This decision, issued on August 2 by judicial member Rakesh Kumar Jain and technical member Jatindranath Swain, follows a settlement between Byju’s and the Board of Control for Cricket in India (BCCI). The dispute involved Byju’s repayment of Rs158 crores owed for cricket jersey sponsorship deals.
CHENNAI: Today (2nd Aug): The National Company Law Appellate Tribunal (NCLAT) has allowed Byju Raveendran’s appeal against initiating insolvency proceedings for Byju’s, the edtech firm.
READ ALSO: Byju Raveendran’s Appeals to HC for Stay on NCLT’s Insolvency Proceedings
This decision, issued on August 2 by judicial member Rakesh Kumar Jain and technical member Jatindranath Swain, follows a settlement between Byju’s and the Board of Control for Cricket in India (BCCI). The dispute involved Byju’s repayment of Rs158 crores owed for cricket jersey sponsorship deals.
The NCLT Bengaluru had previously begun corporate insolvency resolution against Byju’s in June at BCCI’s request. However, with the new agreement, Riju Raveendran, Byju’s brother, will repay the debt personally. The NCLAT confirmed that this repayment would not come from funds intended for Byju’s financial creditors.
The NCLAT accepted the settlement between Byju’s and BCCI, noting that the repayment will be personally funded by Riju Raveendran, not from funds meant for financial creditors.
The tribunal stated,
Riju Raveendran has confirmed that this money is not sourced from any credit agreement. Although the financial creditor does not agree, they have not provided evidence that this money comes from Byju’s Alpha Inc or the Corporate Debtor. The settlement occurred before forming the CoC. The money’s source is undisputed, and the NCLT’s July 16 order already protects the applicant’s interests. Compromise is the essence of justice, and since the settlement offer comes from a suspended director on behalf of the CD, the Court can use Rule 11 to facilitate a settlement. Given these facts, the settlement is approved, the appeal is successful, and the previous order is set aside.”
Concerns were raised by a US-based financial creditor about the source of the repayment funds, suggesting it could be money owed to financial creditors.
However, Solicitor General Tushar Mehta assured that the money was legitimate and would be transferred via a banking channel.
Senior Advocate Mukul Rohatgi, representing a financial creditor, argued that the source of the repayment funds remains unclear.
He stated, “The maths don’t match. We’re ignoring that Rs 10,000 crore was given to them. They claim the remaining amount will come from asset sales. Which assets? Salaries haven’t been paid. Where is this money coming from?”
Counsel for Byju and Riju Raveendran accused GlasTrust of ‘forum shopping’ by approaching a US Court in Delaware and referencing the ongoing NCLAT proceedings.
Senior Advocate Arun Kathpalia, representing Byju, said, “What’s happening in your Lordships’ court is becoming a subject in a US lawsuit. This is unacceptable.”
Senior Advocate Puneet Bali, representing Riju Raveendran, added, “This money came to me in 2015-16. It hasn’t earned interest. I have paid Rs 1,050 crore in taxes on this money. I appreciate that GlasTrust acknowledged in the US court that this is my money, not part of the ₹533 million due to financial creditors. So, what’s the problem? This is forum shopping.”
Responding to an NCLAT query, Rohatgi asserted,
“I have every right to go to the US court. IBC proceedings are not for recovery but for revival. That’s the foundation.”
The NCLAT Bench noted, “We might argue before the Supreme Court that it’s for revival, but in reality, it’s for recovery. Financial creditors have their remedy. Who has stopped you? Rule 11 allows discretion before the CoC is formed. I’ll decide whether to use it or not.”
Rohatgi countered, “My argument is, don’t use it.”
Senior Advocate Krishnendu Datta, for GlasTrust, added, “There’s a procedure under IBC. These are not recovery proceedings.”
The NCLAT Bench responded, “I understand that. If the CoC had been formed, it would be different.”
The appellate tribunal indicated its intention not to prolong the matter.
“This is unnecessary hype. It’s a simple settlement, and I could have decided in two minutes. I’m disturbed because the same arguments are repeated. It’s like any other case. There’s nothing special about this,” the NCLAT said before announcing its decision.
The NCLAT emphasized the importance of settlement, noting that the repayment source was undisputed and the financial creditor’s interests had been protected by a prior NCLT order. The Tribunal criticized the unnecessary complexity added to the case and approved the settlement.
With this settlement, insolvency proceedings against Byju’s parent company, Think and Learn, will be halted. The Company of Creditors under the Insolvency and Bankruptcy Code (IBC) will not be formed, and the firm will no longer be under the control of the Interim Resolution Professional (IRP) appointed by the NCLT Bengaluru.
Byju Raveendran claimed his firm is solvent and committed to paying employee salaries and debts. In case of a future default, creditors will need to initiate new proceedings under the IBC.
The legal representation for Byju’s and Riju Raveendran included Senior Advocates Arun Kathpalia, Puneet Bali, and Dhyan Chinnappa, among others. Solicitor General Tushar Mehta and his team represented the BCCI, while Senior Advocates Mukul Rohatgi, Arvindh Pandian, and Krishnendu Datta, along with their team, represented GLAS Trust Company LLC.
