Akshay Kumar Bhatia v. Cue Learn: celebrity endorsement fee is not operational debt

The facts in brief

The appellant is the well-known film actor Akshay Kumar Bhatia. The respondent, Cue Learn Private Limited, operates the children's mathematics-education brand "Cuemath". On 8 March 2021 the parties entered into a tripartite celebrity-endorsement agreement for a term of two years (8 March 2021 to 7 March 2023). The total consideration was Rs 8.10 crore plus GST, payable in two instalments of Rs 4.05 crore each. The agreement required the appellant to render personal endorsement services on "not more than two days" across the two-year term.

Cue Learn paid the first instalment of Rs 4.05 crore and, on the company's account, used the appellant's services on one of the two contracted days. On the appellant's account, his obligations had been fully performed and the second instalment had fallen due simply with the passage of the contract term. He served a demand notice under s.8 of the Insolvency and Bankruptcy Code, 2016 for the unpaid Rs 4.05 crore together with interest, aggregating Rs 4.83 crore, and on its non-satisfaction filed a s.9 CIRP application before the NCLT, Mumbai Bench.

Cue Learn resisted on two grounds: first, that the second instalment was not unconditionally due because the appellant had not actually rendered the second day of service the contract entitled the company to receive; and second, that any dispute over the construction of "service-days" and the trigger of the second tranche was a pre-existing commercial dispute outside the s.9 summary route. The NCLT accepted the second submission and dismissed the application. The appellant brought Company Appeal (AT) (Insolvency) No. 454 of 2025 before the NCLAT Principal Bench.

The doctrinal question

The appeal asked the Appellate Tribunal to revisit the line between an "operational debt" and a "claim for damages" at the very threshold of CIRP. The s.5(21) definition of operational debt covers a claim in respect of the provision of goods or services. Where, however, the very question of whether services were rendered to the contractual standard is contested on reasonable grounds, can the unpaid invoice still be treated as a crystallised operational debt for s.9 purposes? Or does the contractual ambiguity itself displace the matter into the ordinary civil forum?

This is the Mobilox Innovations question — the foundational s.5(6) reading that a "dispute" requires a plausible contention requiring further investigation, not merely a feeble legal argument or an assertion unsupported by evidence — applied to a service contract where the deliverable is not goods on a despatch note but the actor's time on a shoot day. The endorsement-fee setting concentrates the question because the second-instalment trigger turns on a phrase ("not more than two days") that is itself open to two readings: as a ceiling on the appellant's obligation, or as a measured deliverable on which the second tranche is conditioned.

What the Appellate Tribunal held

Contractual ambiguity is the dispute

The bench accepted that both parties' constructions of the agreement were plausible. The appellant's reading — that "not more than two days" places a ceiling on his obligation and that the second instalment falls due on the elapse of the term — is internally coherent. So is Cue Learn's reading — that the second instalment is consideration for the second day's actual service, and that the appellant having rendered only one day's service the company's payment obligation is correspondingly truncated. A tribunal exercising summary jurisdiction under s.9 cannot choose between two reasonable contractual readings without conducting the very full-merits inquiry that summary insolvency adjudication is designed to avoid.

The damages-versus-operational-debt line

The Tribunal therefore drew the line with precision: where a sum claimed under a service contract is contested on reasonable contractual grounds and would have to be quantified by a civil court construing the contract, the sum is at best a damages claim. It is not an operational debt that has crystallised into an unpaid invoice in the s.5(21) sense. The point is doctrinal, not pecuniary — the figure being Rs 4.83 crore makes no difference to the analysis.

IBC is not a recovery mechanism

The Tribunal reiterated, with the authority of three Supreme Court decisions in the Mobilox / S.S. Engineers / Vidarbha Industries line, that the insolvency code is not a debt-collection statute. Section 9 is available where the existence of the operational debt is uncontested and only its non-payment is in issue; it closes where the existence, quantum, or earned-character of the debt is itself in dispute on plausible grounds. The bench observed that an endorsement fee linked to actual service-days is not amenable to summary adjudication under s.9; the appropriate forum is a civil suit or, where the agreement so provides, contractual arbitration.

