The National Company Law Appellate Tribunal (NCLAT) has set aside the October 24 order of the National Company Law Tribunal (NCLT) that admitted an insolvency petition against Flipkart India. Flipkart’s operational creditor Cloudwalker Streaming Technologies, which used to supply the e-commerce major imported LED TVs, had filed a petition with the NCLT contending that Flipkart had defaulted for an amount of Rs 26.95 crore.
“We set aside the impugned order dated October 24, 2019, passed by the adjudicating authority and the application filed under Section 9 by the operational creditor Cloudwalker Streaming Technologies, company petition is rejected,” the three-member NCLAT bench said, in its 63-page order. The bench also released Flipkart India from the corporate insolvency resolution process and directed the interim resolution professional to immediately hand-over the records and assets of Flipkart India to its promoter who will manage the company.
Flipkart and Cloudwalker had on December 29, 2016, entered into a supply agreement. Cloudwalker contended that Flipkart received first delivery in early 2017, but after that it avoided taking delivery of the LEDs on the ground of lack of warehouse space. Flipkart also did not collect more than 70% of the stock ordered till March 2018. Subsequently, Cloudwalker moved the NCLT, Bengaluru, which admitted the petition on October 24, 2019.
Challenging the order, Flipkart filed a petition with the NCLAT. Flipkart contended that since Cloudwalker could not produce any documentary evidence, a mere claim for damages cannot amount to an operational debt and, hence, Flipkart cannot be treated to have committed a default. Moreover, Cloudwalker’s allegations of losses were based on the projections raised by the company, which was not a binding purchase order under the supply agreement.
“The operational creditors failed to submit any documents to prove the existence of the operational debt and the amount in default. The operational creditor also failed to submit the copy of invoices. It has failed to submit the relevant documents under which the debt has become due. The operational creditor has only filed the copy of supply agreement, and the projections email, which by themselves can by no stretch of the imagination constitute proof of debt,” the bench said in its February 24 order.
The NCLAT bench also said that instead of filing relevant document, Cloudwalker had solely placed its reliance on a few emails to allege that it had suffered losses on account of projections for the demand provided by Flipkart. The figures provided by Flipkart were only projections which do not constitute a binding purchase order under the supply agreement.
via NCLAT sets aside NCLT order against Flipkart India – The Financial Express
aniltikotekar4sme.com 