Today, Wednesday, September 25, the Supreme Court raised concerns over the National Company Law Appellate Tribunal's (NCLAT) decision to halt insolvency proceedings against BYJU'S and approve a Rs 158.9 crore settlement with the Board of Control for Cricket in India (BCCI). This was stated in a report by PTI.
A bench led by Chief Justice DY Chandrachud remarked that the NCLAT appeared not to have thoroughly examined the matter when concluding the insolvency proceedings against the EdTech giant. The court suggested it might refer the case back to the tribunal for reassessment.
The NCLAT had, on August 2, granted BYJU’S relief by approving the settlement with BCCI and halting the insolvency process. This decision allowed BYJU’S Founder, Byju Raveendran, to regain control. However, on August 14, the Supreme Court upheld the NCLAT ruling, deeming it "unconscionable" and issued notices in response to an appeal by BYJU’S US-based (United States) creditor, Glas Trust Company LLC.
During today's, Wednesday, September 25 proceedings, the Supreme Court bench, including Justices JB Pardiwala and Manoj Misra, began hearing Glas Trust Company’s challenge to the NCLAT verdict. Chief Justice Chandrachud questioned the logic behind BCCI receiving settlement payments from BYJU'S, despite the company being burdened being in Rs 15,000 crore debt. “Can one creditor (BCCI) walk away with a settlement while the company is in such significant debt?” the CJI asked.
Furthermore, the court expressed concerns over the settlement being made from Byju Raveendran's assets and criticised the NCLAT for accepting the settlement without thoroughly investigating the source of funds. The bench hinted at remanding the case for further review to understand the money’s origin.
Senior advocates Abhishek Singhvi and NK Kaul represented BYJU’S, while Kapil Sibal and Shyam Divan appeared for the US-based creditor. Solicitor General Tushar Mehta represented the BCCI, which had been directed to keep the Rs 158.9 crore settlement in a separate bank account.
Divan, representing Glas Trust, argued that the NCLAT should not have halted the insolvency process merely owing to the settlement with BCCI. He termed the payment as “round-tripping”, claiming that Riju Raveendran, Byju’s brother, had paid the sum using “tainted” money.
Conversely, Singhvi and Kaul defended the settlement, asserting that the payment was made from Riju Raveendran’s assets. They added that these details were already disclosed during proceedings in a Delaware court.
BYJU’S and BCCI had entered into a “Team Sponsor Agreement” in 2019, under which the ed-tech firm gained rights to display its logo on the Indian cricket team’s kit. BYJU’S fulfilled its sponsorship obligations until mid-2022 but defaulted on subsequent payments totalling Rs 158.9 crore.
Additionally, on July 16, the Bengaluru bench of the National Company Law Tribunal (NCLT) admitted BYJU’S parent company, Think and Learn, into the insolvency process owing to the default on payments to the BCCI. The NCLT suspended BYJU’S board of directors, imposed a moratorium on its assets, and appointed an interim resolution professional (IRP).
The US-based creditors suspected that the settlement funds may have come from credit extended to BYJU’S, which raised further concerns.
