One97 Communications Limited, the parent company of Paytm, has moved the National Company Law Tribunal (NCLT), Delhi Bench, against online gaming company WinZO Games Private Limited. Paytm accuses WinZO of defaulting on payments worth ₹3.6 crore for advertising services. The tribunal has taken note of the plea and issued a formal notice to WinZO. The case has sparked intense discussion across the legal, fintech, and gaming sectors because it highlights the growing tension between advertisers, digital platforms, and gaming startups in India’s rapidly evolving regulatory environment.
Paytm alleges that WinZO failed to pay for promotional campaigns run on the Paytm app, even after repeated reminders and validation confirmations. WinZO disputes the claim and insists that its internal validation process under the purchase order remains incomplete, which suspends its payment obligation. The NCLT’s decision will likely set a crucial precedent for how courts interpret invoice validation clauses and operational debt disputes under India’s Insolvency and Bankruptcy Code (IBC).
Background of the Dispute
Paytm and WinZO entered into a commercial agreement in 2023 to promote WinZO’s real-money gaming products on Paytm’s advertising network. WinZO wanted to increase visibility for its gaming offerings, such as rummy, poker, and fantasy sports. Paytm agreed to display ads and run targeted campaigns across its app ecosystem.
Under the agreement, Paytm issued four invoices totaling around ₹3.6 crore for the services. Each invoice came with a 60-day payment term. Paytm claims it delivered all campaigns as per schedule, verified their completion through the mobile marketing analytics platform AppFlyer, and submitted the necessary proofs of delivery.
However, WinZO allegedly failed to pay even after the due date. Paytm sent multiple reminders, but WinZO maintained that the payment timeline had not started because the invoices had not passed through its internal email validation system, as required under Clause 14 of the purchase order.
Paytm eventually decided to invoke the Insolvency and Bankruptcy Code. It filed a Section 9 application before NCLT, classifying the unpaid amount as an “operational debt.” The company argues that WinZO’s default has disrupted cash flows and violates contractual obligations.
Paytm’s Case
Paytm’s legal counsel submitted that the company provided legitimate advertising services to WinZO and fulfilled every contractual obligation. The counsel emphasized that AppFlyer’s data authenticated campaign delivery and impressions, leaving no room for dispute about the services rendered.
Paytm also asserted that WinZO accepted the campaign performance data during the execution phase and never disputed service delivery in real time. The company only raised the “validation” defense after the invoices became due, which Paytm considers a tactic to delay payment.
According to Paytm, Clause 14 of the purchase order, which mentions email validation, does not indefinitely suspend the payment obligation. The clause only allows a reasonable period for verification, after which the payment must follow the invoice timeline. Paytm contends that WinZO exploited this clause to avoid payment and artificially delay the due date.
Paytm’s counsel further argued that even if the validation remained pending, WinZO should have completed it within a reasonable time. The law never allows a debtor to withhold payment indefinitely on procedural grounds. By refusing to honor invoices after full delivery, WinZO breached the fundamental principle of contract law — that consideration follows service.
WinZO’s Defense
WinZO responded by challenging Paytm’s claim at multiple levels. The company’s counsel stated that Paytm’s invoices cannot become payable until WinZO completes the email validation process defined in the purchase order. According to WinZO, this clause represents a precondition for payment, not a mere formality.
WinZO insists that it continues to validate the campaign data internally and has not yet certified the invoices. The company argues that under Clause 14, the payment term begins only after successful validation. Therefore, no “default” exists under the Insolvency and Bankruptcy Code because the debt has not yet matured.
WinZO also claims discrepancies in the campaign performance data provided by Paytm. The gaming company asserts that AppFlyer’s third-party validation alone cannot replace its internal process. It suspects possible mismatches between impressions delivered and those billed.
Additionally, WinZO emphasizes that insolvency law cannot serve as a tool for commercial recovery. It accuses Paytm of misusing IBC provisions to pressure a business partner. WinZO’s counsel maintained that the alleged default involves a contractual dispute, not a case of insolvency, and should fall outside the NCLT’s jurisdiction.
NCLT’s Response
The NCLT, Delhi Bench, heard Paytm’s plea and issued a formal notice to WinZO. The tribunal directed WinZO to file its response before the next hearing date, set for December 15, 2025. The bench recognized that the dispute raises an important legal question: When does a payment obligation arise under a contract that includes a validation clause?
