NCLT Dismisses Akshay Kumar's Insolvency Plea Against Cue Learn Over Rs4 Crore Payment
SN Thyagarajan (Bar  and  Bench) 22 January 2025
The National Company Law Tribunal (NCLT) dismissed Bollywood actor Akshay Kumar's petition seeking to initiate insolvency proceedings against ed tech company Cue Learn Private Limited [Akshay Kumar Bhatia Vs Cue Learn Pvt Ltd]
 
A bench of NCLT comprising Judicial Member MS Shanmuga Sundaram and Technical Member Dr. Sanjeev Ranjan held that the claim by Kumar was based on outstanding payments to be made under a contract and the same would not qualify as operational debt so as to trigger the Insolvency and Bankruptcy Code (IBC)
 
"As the debt in question does not qualify as operational debt, we do not deem it appropriate to delve into further facts and merits of the case. The essence of the IBC lies in resolving insolvency matters through a process driven approach, and any deviation from its prescribed scope would undermine the legislative intent of the Code," the NCLT said. 
 
The petition stemmed from an endorsement agreement signed between Kumar and Cue Learn in March 2021. 
 
Under the agreement, Kumar was to provide endorsement services for the company's website in exchange for a total payment of 8.10 crore. The payment was to be divided into two tranches - 4.05 crore upon signing and the remaining 4.05 crore plus GST before the utilisation of a second endorsement day.
 
Kumar alleged that Cue Learn failed to make the second payment of 4.05 crore despite him fulfilling his obligations for the first endorsement day. 
 
He claimed that the outstanding amount constitutes an operational debt under the Insolvency and Bankruptcy Code (IBC), 2016 and hence qualifies, for initiation of insolvency proceedings against Cue Learn.
 
Cue Learn contended that the second payment was contingent upon Kumar's availability for a mutually agreed-upon second endorsement day. 
 
The company argued that Kumar never proposed any dates for the second day, thereby breaching the contract and negating his claim for the remaining payment
 
The tribunal noted that Kumar's obligation to render services on the second day was conditional upon receiving the full payment, which he did not. 
 
Furthermore, the NCLT observed that any claim arising from the alleged breach of contract would be considered liquidated damages and not operational debt under the IBC.
 
"However, there is no documentary evidence on record to indicate that these conditions were fulfilled. Consequently, the obligation to render services on the second day did not materialise as the necessary preconditions were not met. The lack of performance on the part of the OC to provide the required services negates the assertion of an operational debt," it said
 
The tribunal further noted that its role is limited to adjudicating disputes with respect to IBC and since the present dispute relates to a contract, it cannot decide the same. 
 
"The claim pertains to a breach of contract and is, at best, a claim for liquidated damages as provided under Clause 7.2(c) of the agreement. Such claims require adjudication before a competent civil court and do not constitute crystallised debts that can be pursued under the insolvency resolution process," it said. 
 
Therefore, it dismissed the actor's plea to initiate insolvency against Cue learning. 
 
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