Insolvency plea against Amazon Wholesale dismissed again

On November 21, the National Company Law Appellate Tribunal (NCLAT) rejected an appeal from Multiplier Brand Solutions, which had challenged the National Company Law Tribunal’s (NCLT) decision to dismiss its insolvency petition against Amazon Wholesale (India).

The Bench, led by Chairperson Justice Ashok Bhushan and technical members Barun Mitra and Arun Baroka, found nothing wrong in NCLT’s decision to set aside the corporate insolvency resolution process (CIRP), citing a pre-existing dispute between the parties as the primary reason.

Multiplier Brand Solutions had filed its insolvency petition under Section 9 of the Insolvency & Bankruptcy Code (IBC), 2016, following a novation and substitution agreement with Amazon Seller Services and Amazon Wholesale (India) in Bengaluru. The company had provided manpower and related services for Amazon Device Projects, based on purchase orders issued between October 2022 and May 2023.

From March to May 2023, Multiplier raised invoices amounting to ₹3.69 crore, but Amazon Wholesale approved only two of the invoices, citing settlement issues and the need for additional documentation due to ongoing investigations into possible fraudulent submissions related to other Amazon projects. Multiplier argued that Amazon had delayed payments, withholding approval pending internal reviews.

In response, Multiplier issued a demand notice to Amazon for ₹3.69 crore, plus 18% interest. Amazon Wholesale denied the claim, pointing to pre-existing disputes between the two companies. As a result, Multiplier filed an insolvency petition in November 2023. However, in March 2024, the NCLT dismissed the petition, agreeing with Amazon that a pre-existing dispute existed, which hindered the initiation of the CIRP.

The NCLAT, in its ruling, reviewed Amazon’s response to the demand notice and noted that the company had raised multiple disputes, including issues with the invoices. The tribunal also examined correspondence between the parties, confirming that the payment dispute was present well before the demand notice was issued on November 6, 2023.

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