NCLT Warns Dunzo Of Moratorium Over Unpaid Dues Worth INR 4 Cr

The National Company Law Tribunal (NCLT) has warned Dunzo that it would impose a moratorium on the hyperlocal delivery startup if it failed to promptly address a notice over unpaid dues worth INR 4 Cr.

Earlier, Betterplace Safety Solutions moved the NCLT in Bengaluru against Dunzo for unresolved payments.

The panel comprising judicial member Justice T Krishnavalli and technical member Manoj Kumar Dubey issued a notice regarding the matter and scheduled a hearing for March 4.

In the hearing, the petitioner stressed that Dunzo owed INR 4 Cr, suffered significant losses, and despite receiving notices, the startup remained unresponsive, NDTV reported.

The amount owed, substantiated by emails, was accompanied by news reports outlining Dunzo’s substantial financial losses.

Betterplace likened the situation to the BYJU’S case, while Dunzo acknowledged its debt and sought an extension. The company voiced apprehensions about the possible depletion of Dunzo’s assets owing to its financial predicament.

The counsel representing Betterplace urged for maintaining status quo regarding Dunzo’s assets to prevent any interference or changes that could impact third-party interests.

The tribunal questioned why there would be any opposition to preserving the status quo to safeguard against third-party interests in the company’s assets and to uphold the current situation.

Consequently, the bench allowed Dunzo a week to respond to the notice, stipulating that no third-party interests could be created during this period, and the status quo on assets would be upheld.

The next hearing is scheduled for April 1.

Dunzo’s outstanding debt to Betterplace arises from a range of services rendered, encompassing background verification, recruitment of delivery personnel, asset management, and merchandise. These services are specified within a master service agreement and platform subscription agreement.

Founded in 2015 by Kabeer Biswas, Suri, Mukund Jha, and Ankur Aggarwal, Dunzo connects consumers with nearby stores and facilitates deliveries of products including groceries, medicines, and food, among other daily needs. Its foray into the quick commerce space with Dunzo Daily led to a sharp increase in its cash burn.

Recently, NCLT admitted Velvin Packaging Solutions Private Limited’s insolvency plea against the quick commerce startup. Velvin Group, a leading Indian manufacturer of sustainable packaging solutions, filed the plea in November last year. The plea was registered in February.

Over the last one year, Dunzo has received multiple legal notices from its vendors for payment of outstanding dues amidst its struggles to continue its operations due to a severe cash crunch.

Last year, the startup received legal notices from Google India, Nilenso, Clover Ventures, Facebook India Online Services Private Limited (FBI), Cupshup, Koo and Glance for the same. Dunzo’s outstanding dues to these vendors stand at around INR 11.4 Cr.

The Bengaluru-based quick commerce startup’s loss surged to INR 1,801 Cr in the financial year 2022-23 (FY23) from INR 464 Cr in the previous fiscal year. While its operating revenue increased 317% to INR 226.6 Cr in FY23 from INR 54.3 Cr in FY22, total expenses jumped 286% to INR 2,054.4 Cr in FY23.