Paytm vs WinZO: Millions in Dispute! NCLT Steps In – Is This a Game Changer for Online Payments?

The National Company Law Tribunal (NCLT) has issued a notice to online gaming firm WinZO following an insolvency petition filed by Paytm (One97 Communications Limited). Paytm alleges that WinZO owes them about ₹3.6 crore for advertising services provided on Paytm's platform, related to promoting games like poker and rummy.

Paytm argues that WinZO has failed to pay based on four invoices, despite 60-day payment terms and a demand notice. Paytm contends that WinZO's defense, stating invoices were "not validated" and under internal investigation, is a "sham defence," especially since WinZO never disputed the placement of advertisements. Paytm also provided validation data using the AppFlyer tool, fulfilling contractual requirements.

WinZO, represented by senior advocate Abhishek Malhotra, countered that Clause 14 of the purchase order requires email validation before invoices are raised. WinZO also pointed to internal emails indicating invoices were transferred for central evaluation. Furthermore, WinZO suggested that their non-payment started after the online real money gaming ban came into effect, implying financial distress due to the ban.

The NCLT has given WinZO two weeks to file its reply, with the next hearing scheduled for December 15. The tribunal suggested WinZO can present its defense in the counter statement.

Impact: This legal dispute could impact investor sentiment towards One97 Communications Limited (Paytm) and potentially signal financial strain or operational challenges for WinZO. It highlights payment disputes and contractual disagreements within the digital advertising and online gaming sectors, which could lead to increased scrutiny of such arrangements by investors. The outcome may also set a precedent for similar payment disputes. Rating: 6/10

Difficult terms: NCLT: National Company Law Tribunal, a specialized Indian body dealing with corporate and insolvency matters. Insolvency petition: A formal request made to a tribunal to declare a company bankrupt or unable to pay its debts. Operational debt: Debt arising from the provision of goods or services in the normal course of business. Demand notice: A formal written request for payment of a debt, often a precursor to legal action. Sham defence: A false or misleading argument put forward to avoid legal obligations. Validation: The process of confirming the accuracy, truth, or legitimacy of something; in this context, confirming that advertising services were delivered and met requirements. Purchase order: A commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. AppFlyer tool: A marketing analytics platform used to track and measure mobile app marketing campaigns. Online real money gaming ban: A prohibition or restriction imposed by authorities on games where players can wager real money.