether Tork Motors committed default in payment of an operational debt owed to Unaprime Investment Advisors.
2. Whether Tork Motors’ plea of financial distress and intent to settle in the future could constitute a valid defense under Section 9 of the IBC.
Contentions of parties
Operational Creditor (Unaprime Investment Advisors): Unaprime contended that all services under the advisory agreement were duly performed, resulting in successful fundraising arrangements with BCCL. Despite repeated invoices and reminders, Tork Motors failed to pay the agreed success fee. It was argued that there existed no pre-existing dispute, and all procedural requirements under Section 9 were fulfilled, including service of the statutory demand notice.
Corporate Debtor (Tork Motors Private Limited): Tork Motors admitted the debt but claimed inability to pay due to severe cash flow constraints. The company submitted that a potential investment of ₹180 crore from Maxis Advisors LLP had fallen through, leading to operational stagnation. It requested additional time to secure funds, asserting that insolvency proceedings would be commercially counterproductive and detrimental to its ongoing business prospects.
Reasoning and Analysis
The Bench noted that the operational debt was admitted and undisputed and that all procedural requirements under Section 9 of the IBC had been duly complied with by the operational creditor. The Tribunal rejected the corporate debtor’s plea for more time, holding that “financial distress or intent to pay does not constitute a valid defence against an otherwise admitted and defaulted debt.” It further observed that there existed both debt and default, warranting initiation of CIRP.
Decision
The NCLT, Mumbai, admitted the insolvency application against Tork Motors Pvt. Ltd., declared a moratorium under Section 14 of the IBC, and directed Unaprime to deposit ₹3 lakh towards initial insolvency costs. Ms. Anagha Anasingaraju was appointed as the Interim Resolution Professional (IRP) to take charge of the corporate debtor’s affairs in accordance with the Code.
In this case the appellant was represented by Mr. Rohit Gupta instructed by Ms. Shruti, Advocates. Meanwhile the respondent was represented by Mr. Pranav Shah, Advocate.
