NCLT Admits Paytm’s Insolvency Plea Against Gaming Company Fabzen Over Unpaid Dues

The Mumbai bench of the tribunal has initiated corporate insolvency proceedings against the maker of Ludo Empire after a ₹3.41 crore debt dispute reached a breaking point.

The Mumbai bench of the NCLT has officially admitted an insolvency plea against gaming company Fabzen, marking a significant legal escalation in the ongoing recovery battle between the gaming firm and Paytm’s parent company, One97 Communications. The tribunal’s decision, delivered on June 18, 2026, paves the way for the Corporate Insolvency Resolution Process (CIRP) to commence, following Fabzen’s failure to settle outstanding dues for digital advertising services that ballooned to over ₹3.41 crore.

The Debt Trap

The dispute stems from a series of advertising campaigns run by Paytm to promote Fabzen’s popular gaming portfolio, which includes titles such as Ludo Empire, Callbreak Empire, and Skill Patti Empire. According to the petition, the services were rendered starting in October 2024. While the initial agreement provided for a 60-day credit period, the invoices remained unpaid long after that window closed.

Evidence presented to the tribunal revealed a paper trail of missed payments and desperate negotiations. One97 Communications produced email correspondence showing that Fabzen had previously acknowledged the debt, even going as far as proposing a 12-month repayment schedule to stave off legal action.

A Failed Defense

Fabzen attempted to block the proceedings by arguing that the advertising campaigns were largely ineffective. The company claimed the services resulted in poor-quality user acquisition and high costs, citing grievances expressed in internal emails from late 2024 and early 2025. Furthermore, the gaming firm invoked the Promotion and Regulation of Online Gaming Act, 2025, arguing that the new regulatory landscape had effectively rendered their commercial contract with Paytm void under Section 56 of the Indian Contract Act.

The NCLT bench, comprising Judicial Member Nilesh Sharma and Technical Member Sameer Kakar, remained unconvinced. The tribunal noted that Fabzen continued to place fresh purchase orders for advertising even after the alleged performance issues arose—conduct the judges found entirely inconsistent with a claim of contractual breach. Furthermore, the tribunal pointed out that the default occurred months before the 2025 gaming regulations even came into effect, dismissing the regulatory defense as irrelevant to the debt.

Why It Matters

This case highlights the growing friction between digital platforms and the gaming sector as both industries grapple with tightening regulations and shifting revenue models. For creditors, the admission of this insolvency plea serves as a potent reminder of the threshold protections under the IBC; once a company crosses the ₹1 crore default mark, "performance disputes" must be substantive and contemporaneous to hold any weight in court. For the broader startup ecosystem, it underscores that digital advertising debts are not mere "service disputes"—they are formal liabilities that, if ignored, can trigger a full-scale corporate resolution process.