The dispute was settled after the SC allowed EzeeGo to withdraw its insolvency application filed against Yatra Online
Yatra’s operational creditor EzeeGo One Travel approached NCLT seeking to initiate insolvency resolution against Yatra under Section 9 of the Bankruptcy Code, 2016
Yatra’s contention was that the insolvency proceedings against it were barred under Section 10A of the IBC while EzeeGo claimed that the payment was due before pandemic in 2019
Drawing the curtains on its months-long legal tussle with Nasdaq-listed Yatra, the contesting traveltech startup, EzeeGo, has settled its insolvency dispute with the travel portal.
The matter saw a resolution after the Supreme Court reportedly allowed EzeeGo to withdraw its insolvency application filed against Yatra. This comes a month after the former moved the SC against an NCLAT ruling that dismissed its appeal.
In March, Yatra’s operational creditor EzeeGo One Travel approached a Mumbai bench of the National Company Law Tribunal (NCLT) to initiate insolvency resolution against the travel portal. The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), and pertained to dues to the tune of INR INR 3.5 Cr, which EzeeGo claimed it was yet to receive from Yatra.
Representing Yatra before the NCLT, senior advocate Krishnendu Dutta, had then sought the dismissal of EzeeGo’s plea, citing that the insolvency proceedings were barred under Section 10A of the IBC.
Section 10A of IBC prohibits the filing of insolvency applications for defaults that occurred between March 2020 and March 2021, owing to the pandemic.
It is pertinent to note that EzeeGo, in its petition before NCLT, alleged that INR 3.15 Cr was due from Yatra and the creditor specified October 30, 2020, as the date of default in the application.
Yatra argued that EzeeGo’s date of default mentioned in the application came under the exempted period as per Section 10A. However, EzeeGo argued that it is incumbent upon the NCLT to determine the true date of default instead of referring to pleadings filed by the parties.
During the proceedings before NCLT, EzeeGo’s counsel submitted a ledger statement sent by Yatra via email, which admitted the debt of INR 1.59 Cr on November 15, 2021. The traveltech company said that the statement reflected that the balance was outstanding since April 1, 2019, which precedes the bar period under Section 10A.
After much back and forth, NCLT dismissed Yatra’s plea and sided with EzeeGo on the matter. Subsequently, Yatra appealed the case before the appellate tribunal, NCLAT, which shot down the beleaguered travel portal EzeeGo’s submission and set aside the order of the Mumbai bench.
In its order, an NCLAT bench observed that there was an error in allowing EzeeGo to bring a new date of default, referring to different dates of default submitted by EzeeGo in its petition and in the ledger statement.
The NCLAT added that EzeeGo never even attempted to amend the application to change the date of default ‘despite having an opportunity to do so’.
While there is no clarity on what prompted the out-of-court settlement, the withdrawal of the application comes as a sigh of relief for both EzeeGo and Yatra. Currently, EzeeGo is in the middle of insolvency proceedings after it defaulted on its term loans availed from Yes Bank back in 2019.
Since then, the company is also the face of an FIR, which alleges that the platform defrauded the bank of more than INR 900 Cr. EzeeGo is also under investigation by the Enforcement Directorate (ED), and promoter Ajay Kerkar is under judicial custody for multiple charges of fraud and financial irregularities.
Meanwhile, the settlement has come as a reprieve for Yatra, which is also looking to list on Indian bourses. A legal case could figure very prominently if Yatra decides to go ahead with the IPO plans and could also lead to challenges on the regulatory front, especially from SEBI.
The two players operate within the larger Indian travel sector which is projected to reach a market size of $125 Bn by FY27.
