NCLT initiates insolvency proceedings against Flipkart for Rs 18 crore default

"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.