Why the holding matters

Tightening the s.9 gate for service contracts

A practical consequence of the order is to put service-contract claimants on notice that the s.9 route is unavailable wherever the underlying contract leaves room for two readings of the trigger condition for payment. The Tribunal's reasoning extends beyond endorsement deals to consultancy retainers, software-maintenance contracts, marketing-services engagements, and any structured-instalment arrangement where the second tranche is hinged on a deliverable whose completion is itself the matter in controversy. In each case the operational creditor will need to choose at the threshold whether to plead the contract as crystallised on its face — and risk dismissal at the pre-existing-dispute stage — or to seek civil-court adjudication of the contractual question first and then return, if at all, to operational-creditor remedies.

Coherence with the Mobilox line

The order coheres with the foundational reading in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 — that the s.5(6) "dispute" need not be one whose merits the Adjudicating Authority finally adjudges, but only one whose existence on plausible grounds the Adjudicating Authority recognises. Bhatia applies that reading to the celebrity-endorsement setting and underscores that the plausibility threshold sits well below the merits threshold. The corporate debtor does not have to demonstrate that its construction of the contract is the correct one; it has only to demonstrate that the construction is reasonable, not a sham, and that the dispute pre-dates the s.8 notice.

Calibration against summary-route abuse

The order forms part of a sequence of NCLAT decisions over the last two years that calibrate the s.9 route against abuse by operational creditors using the insolvency threat as a debt-collection device. The bench's framing — that IBC is "not a recovery mechanism for contested contractual claims" — is now a settled refrain at the Appellate Tribunal level. Where the financial-creditor route under s.7 sits on a relatively bright-line default test, the operational-creditor route under s.9 is increasingly disciplined by the pre-existing-dispute filter as the doctrinal counterweight.

Open questions

The order leaves three threads loose. First, whether the appellant will move the Supreme Court by way of statutory appeal under s.62 IBC; secondary reporting indicates the possibility was being considered, but no SLP had been listed as of the date of this brief. Second, the civil-court route now open to the appellant — Mumbai's commercial courts on the Original Side, or contractual arbitration if the underlying agreement so provides — will have to construe the "service-days" phrasing on full merits, and that construction (whichever way it goes) will inform future endorsement contracts. Third, the Tribunal's reasoning is general enough to apply to influencer-marketing contracts now proliferating in the digital-commerce space; whether the Adjudicating Authorities will read the Bhatia line into those compressed-cycle engagement contracts remains to be seen.

The order's narrow significance is that it dismisses an insolvency petition against a children's mathematics-learning company. Its wider significance is that it returns service-contract disputes to the civil forum and reaffirms that the insolvency code is not the place where contested contractual readings are to be construed under the artificial pressure of a CIRP commencement.

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Sources

1. Bar and Bench — "Akshay Kumar endorsement fee row can't trigger insolvency proceedings: NCLAT": https://www.barandbench.com/news/akshay-kumar-endorsement-fee-row-insolvency-proceedings-nclat
2. IBC Laws — case summary, Company Appeal (AT) (Insolvency) No. 454 of 2025: https://ibclaw.in/nclat-rejects-insolvency-appeal-filed-by-akshay-kumar-over-endorsement-fee-dispute/
3. Moneylife — "NCLAT Dismisses Insolvency Plea Against Cue Learn Over Akshay Kumar Endorsement Fee Dispute": https://www.moneylife.in/article/nclat-dismisses-insolvency-plea-against-cue-learn-akshay-kumar-endorsement-fee-dispute
4. LiveLaw — NCLAT order coverage, February 2026: https://www.livelaw.in/top-stories/nclat-akshay-kumar-cuemath-endorsement-fee-ibc-operational-debt