NCLT accepts insolvency plea against Dream 11-parent over 7.6 Cr default

The National Company Law Tribunal (NCLT) has admitted an insolvency plea against Sporta Technologies, the operator of the fantasy gaming firm Dream11, over a rent default totaling more than Rs 7.6 crore.

According to the plea filed by Piyush Jani, a resolution professional of Reward Solutions, his company entered into a lease and license agreement in 2019 with Sporta, gaining a license for a period of 5 years. The agreement stipulated a monthly license fee of Rs 49.8 lakh for the first three years and Rs 57.3 lakh for the subsequent two years.

The agreement had a lock-in period of 33 months i.e. 27 September 2022 the respondent [Sporta] could not terminate the agreement, the plea said.

“The Respondent failed to pay the license fee. Having been left with no option, on 20.04.2021 the Demand Notice was issued under section 8 in Form 3 under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 of the Code for outstanding license fee from 28.03.2020 to 27.04.2021 amounting to Rs. 7,61,08,246 [Rs 7.6 crore]. The Respondent failed to comply with the Demand Notice and hence the above said Company Petition was filed by the Petitioner,” it further read.

It’s worth noting that Sporta in its response the demand notice had alleged the Reward Solutions had lost the “rightful opportunity to negotiate the License Fees due to the impact of the on-going Covid-19 Pandemic and confusion with regards to ownership of the leased premises with the Petitioner or a third party named Mangalam Vanijya Private Limited...”

The tribunal, however, acknowledged the petitioner [Reward Solutions] is very much a Corporate Debtor and the Petitioner has successfully demonstrated the existence of “operational debt” and “default” committed by the Corporate Debtor along with absence of any preexisting dispute between the parties in consonance with the relevant provisions of the Code.

“...it is concluded that the Company Petition satisfies all legal requirements for admission including the pecuniary, territorial and subject matter jurisdiction and the same is also filed well within the limitation period of 3 years. Considering the above facts, we are of the considered view that this Petition deserves to be admitted under Section 9 of the Code,” said the tribunal order dated February 9.

The tribunal has also appointed Madan Bajrang Lal Vaishnawa as the interim resolution professional for the matter.