Supreme Court questions Byju's decision to settle only BCCI's debt amid 15,000 crore in dues
The Apex Court criticised NCLAT's approval of the BCCI settlement
Supreme Court Questions Byju’s as the ed-tech pioneer faces a hard time with ₹ 15,000 crore debt on its back. The crisis-hit company got relief from the National Company Law Appellate Tribunal’s (NCLT) approval of a ₹ 158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI). However, the Supreme Court has questioned why the over-indebted company chose to settle its ties only with the BCCI.
The Apex Court criticised NCLAT’s approval of the BCCI settlement. The court said NCLAT did not apply its mind while closing insolvency proceedings against the firm.
Following the NCLAT’s 2nd August approval, the ed-tech company felt a huge relief with the founder, Byju Raveendran, regaining control of the company. However, the relief was short-lived as the Supreme Court walked in to halt NCLAT’s approval on August 14, following an appeal by Glas Trust Company LLC, a US-based creditor of Byju’s.
Court proceedings
The top court has instructed the cricketing board to keep the settlement amount in a separate bank account so that the disputed money remains secured for the time being.
The three-judge bench headed by Chief Justice D Y Chandrachud and comprising Justices J B Pardiwala and Manoj Misra questioned, “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 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?” it added.
The hearing that began on Wednesday will continue on Thursday. Meanwhile, the bench had hinted that the case may go back to the appellate tribunal.
Senior advocate Shyam Divan, representing Glass Trust LLC, pointed out that NCLAT shouldn’t have stopped the insolvency proceedings against Byju’s when BCCI demanded the settlement amount. Diwan further claimed that the settlement money paid to the BCCI was “tainted.”.
While Advocates Abhishek Singhvi and NK Kaul, Byju’s representative, defend their clients stance, claiming that Riju Raveendran, brother of Byju Raveendran, paid the settlement amount from his personal assets, which suggests no issues with NCLAT closing the insolvency case.
The BCCI’s representative, Solicitor General Tushar Mehta, supported the same stand, saying their clients got the claim personal assets.
Glas Trust LLC’s claims
Earlier, the US firm informed the court that they were unethically removed from the committee of creditors by the interim resolution professional (IRP) dealing with the case. The firm claimed that it held a 99.41 per cent stake in the company, which has been listed as zero by the IRP; meanwhile, the ones with a 0.59 per cent stake now hold it all.
Byju’s and BCCI sponsorship deal
Byju’s and BCCI had an exclusive sponsorship deal where they had to pay the fees for exclusive rights to display its brand on the Indian cricket team’s kit. The “team sponsor agreement” signed between the two entities in 2019 continued smoothly till 2022, after which Byju’s failed to pay the remaining sponsorship fee of ₹ 158.9 crore.
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