The tribunal observed that WinZO must demonstrate whether its validation process remains ongoing in good faith or whether it used the clause to delay payment beyond a reasonable time. The bench noted that the “reasonable time” concept plays a central role in interpreting such clauses. Even if a contract permits validation before payment, the debtor cannot extend the process indefinitely to avoid liability.
NCLT also indicated that it will examine whether Paytm’s claim qualifies as “operational debt” under the IBC. Operational debt arises from transactions such as goods supply or service provision, which include advertisement services. If the tribunal finds that the invoices represent a valid operational debt and that default exists, it can admit Paytm’s insolvency plea.
Legal Significance of the Case
The Paytm-WinZO dispute goes beyond a simple payment disagreement. It highlights key legal and commercial issues that affect hundreds of businesses in India’s digital economy.
1. Invoice Validation and Payment Obligations
The dispute brings invoice validation clauses into sharp focus. Many advertising contracts include provisions that require the buyer’s internal confirmation before payment. These clauses aim to ensure transparency and accuracy but often cause friction when one party delays or withholds approval.
If NCLT decides in favor of Paytm, the judgment may limit the scope of such clauses. The tribunal might rule that validation must occur within a reasonable time and that a company cannot exploit the clause to postpone payments indefinitely. This outcome would benefit service providers across industries.
If WinZO wins, it could establish a precedent that allows buyers to enforce strict compliance with validation terms before making payments. That outcome would increase the burden on sellers to maintain detailed records and obtain explicit approvals before invoicing.
2. Operational Debt and Insolvency Petitions
The case also tests the threshold for classifying payment disputes as operational debt under the Insolvency and Bankruptcy Code. NCLT has previously rejected insolvency pleas in cases where the dispute seemed “pre-existing” or purely contractual. Paytm must convince the tribunal that WinZO’s default represents a clear case of non-payment and not a business disagreement over validation.
3. Digital Advertising and Contract Enforcement
As digital advertising grows more complex, platforms and advertisers rely on third-party trackers like AppFlyer to verify campaign performance. This case questions whether such independent validation suffices for payment or whether internal buyer approval remains mandatory.
4. Real-Money Gaming Sector and Regulatory Context
The case arrives amid mounting pressure on India’s real-money gaming industry. Recent state-level bans and central taxation measures have disrupted cash flows across the sector. WinZO, like many gaming startups, has faced compliance challenges due to 28% GST on online gaming. This financial stress may have contributed to delayed payments.
Paytm’s decision to pursue insolvency proceedings signals a shift in corporate behavior. Large platforms now appear willing to enforce contractual rights even against prominent startups, particularly when cash flow and advertising revenues fall under strain.
Industry Reactions
The fintech and startup communities have responded sharply to the Paytm-WinZO dispute. Several digital advertisers support Paytm’s move, arguing that large clients frequently delay payments under pretexts like “internal approval” or “validation,” which strains small vendors’ liquidity.
Advertising agencies believe that a judgment in Paytm’s favor would reinforce accountability and improve payment discipline. One senior executive at a Delhi-based digital marketing firm noted, “Advertisers must stop using validation clauses as shields. Once a campaign runs and data proves delivery, payment should follow.”
However, gaming startups and tech entrepreneurs defend WinZO’s stance. They argue that internal validation ensures fairness, especially in digital marketing where inflated metrics or fraudulent traffic can occur. A gaming industry consultant said, “Validation clauses protect advertisers from paying for fake impressions or non-human clicks. Without them, companies risk huge financial losses.”
Legal experts remain divided. Some lawyers view Paytm’s IBC filing as a strategic pressure tactic rather than a genuine insolvency case. Others see it as a legitimate use of the Code to recover undisputed operational dues.
Business and Contractual Lessons
The Paytm-WinZO episode provides valuable lessons for businesses, especially in advertising, SaaS, and digital services.
1. Define Validation Timelines Clearly
Contracts should specify how long validation can take and what happens if the buyer fails to complete it on time. Without explicit timelines, disputes arise over what qualifies as “reasonable time.”
2. Maintain Transparent Communication
Service providers must maintain written proof of campaign delivery, acknowledgment emails, and tracking reports. Buyers should share prompt validation feedback. Transparency prevents escalation.
