NCLT Rejects Shikhar Dhawan’s Insolvency Plea Over Unpaid Legends League Fee:

NCLT Rejects Shikhar Dhawan’s Insolvency Plea Over Unpaid Legends League Fee The application was filed by cricketer Shikhar Dhawan under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against Absolute Legends Sports Private Limited, the operator of the Legends League Cricket. The claim arose from alleged non-payment of the player fee payable under a Player Agreement dated 10.09.2024 executed for Dhawan’s participation in the third season of the league held between September and October 2024. The Operational Creditor claimed that an amount of Rs. 1,24,50,459 remained unpaid, comprising a principal sum of Rs. 1,13,62,500 and interest calculated at 19.15% per annum. The application held that the Corporate Debtor had agreed to pay a total player fee of Rs. 2,65,50,000 and had released only partial payments aggregating to Rs. 1,51,87,500. Despite repeated reminders and issuance of a demand notice under Section 8 of the IBC, the balance amount was allegedly not paid. Thus, the applicant (Shikhar Dhawan) had to initiate insolvency proceedings against the Corporate Debtor. Issue Raised Before Tribunal: Whether the alleged unpaid player fee arising from a Player Agreement for participation in Legends League Cricket constituted a clear operational debt under the Insolvency and Bankruptcy Code, warranting initiation of CIRP against the Corporate Debtor. NCLT’s Order: The NCLT Bench dismissed the Section 9 application after examining the Player Agreement and the material placed on record. The Tribunal observed that the Agreement contained several ambiguities, particularly regarding the date of execution and allocation of liability between the League Owner and the Franchise Holder. Although the Applicant relied upon Clauses 3.2 and 9.2 to contend that the Corporate Debtor was solely liable to pay the player fee even in the absence or default of the franchise holder, the Tribunal held that these provisions appeared uncertain and required deeper contractual scrutiny. The Tribunal also noted that the invoice relied upon by the Applicant had been raised prior to the stated execution date of the Agreement, which, prima facie raised doubts regarding the authenticity and reliability of the contractual arrangement. The Tribunal further found that the structure of the Player Agreement contemplated payment linked to promotional and match-related obligations, yet no material had been placed on record to conclusively establish that the Operational Creditor had fully discharged such obligations or completed the league in accordance with the contractual terms. In view of these deficiencies, the Tribunal held that the Applicant had failed to demonstrate that a definite operational debt had become due and payable. Thus, the petition was held not maintainable under Section 9 of the IBC and was disposed of, while granting liberty to the Applicant to pursue appropriate remedies before a civil court or any other competent forum. To Read Full Judgment, Download PDF Given Below