The Bengaluru bench of the National Company Law Tribunal (NCLT) has initiated insolvency proceedings against ecommerce giant Flipkart for defaulting on Rs 18 crore payment to one of its LED TV suppliers, Taxsutra reported.
One of Flipkart's LED TV suppliers, CloudWalker Streaming Technologies, had filed a petition under the Insolvency and Bankruptcy Code (IBC) against the company for paying only Rs 85 crore as against admitted dues of Rs 103 crores.
The petitioner alleged that Flipkart failed to collect all LED TVs after placing an order, citing a shortage of warehouse space. The supplier further alleged that the ecommerce giant also failed to pay excess charges and costs as promised, resulting in CloudWalker being forced to unload goods at a heavily marked down price just to stay afloat.
"Corporate debtor has consistently and persistently failed, omitted and neglected to discharge its admitted and acknowledged debt and liability to the operational creditor despite vigorous follow-ups, by repeated requests and reminders... the corporate debtor company is not economically viable and poses a threat to commercial morality," alleged CloudWalker.
Flipkart, meanwhile, strongly opposed the IBC petition, contending that it is a profit-making company with sufficient financial strength and that it has established its goodwill in the Indian market.
It said that there is no admitted debt or liability in the present case and that it has already paid Rs 85 crore to the petitioner against various invoices. "Nothing more remains to be paid," it said.
"... there are huge discrepancies with respect to the sums claimed, invoice raised and illegal demands of the petitioner... the disputes between the parties are to be adjudicated by a competent civil court upon appreciating the evidence placed on record...," Flipkart argued.
Flipkart also urged that the petition is an "abuse of law" and an attempt to use IBC proceedings as a coercive step to 'arm-twist' the company to succumb to the illegal demands of the petitioner.
NCLT, however, held that it is established that the petitioner imported goods as per purchase orders made by Flipkart and it is Flipkart that has committed default due to its inability to lift some of the goods.
"Tribunal decisively rejects Flipkart's afterthought and baseless defence of deficiency in service by the supplier," said NCLT.
NCLT also observed that multiple opportunities were given by it to both the parties to resolve the matter amicably but no concrete settlement was seen. However, it noted that it was still open to the parties to settle the issue even after admission of the case under IBC.