NCLT Mumbai Orders Dream 11's Sports Platform Owner Sporta Technologies Pvt. Ltd. Into CIRP Under IBC

Background Facts:

A Lease and License Agreement dated 27.12. 2019 was entered into between Reward Business Solutions Private Limited (Operational Creditor) and Corporate Debtor. The Agreement granted a lease of the property for 5 years with a monthly license fee of Rs. 49.83 Lakhs for initial 3 years and Rs. 57.31 Lakhs for the remaining years.

It was not to pay any rent from 27.12.2019 to 27.03.2020 and was required to pay the rent as per the Lease Agreement from 28.03.2020 onwards.

Piyush Jani, Resolution Professional for the Operational Creditor (Applicant) has filed the CIRP application under Section 9 of IBC against the Corporate Debtor since it has defaulted on the payments from the start to the Operational Creditor. Demand Notice under Section 8 of IBC has also been issued on 20.04.2021 and the total outstanding license fee amounts to Rs. 7.61 crores.

NCLT Verdict:

The NCLT Mumbai allowed the petition and ordered Sporta Technologies Pvt. Ltd. into CIRP under Section 9 of the IBC.

The Tribunal placed reference to the Lease and License Agreement dated 27.12.2019 and observed that the Corporate Debtor had to pay the license fee to the Operational Creditor. It noted that no dispute exists to the financial liability of the Corporate Debtor. Further, the Corporate Debtor should have made the payment saving itself from the consequences of CIRP and fulfilled its obligations of payment post issuance of the Demand Notice. Thus, it had financial obligations towards the Operational Creditor which it failed to comply with.

NCLT pointed out that the Tribunal under its Summary Jurisdiction is constrained to take into account only the existence of an admitted debt and corresponding default as satisfied by the facts. Moreover, there is no dispute in relation to the existence of debt in question.

In conclusion, NCLT held that the Operational Creditor has satisfied all the legal requirements including the pecuniary, territorial and subject matter jurisdiction and the same is also filed well within the limitation period of 3 years.

Case Title: Piyush Jani, RP for Reward Business Solutions Pvt. Ltd. vs. Sporta Technologies Pvt. Ltd.

Case No.: CP No. 775/(IB)-MB-V/2021

Counsel for Corporate Debtor: Adv. Dhruva Gandhi a/w Ms. Anuja Jhunjhulwala i/b M. Mullah Associates (PH)

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