Malabar Gold Initiates Insolvency Proceedings Against Flipkart

Jewellery retailer Malabar Gold has filed an insolvency petition against ecommerce major Flipkart at the Bengaluru bench of the National Company Law Tribunal (NCLT). 

As per the details of the case available on the NCLT website, Malabar Gold filed the case in February this year and the tribunal admitted the plea in April 2024. There was no clarity on why the case was filed against the ecommerce major. 

During the latest hearing on Wednesday (July 3), the counsel for Flipkart reportedly sought additional time to submit objections in connection with the case. The tribunal listed the matter for the next hearing on August 19, NDTV Profit reported. 

The first hearing in the case took place in May this year before a bench comprising Member (Technical) Manoj Kuar Dubey and Member (Judicial) K Biswal. During the hearing, the Tribunal issued a notice to Flipkart. 

In its order, the NCLT then authorised Malabar Gold’s counsel to serve the notice to Flipkart and the ecommerce major’s managing director (MD), along with a copy of the petition and other annexures, by speed post and email. 

The NCLT also mandated the filing of an affidavit of service within a week along with tracking reports. 

“Registry is directed to prepare the notice and counsel for the petitioner is permitted to collect the notice and serve it on the respondent company as well as on the MD of the respondent company along with a copy of the petition and other annexures by speed post as well as by email and is directed to file an affidavit of service along with tracking reports in the Registry within one week,” read the NCLT order dated May 21. 

At the time, the Tribunal also granted Flipkart two weeks’ time to file objections and an additional week’s time to Malabar Gold thereafter to file a rejoinder. Alongside, the NCLT also issued directions to the jewellery retailer to file a memo underlining the details of due dates that are falling within the Section 10A period. 

Section 10A of IBC, 2016 essentially bars the initiation of corporate insolvency resolution process (CIRP) for any default that occurred between March 25, 2020 and March 21, 2021. 

With this, Flipkart has become the latest Indian startup to be embroiled in an insolvency case. Edtech major BYJU’S is currently in the middle of multiple such proceedings filed by vendors and partners such as smartphone maker OPPO, and BCCI. 

Troubled hyperlocal startup Dunzo too is grappling with an insolvency case filed by its vendor Betterplace Safety Solutions over pending dues before the Bengaluru NCLT bench. In April, the National Company Law Appellate Tribunal (NCLAT) overturned insolvency proceedings against gaming major Dream11’s parent Sporta Technologies for alleged rent default of over INR 7.6 Cr.

However, unlike Dunzo and BYJU’S, Flipkart is flush with funds. The ecommerce major recently saw Google join its cap table with a reported infusion of $350 Mn. Besides, Flipkart also raised over $600 Mn from parent Walmart earlier this year as part of a larger $1 Bn fundraise.