NCLT admits insolvency proceedings against Flipkart

Representative image. (PTI photo)

The Bengaluru bench of the National Company Law Tribunal (NCLT) has admitted insolvency proceedings against e-commerce major Flipkart for defaulting on Rs 26 crore payment to one of its operational creditors.
 
The insolvency proceedings were initiated by the operational creditor CloudWalker Streaming Technologies – one of the LED TV suppliers to the company. The operational creditor 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 crore.
 
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 e-commerce 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.

 
As of March 2018, Flipkart India failed to collect more than 70% of the stock ordered by it, CloudWalker alleged. The default of Rs 26 crore includes Rs 13.95 crore towards goods, Rs 5.25 crore of customer charges and Rs 7.75 crore of interest as of March 2019, the operational creditor said.
 
"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.
 
NCLT 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.
 
Flipkart spokesperson told DH that the Karnataka High Court has stayed the order of the NCLT in favour of the company. “Karnataka High Court has stayed the order of the NCLT in favour of Flipkart. This is ongoing commercial litigation which we are challenging. At this stage, we have no further comments,” said the spokesperson.
 

DH Newsletter Privacy Policy Get top news in your inbox daily
GET IT
Comments (+)