The insolvency appellate tribunal NCLAT did not apply its mind while closing insolvency proceedings against Byju’s, the Supreme Court has said, noting that it has approved the edtech major’s dues settlement worth crores with the BCCI.
The National Company Law Appellate Tribunal (NCLAT)’s relief for Byju’s came on August 2 after it approved Rs 158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI).
It came as a huge relief for founder Byju Raveendran, which put him back in control. But the relief didn’t last long with the Supreme Court on August 14 staying its operations on an appeal by Glas Trust Company LLC, an US-based creditor of the edtech firm. The top court had asked the BCCI to keep the amount it received as part of the settlement in a separate bank account.
“The company is in debt of Rs 15,000 crore. When the quantum of the debt is so large, can one creditor (BCCI) walk away saying one promoter is ready to pay me,” said a bench headed by Chief Justice D Y Chandrachud.
The bench, also comprising Justices J B Pardiwala and Manoj Misra, hinted that it may send the case back to the appellate tribunal.
“Why pick up BCCI and settle with them only from your personal assets…The NCLAT accepts this all without applying its mind to it,” the bench said.
The top court hearing on the US firm’s appeal, which began on Wednesday, will resume today.
Arguing for the Glas Trust LLC, senior advocate Shyam Divan said the NCLAT shouldn’t have stopped the insolvency proceedings against Byju’s after the BCCI claimed the settlement amount and called the settlement money paid to the BCCI “tainted”.
Advocates Abhishek Singhvi and NK Kaul, representing Byju’s, said the money was paid by Riju Raveendran, brother of Byju Raveendran, from his personal assets and there was nothing wrong with NCLAT closing the insolvency case.
Solicitor General Tushar Mehta, appearing for the BCCI, echoed the same stand and said the cricket board got its claim from the personal assets of a person.
The US firm had earlier told the court that the interim resolution professional (IRP) dealing with the insolvency case against Byju’s had wrongly removed it from the committee of creditors. It had said it held 99.41 per cent stake in the company, which has been reduced to zero by the IRP while those with 0.59 per cent stake now have it all.
Under the “team sponsor agreement” between Byju’s and the BCCI, which was signed in 2019, the edtech firm had to pay a sponsorship fee for the exclusive rights to display its brand on the Indian cricket team’s kit. The payments continued till 2022, but after that, Byju’s had defaulted on the sponsorship fee of Rs 158.9 crore.
The company met its obligations till the middle of 2022 but defaulted on subsequent payments of Rs 158.9 crore.
