The Supreme Court expressed dissatisfaction with the order of the National Company Law Appellate Tribunal (NCLAT) which closed the insolvency proceedings against ed-tech firm Byju's (Think and Learn Private Ltd) by accepting a settlement between it and the Board of Control for Cricket in India (BCCI).
The top court on Sep 25 questioned why crisis-hit ed-tech major Byju's chose to settle its dues only with the BCCI despite being in ₹15,000 crore debt. The insolvency appellate tribunal NCLAT did not apply its mind while closing insolvency proceedings against the firm, the court noted.
"The company is in debt of ₹ 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, 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 assets...The NCLAT accepts this all without applying its mind to it," the bench said.
Arguing for the Glas Trust LLC, US is a regulated trust company, 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 said the cricket board got its claim from the personal assets of a man.
Pertinently, the NCLT's relief for Byju's came on Aug 2 after it approved ₹158.9 crore dues settlement with the BCCI.
It came as a huge relief for founder Byju Raveendran enabling him to get back in control. But the relief didn't last long with the Supreme Court on Aug 14 staying its operations on an appeal by Glas Trust Company LLC, a US-based creditor of the ed-tech 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 Byju's 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 a 99.41 % stake in the company, which has been reduced to zero by the Insolvency Resolution Process while those with 0.59 % stake now have it all.
Notably, under the "team sponsor agreement" between Byju's and the BCCI, which was signed in 2019, the ed-tech 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 Byju's later defaulted on the sponsorship fee of ₹ 158.9 crore.