3. Use Third-Party Trackers with Mutual Consent
When both parties agree on a verification tool like AppFlyer or MoEngage, the data should become binding. This practice reduces room for post-delivery disputes.
4. Reserve Insolvency Action as a Last Resort
While IBC offers an efficient debt recovery mechanism, companies should use it after exhausting reconciliation and negotiation options. Frequent use of insolvency proceedings for commercial disputes may overburden NCLT and damage business relationships.
Regulatory and Economic Context
The timing of this dispute coincides with turbulent conditions in India’s online gaming and fintech sectors.
Gaming Industry Pressures
In 2023, the government imposed a 28% GST on online real-money gaming. Several startups, including Dream11, Games24x7, and WinZO, faced substantial tax liabilities. The increased tax burden reduced working capital and forced companies to delay vendor payments.
Many advertising platforms also withdrew or scaled back their partnerships with gaming firms due to legal uncertainties in states like Tamil Nadu and Karnataka, where real-money gaming faced temporary bans. This environment intensified operational risks and payment defaults.
Paytm’s Business Shift
Paytm itself has undergone significant restructuring. After the Reserve Bank of India’s actions against Paytm Payments Bank, the company began consolidating non-banking verticals, including advertising, merchant services, and e-commerce. Paytm now focuses on improving profitability and cash efficiency. The company’s firm stance against WinZO aligns with its new financial discipline.
IBC Enforcement Trend
The case also fits within a larger pattern of IBC enforcement for operational debts. Over the last two years, several large corporations, including media agencies and software vendors, have invoked insolvency provisions to recover dues from clients. The NCLT’s interpretation of such cases will determine whether IBC continues to serve as a debt recovery mechanism or reverts to its original purpose — reviving genuinely insolvent businesses.
Possible Outcomes
The tribunal can decide the case in several ways:
1. Admission of Insolvency Petition
If NCLT concludes that Paytm has proven service delivery and that WinZO defaulted without valid justification, it can admit the insolvency petition. The tribunal will then appoint an interim resolution professional (IRP) to evaluate WinZO’s finances. This outcome would seriously affect WinZO’s business reputation and credit standing.
2. Rejection on Grounds of “Pre-Existing Dispute”
If the tribunal accepts WinZO’s argument that invoice validation remains pending or that the claim involves a contractual disagreement, it may reject the plea. In that case, Paytm must pursue civil recovery instead.
3. Settlement Before Hearing
Most IBC petitions end in out-of-court settlements. WinZO may choose to clear dues or reach a compromise to avoid the reputational damage of insolvency proceedings. Paytm could accept a partial payment or structured plan to close the case.
Broader Implications
The verdict will resonate beyond Paytm and WinZO. Every company that sells or buys digital advertising services will watch this case closely. If the tribunal rules that delayed internal validation cannot indefinitely stall payment, businesses will need to tighten their compliance and accounting systems.
For the startup ecosystem, the case highlights the importance of contract clarity and financial discipline. As investor sentiment becomes more conservative, startups can no longer rely on informal arrangements or deferred payments.
For India’s legal community, the case will refine the definition of operational debt under the IBC. It may also influence how tribunals interpret “reasonable time” clauses in commercial contracts — a gray area that often leads to litigation.
Conclusion
The Paytm versus WinZO dispute represents more than a ₹3.6 crore payment battle. It embodies a clash between two expanding sectors — fintech and gaming — at a time when both face regulatory pressure and economic uncertainty. Paytm wants timely payment for completed services; WinZO seeks validation of every detail before release of funds. The NCLT must decide whether the law prioritizes service completion or procedural compliance.
The case underscores that businesses cannot afford vague contracts or indefinite validation processes. Every clause must define clear timelines, obligations, and consequences. In an era where digital transactions dominate, trust and transparency must replace ambiguity.
As the December 15 hearing approaches, both companies will likely weigh their options. A settlement could preserve their relationship, but a full trial could set an influential precedent for India’s digital economy. Whatever the outcome, this dispute has already sparked an essential conversation on corporate accountability, fairness, and the boundaries of insolvency law.
Also Read – Nykaa Q2 FY26: Strong Growth, Stronger Confidence