Authority: National Company Law Tribunal Principal Bench New Delhi
Order Date: 09.07.2026
Case Overview
The Operational Creditor, M/s Cubix Control Systems Private Limited (CIN: U74899DL1989PTC037285), filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 on 19.10.2024 against the Corporate Debtor, M/s Zazz Technology Connect Private Limited (CIN: U31909DL2018PTC337097). The petition sought initiation of Corporate Insolvency Resolution Process (CIRP) for recovery of an outstanding amount of INR 1,38,55,936/- along with interest at 12% p.a. as on 23.07.2024, totaling INR 1,83,55,936/-.
The dispute arose from a Memorandum of Understanding dated 15.06.2022 where Cubix agreed to manufacture lifestyle products (fitness watches, home and personal audio, IoT products) under the Gizmore brand for Zazz. The Operational Creditor claimed that despite supplying materials and finished products during 2022-2023, the Corporate Debtor failed to clear dues against invoices.
The Corporate Debtor contested the petition, asserting a pre-existing dispute regarding manufacturing defects in supplied products. They provided evidence of communications dating back to September 2022, including WhatsApp chats on 20.09.2022, 27.12.2022, 22.01.2023, 23.01.2023, and an email dated 20.02.2023 specifically complaining about defects in GizFit 930 Plasma models with "TP shifted, Battery Discharge Problem." The Corporate Debtor also claimed that products worth over INR 25 lakhs were returned by distributor M/s Dev Marketing due to defects.
The Corporate Debtor presented 17 debit notes totaling INR 91,37,987/- for 12,954 units of defective material returned between 06-07.08.2024, which the Operational Creditor refused to accept. They also submitted e-way bills as evidence of attempted returns.
Final Outcome
The NCLT Bench comprising Justice Anupinder Singh Grewal and Shri Ravindra Chaturvedi dismissed the petition under Section 9 of IBC. The tribunal found that a pre-existing dispute regarding product quality was evident from communications exchanged in 2022-2023, well before the demand notice was served in July 2024. The Bench applied the principles established in Mobilox Innovations Private Limited v. Kirusa Software Private Limited (2018) 1 SCC 353, determining that the dispute was genuine, not spurious or hypothetical, and therefore not suitable for resolution through the summary process of IBC. The tribunal also noted that the MoU did not provide for interest payment, rejecting that portion of the claim. All connected applications (IA No. 1441/2025, IA No. 3393/2025, IA No. 2728/2025) were disposed of accordingly.
Topics: Insolvency Petition, Product Quality Dispute, Contract Manufacturing