NCLT Mumbai Admits Paytm Parent's Insolvency Plea Against Gaming Company Fabzen Over ₹3.41 Crore Dues

The National Company Law Tribunal (NCLT) in Mumbai has admitted an insolvency plea filed by One97 Communications Ltd, which operates Paytm, against gaming company Fabzen Technologies Pvt Ltd over unpaid dues of more than ₹3.41 crore for digital advertising services.

A bench of Judicial Member Nilesh Sharma and Technical Member Sameer Kakar held that One97 had established the existence of an operational debt and a payment default, while Fabzen had failed to show any pre-existing dispute.

“In view of the above findings, it is clear that the Applicant has placed on record the necessary evidences and materials to demonstrate the existence of the operational debt exceeding the minimum threshold of Rs.1 Crore prescribed under Section 4 of the Code due and payable by the CD as well as the default in repayment thereof by the CD. The Applicant has served the Demand Notice upon the CD, and that the CD has failed to establish the existence of any pre-existing dispute,” the bench observed.

The dispute arose from advertising campaigns undertaken by One97 for Fabzen's gaming applications. One97 contended that the invoices raised for those services remained unpaid despite repeated follow-ups and assurances of payment.

Fabzen resisted the plea on the ground that the advertising campaigns had underperformed and that concerns regarding campaign outcomes had been communicated to One97.

It also argued that the Promotion and Regulation of Online Gaming Act, 2025 had frustrated the commercial arrangement between the parties.

After examining the correspondence placed on record, the tribunal found that the communications relied upon by Fabzen reflected routine discussions concerning campaign performance and optimisation rather than a dispute over liability for the invoices.

It noted that Fabzen continued placing purchase orders and availing services even after raising concerns about campaign performance.

“Such conduct is inconsistent with the stand that the services were fundamentally deficient or commercially unacceptable. The Corporate Debtor has also failed to place on record any contemporaneous debit note, claim for damages, notice of termination or legal proceeding alleging breach of contractual obligations or claiming compensation on account of deficient services,” the bench held.

The tribunal also took note of emails in which Fabzen sought additional time to clear the dues and proposed repayment schedules.

“The conduct of the Corporate Debtor in proposing repayment schedules is inconsistent with its present stand that no liability exists or there is dispute,” the bench observed.

Rejecting Fabzen's reliance on the online gaming law, the tribunal held that the debt had already become due before the legislation was enacted.

“We also find no merit in the contention that the Promotion and Regulation of Online Gaming Act, 2025 frustrated the contract between the parties. The operational debt claimed in the present Petition had already become due and crystallised prior to the enactment of the said legislation,” the bench ruled.

The tribunal admitted the petition, imposed a moratorium, and appointed Manish Lalji Dawda as the interim resolution professional.