The NCLT rejected Akshay Kumar’s insolvency plea against Cue Learn, stating the claim did not constitute operational debt under the IBC. Kumar’s assertion of an unpaid endorsement agreement was deemed invalid due to a contractual breach. The tribunal emphasized that such disputes belong in civil court, not insolvency proceedings, distinguishing between contract claims and actual insolvency issues.
New Delhi: The National Company Law Tribunal (NCLT) dismissed Bollywood actor Akshay Kumar’s plea to initiate insolvency proceedings against ed-tech company Cue Learn Private Limited. The tribunal determined that the claim did not qualify as operational debt under the Insolvency and Bankruptcy Code (IBC), 2016.
The case revolved around an endorsement agreement signed in March 2021 between Akshay Kumar and Cue Learn. According to the contract, Kumar agreed to provide endorsement services for the company in exchange for Rs 8.10 crore. The payment was to be made in two parts:
- Rs 4.05 crore upon signing the agreement.
- Rs 4.05 crore plus GST before a second endorsement day.
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Kumar claimed that he fulfilled his obligations for the first endorsement day, but Cue Learn failed to make the second payment of Rs 4.05 crore. He argued that the unpaid amount qualified as operational debt, thereby justifying the initiation of insolvency proceedings under the IBC.
Cue Learn countered that the second payment was contingent on Kumar’s availability for a mutually agreed-upon second endorsement day. The company alleged that Kumar did not propose any dates for the second endorsement day, effectively breaching the contract and invalidating his claim for the pending payment.
The NCLT bench, comprising Judicial Member MS Shanmuga Sundaram and Technical Member Dr. Sanjeev Ranjan, ruled in favor of Cue Learn. Key observations included:
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- Lack of Operational Debt: The tribunal stated, “The debt in question does not qualify as operational debt.” Therefore, the matter falls outside the purview of insolvency resolution under the IBC.
- Contractual Breach: The bench noted that Kumar’s obligation to perform on the second endorsement day was conditional upon receiving the full payment. However, the preconditions were not met, and there was no documentary evidence to support Kumar’s claims.
- Jurisdiction Limitation: The tribunal emphasized that disputes related to contract breaches are better suited for adjudication by a civil court rather than being pursued under the insolvency process.
The bench clarified,
“The claim pertains to a breach of contract and is, at best, a claim for liquidated damages. Such claims do not constitute crystallized debts under the IBC.”
Legal Representation
- Akshay Kumar was represented by advocates Sanyam Saxena, Nubair Alvi, and Ramya Aggarwal.
- Cue Learn was represented by advocates Prithu Garg, Parth Bhatia, Sukriti Verma, Yashodhara Burmon Roy, and Shivam Singh.
The NCLT dismissed Akshay Kumar’s petition, stating that the essence of the IBC is to resolve insolvency matters and not to adjudicate contractual disputes. This ruling underscores the importance of distinguishing between contractual claims and genuine insolvency issues.
Case Title – Akshay Kumar Bhatia Vs Cue Learn Pvt Ltd
Read the Judgement here:
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