NCLT dismisses Stayzilla appeal against insolvency

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

A bench comprising justice S J Mukhopadhaya, chairperson, justice AIS Cheema, member (judicial) and Balvinder Singh, member (technical) said it didn’t find any merit in the appeal and ordered dismissal.

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

But the NCLAT bench observed that from the enclosure attached to the appeal, they found the document preferred by Jigsaw Solutions, on whose behest insolvency was ordered against Stayzilla, was complete. “Any observations with regard to an individual officer, if made by a court of law or in communication made by Jigsaw, cannot be treated as the existence of a dispute. As we find no specific objection made by Stayzilla in writing, no dispute can be raised at the stage of submitting reply under subsection (2) of Section 8 of the I&B Code,” said the order.

The Bengaluru start-up had moved NCLAT against the insolvency process slapped on it on September 15 by the 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 it was seeking the unpaid dues for the job undertaken by demanding dissolving of the troubled start-up. The firm was hired by Stayzilla for outdoor and bus-shelter publicity.

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 NCLT, Chennai, had ordered corporate insolvency resolution process against Inasra Technologies Pvt Ltd, which was running the private equity-backed online accommodation aggregator, in a petition filed by its vendor Jigsaw.

The tribunal has also appointed an IRP to take care of the management of Inasra Technologies.