Insolvency and BankruptcyNCLTRulingsTribunal & Appellate

NCLT orders to initiate Corporate Insolvency against Flipkart for failure to make payment for purchase of goods

CloudWalker Streaming Technologies Pvt. Ltd. vs. Flipkart India Pvt. Ltd

NCLT orders Corporate Insolvency Resolution for Flipkart; finds that Flipkart has committed default and has not paid the Operational debt; says Flipkart failed to prove a preexisting dispute between the parties so as to avoid the CIRP.

In the present matter, M/s CloudWalker Streaming Technologies Pvt. Ltd. (Operational Creditor) filed a petition u/s 9 of the IBC read with 6 of the I&B (Application to Adjudicating Authority) Rules, 2016 seeking to initiate CIRP in respect of M/s Flipkart India Pvt. Ltd (Financial Debtor) on the ground that it has committed a default for an amount of Rs 26,95,00,000/-. The Operational Creditor contends that Flipkart is commercially insolvent and is unable to pay its debt. Flipkart submits that there is disparity between the sums claimed invoices raised and the illegal demands of the Operational Creditor and adds that an amount of Rs. 42,96,668/- was withheld due to deficiency of services by the Operational Creditor and that there is existing dispute between the parties.

NCLT, from the correspondences between the parties observes that on order made by Flipkart, the Operational Creditor imported the goods and due to shortage of warehouse facility Flipkart couldn’t take delivery of those goods and it resulted in payment of excess excise duty by the Operational Creditor. NCLT further observes that Flipkart did not raise any dispute with regards to alleged deficiency in services or brought to the notice of the Operational Creditor about alleged breach of terms of Supply Agreement. NCLT notes that in order to avoid initiation of CIRP u/s 9 of the Code, there has to be a preexisting dispute but there is not preexisting dispute between the parties. Further, NCLT notes that Flipkart did not respond to the Demand Notice by the Operational Debtor and has failed to pay the Operational Debt. 

NCLT refers to the decisions in M/s Next Education India Pvt. Ltd. Vs M/s K12 Techno Services Pvt. Ltd. Vide CP(IB) No. 114/BB/2017, CP (IB) No.25/BB/2018 filed by M/s Gupshup India Technology India Pvt. Ltd. Vs. M/s Interpid Online Retail Pvt. Ltd., M/s Pedersen Consultants India Pvt. Ltd. Vs Nitesh Estates limited CP(IB) No.35/BB/2018 and observes that the present petition cannot be kept pending for settlement of the issue and the Adjudicating Authority has granted several opportunities to the parties to settle the issue.

NCLT observes the facts and circumstances of the case and states that Flipkart as committed the debt and default in question and that there is neither preexisting debt nor post existing dispute made out by Flipkart. The Adjudicating Authority is satisfied that the petition is complete under proviso 2 of Section 9 of the Code and that there is no payment of Operational Debt; the demand notice is delivered and no notice of dispute was received by the Operational Creditor; a resolution professional is suggested as Interim Resolution Professional to conduct the CIRP in respect of Flipkart. The AA passed an order admitting and initiating CIRP in respect of Flipkart.


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