Walmart-owned Flipkart has come under fresh legal scrutiny after an advertising and media agency moved the National Company Law Tribunal (NCLT), seeking insolvency proceedings against the e-commerce giant over alleged unpaid dues linked to marketing campaigns.
The insolvency petition was filed by AppLabs Media Network Pvt. Ltd., which claims that Flipkart failed to clear payments worth about Rs. 4.24 crore for advertising and campaign-related services rendered over several years. The matter is currently before the Bengaluru bench of the NCLT.
According to the petition, AppLabs Media handled multiple advertising and promotional campaigns for Flipkart between 2019 and 2022. The agency alleged that despite raising invoices and repeatedly seeking payment, a substantial portion of the dues remains unpaid.
In accordance with the provisions of the IBC, this company has brought the case before the tribunal. Therefore, one can categorize the debtor’s claim as operational debt, and the initiation of CIRP should follow if a settlement is not achieved.
Flipkart has rejected the above claims, as it thinks this matter does not come under any insolvency process at all. According to Flipkart, there is an ongoing dispute between the two over the applicant’s allegations.
Legal experts, who raise these concerns, say that insolvency cases cannot be used to recoup dues by anyone, especially when there is already a dispute between the parties involved.
The Bengaluru NCLT bench has taken up the matter to determine if the case should be admitted under the provisions of IBC. The admission of the case does not mean in any way that the liabilities of either party can be proved at all.
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It’s not the first time Flipkart has found itself involved in litigation concerning insolvency issues. In 2019, an application against the company by the TV provider CloudWalker Streaming Technologies was admitted by the NCLT. But the NCLAT reversed the judgment and dismissed the insolvency case.
While adding another challenge to the largest Indian e-commerce platform, the current petition still needs to be decided in the petitioner’s favor on the undisputed evidence of a payment default under the IBC.