Byju’s: Supreme Court Stays NCLAT Decision To Close Insolvency Case

Debayan Roy (Bar and Bench) 14 August 2024

Economy & Nation

The Supreme Court on Wednesday stayed a recent judgment delivered by the National Company Law Appellate Tribunal (NCLAT) closing insolvency proceedings initiated against ed-tech firm Byju's (Glas Trust Company LLC v. Byju Raveendran and ors).

A Bench of Chief Justice of India (CJI) DY Chandrachud with Justices JB Pardiwala and Manoj Misra passed the stay order after a financial creditor Glas Trust Company LLC approached the top court challenging the NCLAT verdict.

By the August 2 ruling under challenge, the NCLAT had allowed an appeal filed by Byju Raveendran, the founder of Byju’s, against an order the initiating insolvency resolution proceedings.

The appellate tribunal made the decision in view of a settlement reached between Byju's and the Board of Control for Cricket in India (BCCI) for the repayment of around 158 crore for sponsorship of the Indian cricket team's jersey.

Senior Advocate Shyam Divan represented Glas Trust today and argued that the NCLAT decision was not correct.

"This order is procedurally infirm. There is no dispute that the (Raveendran) brothers are outside the country and that 3,000 claims (were) lodged before the IRP," he said.

Solicitor General (SG) Tushar Mehta appeared for the BCCI and opposed any stay of the NCLAT decision.

"Stay means our (BCCI) settlement goes," he pointed out.

Senior Advocate Abhishek Manu Singhvi, appearing for Byju's said that a stay would amount to allowing the appeal, de facto.

The Court, however, maintained that it was inclined to stay the operation of the NCLAT verdict. The Court added that the 158 crore settlement amount that was paid by Byju's to BCCI should be kept in a separate account in the meantime.

"Pending further orders, there shall be a stay on the order. In the meantime, BCCI shall maintain Rs 158 crores realised as settlement in a separate account...List on August 23," the Court said.

When SG Mehta persisted and urged the judges not to stay the order, the Court replied that it will hear these submissions during the next hearing.

"We are open to being persuaded in the next hearing," CJI Chandrachud said.

It was on BCCI's plea that the National Company Law Tribunal (NCLT) Bengaluru initiated the corporate insolvency resolution process (now halted) against Byju's in June. The BCCI informed the NCLAT that it had arrived at a settlement with Byju's in July.

Byju's founder Byju Raveendran added that the due amount would be paid to BCCI by his brother Riju (the largest shareholder of Byju's) from his personal account.

At the time, Glas Trust had raised concerns that stolen money (referring to a sum of $533 million) that was due from Byju's to financial creditors may be used to repay the BCCI.

SG Mehta had countered that the BCCI would never accept any tainted money, and that the repayment would be made through a banking channel.

The NCLAT proceeded to accept the settlement between BCCI and Byju's, thereby ending the insolvency proceedings initiated in June against Think and Learn (parent company of Byju's).

Courtesy: Bar & Bench

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