NCLAT dismisses Stayzilla appeal against insolvency process

Stayzilla accused Jigsaw Solutions of creating fake invoices to raise the bills

The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal by Stayzilla, a home-stay start-up, against the insolvency process order by NCLT.

A bench comprising justice S J Mukhopadhaya, chairperson, justice AIS Cheema, member (judicial) and Balvinder Singh, member (technical) has said it did not found any merit in the appeal and ordered dismissal of the same.

Earlier, arguing the case a counsel for Yogendra Vasupal, one of the founders of Stayzilla, argued that there was existence of a dispute and therefore, the application under Section 9 of the 'I&B Code' was not maintainable.

However, NCLAT bench observed that from the enclosure attached to the appeal, they find that the document preferred by Jigsaw Solutions under whose initiation an insolvency process was ordered against Stayzilla, was complete.

"In so far dispute is concerned, any observations with regard to the individual officer if made by a court of law or in a communication made by Jigsaw, the same cannot be treated to be an 'existence of a dispute.

As we find that there is no specific objection made by Stayzilla in writing, raising any dispute with regard to the quality of services as claimed to have been rendered by Jigsaw, no dispute can be raised at the stage of submitting reply under subsection (2) of Section 8 of the I&B Code," said in the Order.

The Bangalore-based startup had moved NCLAT against the insolvency process slapped on the company on September 15 by Chennai bench of NCLT on a petition filed by city-based advertising firm Jigsaw Solutions.

The NCLT bench earlier appointed Karthigeyan Srinivasan as interim resolution professional (IRP) and ordered completion of the process within 180 days.

Moving the NCLT, the counsel for Jigsaw Solutions argued that it was seeking the unpaid dues for the job undertaken by demanding dissolving of the troubled home-stay start-up. The company was hired by Stayzilla to do outdoor and bus-shelter publicity for the latter.

Countering the argument, the counsel for Stayzilla submitted that there were deficiencies in the works done by the vendor and accused Jigsaw of creating fake invoices to raise the bills.

The National Company Law Tribunal (NCLT), Chennai, has issued an order to commence the Corporate Insolvency Resolution Process against Inasra Technologies Pvt Ltd, which was running the Private Equity-backed online accommodation aggregator Stayzilla, in a petition filed by its vendor Jigsaw Solutions.

The Tribunal has also appointed an Interim Resolution Professional to take care of the management of Inasra Technologies.

The dispute between these two companies has been going on for several months and one of the Stayzilla founder, Yogendra Vasupal, was earlier arrested and was in prison for almost four weeks in a related matter.

Jigsaw, the operational creditor according to the NCLT order, has filed an application against Inasra Technologies Pvt Ltd, on account of the default in the payment of the outstanding debt to the tune of Rs 1.69 crore, along with interest at 18 per cent per annum.

An order issued by Ch Mohmmed Sharief Tariq, member (Judicial) and S Vijayaraghavan, member (Technical), NCLT, Chennai, said that it is established that the Corporate Debtor has committed the default in making the payment of the outstanding debt along with interest.

Admitting the application, order added, "...we order the commencement of the Corporate Insolvency Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed".

It has appointed an IRP to take charge the management of the start-up and declared moratorium with effect from the date of the Order, which is September 15, on various aspects, till the completion of the process.