The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted Sporta Technologies, which owns India’s largest fantasy sports platform Dream11, under the corporate insolvency resolution process (CIRP) on an application filed by the resolution professional of Reward Solutions.
The tribunal appointed Madan Bajrang Lal Vaishnawa as the interim resolution professional to conduct the insolvency resolution process.
Piyush Jani, the resolution professional for Reward Solutions, had approached the NCLT to initiate insolvency proceedings against Sporta after the company defaulted on its dues of about Rs 7.61 crore.
Incidentally, Reward Solutions has also been admitted under the CIRP by the NCLT.
“The corporate debtor (Sporta Technologies), in the exercise of its due diligence and reasonable prudence, should have made the payment then and logically saved itself from the rigours of consequent CIRP,” the division bench of judicial member Reeta Kohli and technical member Madhu Sinha said in its order of February 9. “Considering the above facts, we are of the considered view that this petition deserves to be admitted under Section 9 of the code (Insolvency and Bankruptcy Code).”
Sporta Technologies declined to comment on the order.
People close to the development said the matter is most likely to be settled outside the court.
The matter pertains to December 2019, when Mumbai-based Reward Solutions, owner of office premises at Lower Parel in Central Mumbai, entered into a lease and licence agreement with Sporta Technologies for five years.
The agreement had a 33-month lock-in period till September 27, 2022, during which Sporta Technologies could not terminate the agreement.
Reward Solutions argued that Sporta Technologies had failed to pay the licence fee right from the beginning.
However, Sporta Technologies argued that it lost the opportunity to negotiate licence fees due to COVID-19 and confusion over whether Reward Solutions or a third party named Mangalam Vanijya had ownership of the leased premises.
Sporta Technologies added that it had also received a provisional attachment order from the Enforcement Directorate concerning the leased premises.
The company also argued that the debt fell under Section 10A of the Insolvency and Bankruptcy Code (IBC), leading to the non-maintainability of the petition.
Against the backdrop of the COVID-19 pandemic, the government introduced Section 10A to the IBC, prohibiting applications for CIRP initiation for defaults arising after March 25, 2020, for six months or such a period not exceeding one year from the date.
However, the tribunal concluded that Sporta Technologies is a corporate debtor and Reward Solutions has demonstrated the existence of operational debt along with the absence of any pre-existing disputes between the parties.
It said the petition meets legal requirements, including jurisdiction, territoriality and subject matter, and has been filed within a three-year limitation period.
“Considering the above facts, we are of the considered view that this petition deserves to be admitted under Section 9 of the code,” the tribunal said.
Sporta Technologies, worth $8 billion, reported 32% increase in net profit to Rs 188 crore for 2022-23 and a 66% increase in revenue to Rs 6,384 crore.
Source: Economic Times