NCLAT sets aside insolvency proceedings against Dream 11 parent company

The National Company Law Appellate Tribunal (NCLAT) has set aside the corporate insolvency resolution process (CIRP) against Sporta Technologies, the parent company of fantasy gaming platform Dream 11 [Mr Bhavit Seth v. Mr Madan Bajrang Lal Vaishnawa & Anr]. .A coram of NCLAT Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra held that the application moved under Section 9 of the Insolvency and Bankruptcy Code (IBC) by the operational creditor for initiation of CIRP was time-barred and that NCLT could not have admitted the plea.“In view of our forgoing discussions and conclusions, we are of the view that the application filed by the Operational Creditor under Section 9 was clearly barred by Section 10A, and the Adjudicating Authority committed an error in admitting Section 9 application by the impugned order dated 09.02.2024,” the NCLAT ordered.It further said that the operational creditor is at liberty to file a fresh application for default committed by corporate debtor (Sporta Technologies) subsequent to the Section 10A (IBC) period and shall have “liberty to seek appropriate remedy for their dues in accordance with law”..Senior Advocate Arun Kathpalia along with Advocates Gopal Jain, Karan Malhotra, Anuja Jhunjhunwala and Ayush Pratap Singh appeared for Dream 11 co-founder and Chief Operating Officer Bhavit Sheth.Senior Advocate Abhijeet Sinha with Advocates Anirudh Sharma, Aishwary Vikram, Abhaid Parekh, Ritwik and Heena Kochar represented Sporta Technologies through the IRP..The NCLAT had earlier stayed the NCLT order which admitted the insolvency plea on February 9 based on an application by Piyush Jani, resolution professional of creditor Reward Solutions, for a default of ₹7,61,08,246 on the part of Dream 11..This order was challenged by Sheth before the NCLAT. The appeal before the NCLAT contended that the application seeking initiation of insolvency against Dream 11 was barred under Section 10A of the Insolvency and Bankruptcy Code.Section 10A deals with suspension of initiation of CIRP for any default arising on or after March 25, 2020, for a period of six months.The appeal pointed out that this aspect was not considered by the NCLT.The interim resolution professional (IRP) for Dream 11 responded to the petition stating that after filing of the application under Section 9, Reward Solutions had issued a fresh demand notice on January 23, 2023..[Read Order]