Lam Presentation

FLIPKART V/S
CLOUDWALKER
INTRODUCTION
The petition was to initiate

Corporate Insolvency Resolution
process (CIRP) in respect of M/s
An insolvency application was
Flipkart India Private Limited on
filed by M/s Cloud Walker
the ground that it has committed
Streaming Technologies Pvt Ltd.
default for an amount of Rs.
in the NCLT on 22nd July, 2019.
26,95,00,000/- (Rupees Twenty-
Six Crore and Ninety-Five Lakhs
Only).
FACTS OF THE CASE
M/S CLOUD WALKER STREAMING M/S FLIPKART INDIA PRIVATE LIMITED, ON 29.12.2016, THE OPERATIONAL CREDITOR
TECHNOLOGIES PRIVATE LIMITED, WHO IS WHO IS THE RESPONDENT (CORPORATE AND THE CORPORATE DEBTOR ENTERED INTO A
SUPPLY AGREEMENT, WHEREIN M/S CLOUD
THE PETITIONER (OPERATIONAL DEBTOR) IN THE CASE, IS AN E-
WALKER WOULD SUPPLY LED TVS TO FLIPKART AS
CREDITOR) IN THE CASE, IS INVOLVED IN COMMERCE COMPANY ENGAGED IN THE PER THE PURCHASE ORDERS PLACED BY THE
THE BUSINESS OF IMPORT AND SUPPLY OF RETAIL SALE OF PRODUCTS ON THEIR LATTER. FURTHER, FLIPKART WOULD SELL THOSE
LED TVS. ONLINE PLATFORM. LED TVS ON ITS ONLINE PLATFORM.
FACTS OF THE CASE
THE PURCHASE ORDER WAS THE REQUIRED NUMBER OF THE FIRST FEW DELIVERIES PROMPT PAYMENTS WERE THEREAFTER, FLIPKART
PLACED BY FLIPKART LED TVS WERE IMPORTED DATED 16TH JANUARY, 2017, MADE FOR THE SAME. STARTED TO AVOID TAKING
THROUGH EMAILS AND THE AND PROCURED BY M/S 7TH MARCH, 2017, AND SO DELIVERIES OF THE LED TVS
ORDER WAS DULY CLOUD WALKER, AND ON WEE DULY RECEIVED BY AND GAVE FEEBLE EXCUSES
ACKNOWLEDGED BY M/S SUPPLIED TO FLIPKART AT FLIPKART. SUCH AS LACK OF
CLOUD WALKER. THE DESIRED LOCATION. WAREHOUSE SPACE FOR THE
SAME.
FACTS OF THE CASE
THE OPERATIONAL CREDITOR WAREHOUSED THE FLIPKART ALSO COERCED M/S CLOUD WALKER TO IT IS STATED THAT THE OPERATIONAL CREDITOR
GOODS FOR SOME DURATION ON BEHALF OF THE OFFER DISCOUNT ON THE LED TVS. AS M/S CLOUD FACING HEAVY FINANCIAL LOSSES ISSUED A NOTICE
CORPORATE DEBTOR. WALKER WAS FACING HUGE LOSSES AND WAS IN THE AND INVOKED THE ARBITRATION CLAUSE OF THE
MIDST OF A LIQUIDITY CRUNCH, IT AGREED TO OFFER SUPPLY AGREEMENT. THE CORPORATE DEBTOR ON
THE PROPOSED DISCOUNT. THE CONDITION RECEIPT OF THE ARBITRATION NOTICE THREATENED
ATTACHED WAS THAT FLIPKART WOULD TAKE TO WITHDRAW FROM THE DEAL ENTIRELY AND NOT
DELIVERY OF THE REMAINING LED TVS AND MAKE COLLECT ANY OF THE REMAINING SHIPMENT UNLESS
PAYMENT FOR THE SAME AS WELL. THE OPERATIONAL CREDITORS WITHDREW THE
NOTICE.
OPPOSITION BY THE FLIPKART
The company petition is not maintainable either in law or on facts and it is liable to
be rejected with exemplary costs.
Flipkart has already paid Rs. 85,57,00,664/- towards the invoices which M/s Cloud
Walker has raised. Further, Flipkart is not liable to make any further payments to the
Operational Creditor. Therefore, the allegations raised against Flipkart are baseless.
The Operational Creditor had approached Flipkart and had expressed its desire to get
into business with Flipkart. After due deliberations, the companies entered into a
Supply Agreement on 29th December, 2016.
LEGAL ISSUES INVOLVED
Flipkart failed to collect more that 70 percent of the stock ordered by it as of March 2018. As per
M/s Cloud Walker, the total default of Rs. 26 crore comprises of Rs. 13.95 crore for goods, Rs. 7.75
crore for interest, and Rs. 5.25 crore for customer charges.
Flipkart on its part argued that it is not liable to make any more payments as it has already made
payments to the tune of Rs. 85 crores.
But as per the email correspondence that took place over the course of period between Flipkart and
Cloud Walker, the NCLT has found default on the part of the Respondent, i.e. Flipkart. Flipkart India
did not dispute the demand notice which Cloud Walker served. This fact in itself establishes the
existence of default.
• Cloud Walker earlier issued a demand notice in
June 2019 under Section-8 of the Insolvency
LEGAL ISSUES and Bankruptcy Code. However, there was no
reply to the same. Subsequently, on 22nd July,
INVOLVED 2019, a Section-9 petition was filed by M/s
Cloud Walker.
• On 24th October, 2019, the Bengaluru Bench of the NCLT
accepted the petitioner, i.e., M/s Cloud Walker’s argument.
Initiation of insolvency proceedings were ordered against
Flipkart by the NCLT. Moratorium under section 14 of the IBC
was to be imposed on Flipkart, which meant a temporary
prohibition till the process of insolvency resolution was
JUDGEMENT complete.
• However, a day later, Flipkart filed a writ petition in the
PRONOUNCED Karnataka High Court and has procured a stay on the order
passed by the NCLT.
BY THE COURT • The next hearing of the case was scheduled on 31st October,
2019 but it ended in further extending the stay order. Next
hearing has not been scheduled yet by the court. In an email
statement, Flipkart has mentioned that it is not undergoing
corporate insolvency resolution process and the company is
continuing its regular operations.
• Flipkart shows 'lack in administration’, which
had neglected to gather the conveyance and
subsequently dedicated a default.
• Flipkart had neglected to raise a contest with
respect to inadequacy of administrations of the
CASE piece of Cloud Walker, before the bankruptcy
request was favoured by the provider, nor did it
ANALYSIS react to the statutory interest see gave under
segment 8.
• Flipkart had neglected to tell the provider Cloud
Walker of any substantive pending question,
suit or arbitral procedures.

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FLIPKART V/S

The petition was to initiate

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