NCLT dismisses insolvency plea against Zomato over alleged payment default

The National Company Law Tribunal (NCLT) Delhi on Thursday dismissed an insolvency plea filed against food delivery giant Zomato by uniform supplier Nona Lifestyle over an alleged payment default of ₹1.64 crore.

The NCLT dismissed the insolvency plea against Zomato on procedural grounds, citing non-compliance with the Insolvency and Bankruptcy Code (IBC). 

The tribunal ruled that Nona Lifestyle had failed to properly serve the mandatory notice under Section 8 of the IBC before filing the case. The original plea had already been dismissed in November 2024 after Nona Lifestyle’s lawyer failed to appear for the hearing. When the company later sought to restore the case, the tribunal rejected the request, stating that an invalid plea could not be revived.

Read this | Data dive: What Eternal aka Zomato got right in the last two years

Business-to-business (B2B) apparel manufacturer Nona Lifestyle sought to initiate a Corporate Insolvency Resolution Process (CIRP) against Zomato, claiming non-payment for uniforms and merchandise, including ICC World Cup 2023 apparel.

According to Nona Lifestyle, Zomato placed multiple orders in 2023 for rider uniforms, trousers, and World Cup jerseys but later delayed payments and refused deliveries, citing storage issues. The plea detailed specific purchase orders and alleged that Zomato’s actions led to financial losses.

In a purchase order dated 18 July 2023, Zomato allegedly ordered 32,724 rider t-shirts, generating five invoices worth ₹16.47 lakh. Nona Lifestyle delivered 11,210 t-shirts, which Zomato acknowledged, but the remaining 21,500 were not delivered due to payment disputes. The undelivered stock remains in Nona Lifestyle’s warehouse, incurring storage costs.

Read this | IBBI cracks the whip on a dozen insolvency professionals

Another order, dated 6 June 2023, covered 35,000 t-shirts valued at ₹51.45 lakh, with delivery due by 7 August 2023. However, Nona Lifestyle admitted to delays of 21 to 73 days, attracting penalties under Zomato’s agreement.

The supplier further alleged that Zomato pressured it into offering discounts through "threats and warnings" and later refused to accept remaining World Cup jerseys, citing a "failed campaign." Since the jerseys were custom-made, they could not be resold.

Also read | Zomato’s growth path: Where will the stock be in 3 years?

Zomato denied the allegations, stating that Nona Lifestyle repeatedly missed delivery deadlines, triggering contractual penalties. It argued that the delays caused “substantial reputational and goodwill damage” and maintained that it only paid for delivered jerseys after adjusting penalties and advance payments.