M Mulla Associates Secures Victory For Dream11: NCLAT Sets Aside Insolvency Order
M Mulla Associates has successfully represented Sporta Technologies Private Limited, the parent company of Dream11, before
M Mulla Associates Secures Victory For Dream11: NCLAT Sets Aside Insolvency Order
M Mulla Associates has successfully represented Sporta Technologies Private Limited, the parent company of Dream11, before the NCLAT, New Delhi, against the order passed by the NCLT, Mumbai, initiating corporate insolvency proceedings against the company.
The National Company Law Appellate Tribunal (NCLAT), bench comprising Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) set aside the insolvency admission order of NCLT against Sporta Technologies Pvt. Ltd. freeing it from the corporate insolvency resolution process (CIRP) rejecting a petition by Reward Solutions.
The appeal stemmed from an insolvency petition filed by the Resolution Professional of Reward Solutions Pvt. Ltd., acting as an operational creditor, seeking to initiate the CIRP against Sporta Technologies Private Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), citing an operational debt of Rs. 7,61,08,246/-. The company petition was admitted, and thereby the initiation of CIRP has also been ordered against Sporta Technologies Pvt. Ltd.
The NCLAT held that the presence of a legal bar to initiate an application renders inconsequential the absence of a plea regarding the bar in the corporate debtor's reply. Furthermore, the adjudicating authority itself was cognizant of the plea of Section 10A and rejected the amendment application filed by the operational creditor on the grounds that the company petition was barred by Section 10A. The adjudicating authority erred in proceeding to admit the Section 9 application without acknowledging the prohibition under Section 10A.
In this case, a demand notice was issued on April 20, 2021, highlighting defaults mentioned in Part IV dating back to March 2020. The lease rental period referenced in Part IV spanned from March 2020 to April 2021.
The NCLT observed that even if the lease rental for April 2021 is excluded, the entire claim of operational debt falls within the Section 10A period, rendering the application filed by the operational creditor ineligible for consideration. The adjudicating authority erred in admitting the Section 9 application despite the clear prohibition under Section 10A. Consequently, the appeal was allowed, and the order dated February 9, 2024, was set aside.
Additionally, the Bench granted liberty to the operational creditor to file a fresh application for defaults committed by the corporate debtor subsequent to the Section 10A period. They were also given the liberty to seek appropriate remedies for their dues in accordance with the law.
Ms. Anuja Jhunjhunwala, partner at M Mulla Associates led the team and played a crucial role in successfully representing Sporta Technologies Private Limited before the NCLAT, contributing to the overturning of the insolvency admission order.