The Supreme Court has raised concerns over why troubled ed-tech giant Byju’s opted to settle its debts exclusively with the BCCI while facing a total debt of Rs. 15,000 crore. The court criticized the National Company Law Appellate Tribunal (NCLAT) for not adequately reviewing the situation when it closed insolvency proceedings against Byju’s.
On August 2, the National Company Law Tribunal (NCLT) granted Byju’s relief by approving a settlement of Rs. 158.9 crore with the Board of Control for Cricket in India (BCCI). This move was a significant boost for founder Byju Raveendran, allowing him to regain control of the company. However, the relief was short-lived, as the Supreme Court stayed the NCLT’s decision on August 14, following an appeal from Glas Trust Company LLC, a U.S.-based creditor of Byju’s. The Supreme Court instructed the BCCI to deposit the settlement amount into 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?” questioned Chief Justice D.Y. Chandrachud, leading a bench that included Justices J.B. Pardiwala and Manoj Misra. The bench indicated it might refer the Byju’s 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 remarked.
The Supreme Court’s hearing regarding the U.S. firm’s appeal commenced on Wednesday and is set to continue today.
Senior advocate Shyam Divan, representing Glas Trust LLC, argued that the NCLAT should not have halted the insolvency proceedings after the BCCI accepted the settlement, labeling the funds paid to the BCCI as “tainted.” In defense of Byju’s, advocates Abhishek Singhvi and N.K. Kaul contended that the payment came from Riju Raveendran, Byju Raveendran’s brother, from his personal finances, and asserted that there was no wrongdoing in the NCLAT’s decision to conclude the insolvency case.
Solicitor General Tushar Mehta, representing the BCCI, supported this viewpoint, stating that the cricket board received its dues from the personal assets of an individual.
Earlier, the U.S. firm claimed that the interim resolution professional (IRP) handling Byju’s insolvency case had improperly removed it from the committee of creditors. It alleged that its 99.41% stake in the company had been reduced to zero by the IRP, while those with only 0.59% now retained control.
Under the “team sponsor agreement” established in 2019 between Byju’s and the BCCI, the ed-tech company was required to pay a sponsorship fee for the exclusive rights to feature its brand on the Indian cricket team’s kit. While payments continued until 2022, Byju’s defaulted on the ₹158.9 crore sponsorship fee afterward, having met its obligations until mid-2022.
