- Nature of Dispute: The dispute arose from an endorsement agreement where actor Akshay Kumar Bhatia was engaged by Cue Learn Private Limited for promotional services for ?8.10 crores, split into two equal tranches. While the first payment was made, the second tranche of ?4.05 crores remained unpaid.
- Applicant’s Claim: Akshay Kumar sought to initiate the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC), claiming the unpaid amount as operational debt.
- Respondent’s Défense: Cue Learn Private Limited argued that the second payment was contingent on mutually agreed dates for the second day of service, which was never finalized. It contended the matter was contractual and outside the scope of the IBC.
- Operational Debt: The NCLT emphasized that under Section 5(21) of the IBC, operational debt pertains to goods or services provided. Claims involving damages or breaches of contract fall outside the scope of IBC.
- Conditional Obligations: The agreement stipulated that Bhatia’s services were conditional upon Cue Learn Private Limited fulfilling its obligations, including payment. As the preconditions for the second day of service were unmet, the claim could not qualify as operational debt.
Key Findings of the Tribunal:
- Jurisdictional Limitation: The NCLT cannot adjudicate disputes arising from claims for damages under contractual breaches, which must be pursued in civil courts.
- Nature of Claim: The unpaid amount represented a claim for damages, not a crystallized operational debt, thereby rendering the insolvency petition untenable.
The NCLT dismissed the application for initiating CIRP, underscoring that not all payment defaults under service contracts qualify for insolvency proceedings. The judgment reinforces the distinction between operational debts under the IBC and claims for damages, emphasizing the proper jurisdiction for such disputes lies in civil courts.
