NCLT Initiates Insolvency Proceedings on Paytm's Holding Company Plea against Gaming Company Fabzen for Rs.3.41 Crore Outstanding Dues [Read Order]

The National Company Law Tribunal (NCLT) initiated insolvency proceedings on Paytm's holding company plea for initiating Corporate Insolvency ResolutionProcess (CIRP) in respect of Fabzen Technologies Private Limited, the Corporate Debtor, for Rs.3.41 Crores outstanding dues

The application was filed by One 97 Communications Limited (“Operational Creditor”) under Section 9 of the Insolvency and Bankruptcy Code, 2016, read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 .

One97 Communications Limited raised invoices for in-app advertising campaigns executed for Fabzen Technologies Private Limited from October 2024 onwards, with payment terms providing a 60-day credit period. Fabzen, which operates gaming platforms including Callbreak Empire and Skill Patti Empire, allegedly failed to clear the outstanding dues despite repeated follow-ups by theOperational Creditor.

The email correspondence placed on record reflected Fabzen’s acknowledgment of the outstanding liability, including proposals for a 12-month repayment schedule and requests for additional time to settle the dues. In response, Fabzen contended that genuine disputes existed regarding the quality, effectiveness, and performance of the advertising campaigns, and therefore challenged the Operational Creditor’s claim.

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The Operational Creditor submitted that the Corporate Debtor neither responded to the demand notice issued under Section 8 of the Insolvency and Bankruptcy Code, 2016, nor made any payment towards the admitted outstanding dues. Despite repeated reminders and concessions given by the Operational Creditor to the Corporate Debtor to clear the outstanding dues, no payment was received.

The Corporate Debtor stated that despite the above challenges, it acted at all times in good faith and sought to resolve the matter amicably. It repeatedly requested the Operational Creditor to provide complete campaign data, performance reports, and reconciliation statements, so that legitimate dues, if any, could be identified and settled after due verification. The Corporate Debtor reiterated its willingness to reconcile the accounts and make partial payments post verification. The Operational Creditor, however, failed to furnish the requisite reconciliation data or credit notes for under-delivered campaigns and instead rushed to initiate the present insolvency proceedings.

The Tribunal of Nilesh Sharma, Member (Judicial), and Sameer Kakar, Member (Technical) noted that “The Corporate Debtor has failed to produce any documentary evidence demonstrating discharge of the outstanding liability or establishing any contemporaneous and bona fide dispute capable of defeating the present proceedings.”

The Tribunal held that the application was complete in all respects, filed within the prescribed limitation period, and satisfied the requirements of Sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016. It noted that the Operational Creditor had filed the affidavit under Section 9(3)(b) affirming the absence of any dispute regarding the unpaid operational debt.

The Tribunal further found that the Operational Creditor had established the existence of an operational debt exceeding the statutory threshold of ₹1 crore and the Corporate Debtor’s default in repayment. As the demand notice had been duly served and the Corporate Debtor failed to demonstrate any pre-existing dispute, the Tribunal admitted the application and initiated the Corporate Insolvency Resolution Process (CIRP).

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