Introduction
The National Company Law Tribunal (NCLT) in Mumbai has admitted an insolvency petition filed by One97 Communications Ltd, the parent company of Paytm, against Fabzen Technologies Pvt Ltd. The case revolves around unpaid digital advertising dues amounting to over ₹3.41 crore, as outlined in the case One97 Communication Ltd v. Fabzen Technologies Pvt Ltd.
Background and Claims
On June 18, the NCLT initiated the corporate insolvency resolution process (CIRP) against Fabzen, the developer behind popular games such as Ludo Empire, Callbreak Empire, and Skill Patti Empire. Paytm had moved to the tribunal under the Insolvency and Bankruptcy Code (IBC), alleging that Fabzen failed to settle invoices for in-app advertising from October 2024 onwards. Despite a 60-day credit period and numerous follow-ups, the dues remained unpaid.
Emails presented as evidence showed that Fabzen acknowledged the outstanding amounts several times. The company even proposed a 12-month payment schedule and requested additional time to make payments. Conversely, Fabzen argued that there were significant disputes concerning the performance of Paytm Ads campaigns, citing emails from November 2024 and January 2025 that criticized the quality of users acquired, high acquisition costs, and unmet performance targets.
Fabzen’s Defense and NCLT’s Findings
Fabzen also referred to the Promotion and Regulation of Online Gaming Act, 2025, claiming that new legislative restrictions on online gaming dismantled the commercial foundation of the agreement, invoking Section 56 of the Indian Contract Act to argue for automatic contract termination.
However, the NCLT Bench, comprising judicial member Nilesh Sharma and technical member Sameer Kakar, dismissed these defenses. The bench noted that the emails Fabzen cited were routine discussions about performance, lacking any explicit references to service issues or invoice disputes. It was highlighted that Fabzen continued to place purchase orders and utilize services without raising complaints or grievances, which contradicted their claim of fundamentally deficient or unacceptable services.
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Legal Interpretation and Conclusion
The tribunal also rejected Fabzen’s argument regarding the gaming law, emphasizing that Fabzen’s default occurred on January 7, 2025, well before the enactment of the Online Gaming Regulation Act in August 2025. The bench concluded that the operational debt in question had already become due prior to the legislation’s introduction, thereby invalidating Fabzen’s defense.
Consequently, the NCLT proceeded with the CIRP against Fabzen and appointed Manish Lalji Dawda as the interim resolution professional. The legal representation included advocates Nikita Abhyankar, S. Vatsa, and Vijayant from Gravitas Legal for Paytm, while advocates Devashish Godbole and Aman Pawar represented Fabzen.
