Zomato’s shares have continued to show surprising strength in the stock market despite facing a renewed insolvency plea from Nona Lifestyle Private Limited, a company that previously supplied branded uniforms and merchandise for Zomato’s employees and delivery partners — including special gear for the ICC World Cup 2023 campaign. Nona Lifestyle alleges that Zomato defaulted on payments, delayed transactions, and did not accept the full delivery of the contracted goods. The company claims an outstanding amount of Rs 1.64 crore, which includes interest on the unpaid sum.
The matter first appeared before the National Company Law Tribunal (NCLT) in 2024 under Section 9 of the Insolvency and Bankruptcy Code (IBC), which deals with cases of operational creditors seeking to initiate corporate insolvency proceedings. However, the NCLT dismissed the case earlier due to "non-prosecution" — essentially, the case was thrown out because Nona Lifestyle failed to pursue it actively. Now, the company has returned to court, filing a fresh application under Rule 11 of the NCLT Rules, 2016, which grants the tribunal the power to revive previously dismissed cases if deemed appropriate.
Nona Lifestyle has argued that Zomato's alleged non-payment has severely impacted its operations, while Zomato’s legal team has pushed back, asserting that the dispute isn’t straightforward. According to Zomato’s lawyers, a "pre-existing dispute" over the quality and delivery of the merchandise invalidates Nona Lifestyle’s claim under the IBC. They contend that insolvency proceedings cannot be misused to recover disputed amounts, which should instead be handled as a civil case.
The case was heard on Monday by a two-member NCLT bench, comprising Judicial Member Ashok K Bhardwaj and Technical Member Reena Sinha Puri. However, the bench deferred the next hearing to April, extending the legal uncertainty surrounding the case.
Despite this legal turbulence, Zomato’s stock has remained resilient. Over the past five trading sessions, the stock has risen by more than 4%. However, it remains down by 22% over the last six months, reflecting some investor caution amid ongoing market volatility. Year-over-year, the stock has shown an impressive rebound, climbing over 36%, driven by Zomato’s growing dominance in the food delivery sector, strategic acquisitions, and its rapid expansion into quick-commerce through Blinkit.
Market analysts believe that investor confidence in Zomato remains high, primarily due to the company’s aggressive growth strategies and its ability to capture a significant market share in the competitive food-tech space. Additionally, Zomato’s move toward profitability — after years of operating at a loss — has strengthened its position in the eyes of shareholders. Its recent focus on improving unit economics, reducing delivery costs, and expanding high-margin services like Zomato Gold subscriptions has also contributed to its positive market performance.
However, the legal battle could cast a shadow on this progress if the NCLT rules in favor of Nona Lifestyle. If the tribunal admits the application and initiates the Corporate Insolvency Resolution Process (CIRP), Zomato may face operational disruptions, potential damage to its brand reputation, and even a temporary freeze on certain financial activities — all of which could dampen investor sentiment.
Conversely, if Zomato successfully defends the case and the tribunal dismisses Nona Lifestyle’s plea once again, it could further bolster market confidence, reinforcing the view that the company is resilient in the face of legal and operational challenges. This outcome could also deter other suppliers from attempting similar legal actions, potentially safeguarding Zomato from additional disputes.
For now, all eyes remain on the April hearing, where the NCLT’s decision could shape the next chapter in this high-stakes legal tussle.
