NCLT Issues Notice To WinZO On Paytm's Insolvency Plea

The New Delhi bench of the National Company Law Tribunal (NCLT) has reportedly issued a notice to gaming platform WinZO on an insolvency petition filed by listed fintech major Paytm.

As per Storyboard18, a bench, comprising judicial member Justice Jyotsna Sharma and technical member Anu Jagmohan Singh, directed the online gaming startup to furnish its reply to the petition in the next two weeks.

Paytm has dragged WinZO to the tribunal over non-payment of dues to the tune of INR 3.6 Cr. Meanwhile, after hearing both sides, the NCLT scheduled the matter for next hearing on December 15.

Arguing before the NCLT, Paytm counsel Krishnendu Datta reportedly contended that WinZO had failed to clear the four invoices, which arose from promoting its real-money gaming products on the fintech app.

As per the report, Paytm issued a demand notice for the pending invoices, each of which carried a 60-day payment term, on October 1. The fintech major’s counsel alleged that WinZO failed to make payments despite the notice. Datta also reportedly submitted that the advertisements were delivered in full and that WinZO never disputed the ad placements.

“There is no communication or email where they say advertisements were not placed,” he reportedly added. Meanwhile, Datta also further noted that the validation data from AppFlyer, a tool used to track ad campaigns, had been provided to WinZO as per contractual terms.

In counter, WinZO’s counsel Abhishek Malhotra denied the liability. Citing clause 14 of the purchase order, he argued that the invoices had to be validated through email before becoming payable.

Malhotra also reportedly noted that internal correspondence showed that the invoices were ‘under validation’ and had been forwarded to the central team for verification, adding that the payment was therefore not yet due.

In response, Paytm’s counsel dismissed this argument as a “sham defence,” alleging that WinZO was using procedural excuses to delay payment. Highlighting the Centre’s recent ban on online real money gaming, Datta argued that the non-payment coincided with the clampdown. He also reportedly suggested that financial distress caused by the ban could be the real reason behind the default.

After hearing the two sides, the NCLT bench allowed WinZO to present its defence in a counter statement and formally issued notice to the gaming platform.

The insolvency petition comes at a tough time for the gaming giant. Valued at $375 Mn in 2021, WinZO has been experimenting with a new product stack, following the recent ban on online RMG. In August, the company ventured into the US market to take its offering global.

Additionally, the startup was also said to be foraying into the short video market by rolling out its short video feature called ZO TV.

Meanwhile, startups have challenged the ban on real money gaming. Earlier this month, the Supreme Court (SC) reportedly directed the Centre to furnish a “comprehensive” reply on a clutch of petitions challenging the new online gaming rules.

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