One 97 Communications Secures Tribunal's Nod as Fabzen Fails to Dispute Operational Debt
The National Company Law Tribunal (NCLT), Mumbai Bench, has ordered the initiation of the Corporate Insolvency Resolution Process (CIRP) against Fabzen Technologies Private Limited. The ruling came after the tribunal adjudicated a petition filed by One 97 Communications Limited, the operational creditor, under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016.
One 97 Communications, known for its digital advertising services, claimed that Fabzen Technologies defaulted on payments amounting to over Rs. 3.41 crore. The tribunal, comprising Mr. Nilesh Sharma and Mr. Sameer Kakar, found that the operational debt and default exceeded the minimum threshold of Rs. 1 crore, and there was no pre-existing dispute from Fabzen Technologies regarding the liability.
The tribunal examined the communications between the two parties, which revealed that Fabzen Technologies had repeatedly acknowledged the outstanding dues and assured repayment schedules. Despite the debtor's contentions about service deficiencies and legislative changes affecting online gaming, the tribunal found no substantial evidence of a dispute before the insolvency proceedings.
The tribunal also dismissed Fabzen Technologies' argument that the enactment of the Promotion and Regulation of Online Gaming Act, 2025 frustrated the contract, as the operational debt had crystallized before the legislation came into effect.
As part of the CIRP initiation, a moratorium under Section 14 of the IBC has been declared, prohibiting suits or proceedings against Fabzen Technologies, and placing its management under an Interim Resolution Professional (IRP). Mr. Manish Lalji Dawda has been appointed as the IRP to oversee the resolution process.
This decision underscores the importance of maintaining clear and documented correspondences in business transactions, especially in scenarios involving potential insolvency proceedings.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 - Operational debt established with default exceeding minimum threshold - No pre-existing dispute or documentary evidence produced by Corporate Debtor to challenge liability.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 3(11), 3(12), 5(20), 5(21), 8, 9, 14
