NCLAT dismisses insolvency plea against Amazon Wholesale

The National Company Law Appellate Tribunal (NCLAT) on November 21 dismissed an appeal filed by Multiplier Brand Solutions challenging an order of the National Company Law Tribunal (NCLT) dismissing its insolvency plea against Amazon Wholesale (India). [Multiplier Brand Solutions Pvt Ltd v. Amazon Wholesale (India) Pvt Ltd].A coram of Chairperson Justice Ashok Bhushan and Technical Members Barun Mitra and Arun Baroka said, “In facts of the present case, Adjudicating Authority has not committed any error in refusing to initiate CIRP, there being Pre-Existing Dispute which is reflected with the correspondence which took place between the Parties much prior to issuance of Demand Notice.”.Multiplier Brand Solutions had filed the plea under Section 9 of the Insolvency & Bankruptcy Code (IBC), 2016. It had entered into a novation and substitution agreement at Bengaluru between Amazon Seller Services and Amazon Wholesale (India)..The company provided manpower and related services for Amazon Device Projects based on purchase orders issued between October 2022 and May 2023. Subsequently, invoices amounting to ₹3.69 crore were raised from March 2023 to May 2023, and payment approval was requested. It contended that though Amazon Wholesale confirmed that two invoices were approved but delayed due to settlement issues. Multiplier argued that Amazon later requested additional data, since there were allegations of fake submissions by the company concerning other Amazon projects under investigation. It further contended that Amazon Wholesale withheld payments, citing the need to complete internal reviews.Owing to this, Multiplier issued a demand notice to Amazon seeking ₹3.69 crore with 18% interest. Amazon Wholesale, however, refuted the claim citing pre-existing disputes between the parties. Following this, multiplier filed an insolvency application in November last year. In March 2024, the NCLT rejected the plea, acknowledging that there was a pre-existing dispute between the parties and it could not initiate the corporate insolvency resolution process (CIRP) against Amazon owing to this. .While dismissing the appeal against the NCLT order, the NCLAT found,“When we look into the Reply given by the Corporate Debtor to the Demand Notice, the Reply Notice clearly indicates that Notice of dispute was issued by Corporate Debtor, raising several issues, including the Pre-Existing Dispute.”The appellate tribunal also went through a series of correspondence between the parties and found, “The above correspondence between the Parties which relates to the payments which are subject matter of Demand Notice and Section 9 Application is clear communication by Corporate Debtor that payments have been put on hold indicates that there was dispute raised by Corporate Debtor with regard to entitlement and payment of the invoices which are subject matter of Section 9 Application much before issuance of Demand Notice dated 06.11.2023.”It thus found merit in Amazon’s contention and dismissed the appeal. .Multiplier Brand Solutions was represented by Senior Advocate Neeraj Malhotra and Advocates Lakshmeesh S Kamath, Rajesh Khandelwal, Samriti Ahuja, Aditi Prakash, Rohit Patil and Nimish Gupta.Amazon Wholesale was represented by Senior Advocate Krishnendu Datta with Advocates Vijayendra Pratap Singh, Raghav Seth, Ankitesh Ojha, Arnab Ray and Akhil Nene..[Read order]