Online gaming company Fabzen Technologies Pvt Ltd, the operator of popular gaming platforms such as Ludo Empire, Callbreak Empire, and Skill Patti Empire, has suffered a major legal setback after the Mumbai Bench of the National Company Law Tribunal (NCLT) admitted an insolvency petition filed by One97 Communications Ltd, the parent company of Paytm. The case revolves around alleged unpaid digital advertising dues exceeding ₹3.41 crore.
In its order dated June 18, 2026, the NCLT initiated the Corporate Insolvency Resolution Process (CIRP) against Fabzen, holding that the operational debt claimed by One97 Communications was due and remained unpaid. The tribunal also rejected Fabzen’s arguments regarding the performance of Paytm’s advertising campaigns and its reliance on subsequent online gaming regulations to avoid liability.
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Fabzen is a prominent player in India’s online gaming sector and operates several real-money and skill-based gaming platforms. According to the insolvency petition, One97 Communications provided in-app advertising services to Fabzen beginning in October 2024. The petitioner alleged that despite a contractual credit period of 60 days and repeated reminders, Fabzen failed to clear outstanding invoices related to those campaigns.
One97 Communications argued that the unpaid dues constituted an operational debt under the Insolvency and Bankruptcy Code (IBC) and that repeated attempts to recover the money had failed. The company maintained that the debt was acknowledged by Fabzen on multiple occasions and therefore could not be treated as a disputed claim.
During the proceedings, email communications placed before the tribunal reportedly showed that Fabzen had acknowledged the outstanding liability and even proposed a 12-month repayment schedule. The company had also sought additional time to settle the dues. According to One97, these communications demonstrated that the liability was accepted and that there was no genuine dispute regarding payment obligations.
Fabzen, however, contested the insolvency proceedings by claiming that the Paytm Ads campaigns did not deliver the expected results. The company relied on email exchanges from November 2024 and January 2025, alleging that the advertising campaigns generated poor-quality users, involved higher-than-expected acquisition costs, and failed to achieve agreed performance targets. On that basis, Fabzen argued that disputes existed regarding the services provided.
The NCLT Bench was not persuaded by this defence. The tribunal observed that the emails relied upon by Fabzen reflected routine business discussions rather than formal objections to the quality of services or disputes concerning invoices. The Bench further noted that Fabzen continued placing purchase orders and availing advertising services during the relevant period without raising any substantial grievance regarding performance deficiencies.
According to the tribunal, such conduct was inconsistent with the company’s later claim that the services were fundamentally deficient or commercially unacceptable. The Bench concluded that the alleged disputes appeared to be an afterthought and did not constitute a valid defence against the insolvency petition.
Fabzen also sought to rely on the Promotion and Regulation of Online Gaming Act, 2025, arguing that regulatory restrictions introduced under the legislation had effectively destroyed the commercial foundation of the agreement. Invoking Section 56 of the Indian Contract Act, the company contended that the contract had become impossible to perform and therefore stood discharged.
The tribunal rejected this argument as well. It pointed out that the alleged payment default had arisen on January 7, 2025, whereas the online gaming legislation came into effect only in August 2025. As a result, the law could not retrospectively extinguish liabilities that had already crystallized before its enactment. The Bench held that the operational debt had become due prior to the introduction of the legislation and therefore remained enforceable.
Based on these findings, the NCLT admitted the insolvency petition and commenced the Corporate Insolvency Resolution Process against Fabzen. Insolvency professional Manish Lalji Dawda has been appointed as the Interim Resolution Professional (IRP) to oversee the company’s affairs during the resolution process.
The ruling comes at a time when India’s online gaming industry is facing increasing regulatory scrutiny, evolving compliance requirements, and growing financial pressures. Legal experts believe the decision underscores the importance of timely payment of operational debts and highlights the limited scope of defences available once liabilities have been acknowledged and allowed to crystallize under insolvency law.
