Dream11’s parent company challenges insolvency petition in NCLAT appeal

Dream11‘s parent company Sporta Technologies on Tuesday filed an appeal in the National Company Law Appellate (NCLAT), Delhi against the National Company Law Tribunal (NCLT) Mumbai’s order which came out on Monday admitting an insolvency petition against the fantasy gaming company.

The appeal, which has been reviewed by ET from the NCLAT website, was filed by Bhavit Seth, on behalf of the suspended board of directors of Sporta Technologies. The case is listed for hearing tomorrow before the Chairperson’s court in the NCLAT.

Dream11 declined to comment on ET’s queries.

The insolvency petition was filed before the NCLT by the resolution professional of Reward Solutions after Sporta had supposedly defaulted on its dues of Rs 7.61 crore. The NCLT in its order had appointed Madan Bajarang Lal Vaishnawa as the interim resolution professional to take care of the resolution process.

The matter dates back to December 2019 when Reward Solutions, the owner of the office premises at Lower Parel in Mumbai, executed a five-year lease and licence agreement with Sporta Technologies.

The agreement had a 33-month ‘lock-in period’ till September 27, 2022, during which neither party could have terminated the agreement.Reward Solutions claimed that from the beginning of the agreement period Sporta Technologies had failed to pay the licence fees.However, Sporta Technologies argued that the licence fees had to be negotiated, and that could not be done due to Covid-19. It further alleged that there was no clarity on who the owner of the premises was – Reward Solutions or a third party called Mangalam Vanijya.

Sporta Technologies also informed the tribunal that the Enforcement Directorate (ED) had issued a provisional attachment order concerning the leased premises.

Further, the unicorn said that the debt was defaulted within the Section 10A period of the Insolvency and Bankruptcy Code, (IBC) as a result, it said Corporate Insolvency Resolution Process (CIRP) couldn’t be initiated against it.

The government had 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.

The tribunal, on its part, held that Sporta Technologies owed an operational debt to Reward Solutions, and there was no pre-existing dispute regarding the debt between the parties.

“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 had said in its order.

(With inputs from Dia Rekhi)

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