The court questioned whether the National Company Law Appellate Tribunal (NCLAT) thoroughly considered the insolvency case against Byju’s before closing it
The decision of ed-tech firm Byju’s to settle its Rs 158 crore debt with the Board of Control for Cricket in India (BCCI) has been questioned by the Supreme Court (SC). The court asked the ability of the ed-tech firm to pay its debt to BCCI but not to its other creditors.
The court questioned whether the National Company Law Appellate Tribunal (NCLAT) thoroughly considered the insolvency case against Byju’s before closing it. Further, the court suggested that it might refer the case back to the NCLAT for a new ruling. This was initially reported by Bar and Bench.
The court was hearing an appeal from GLAS Trust, a group of US-based lenders, which recently challenged Byju's debt settlement with the Board of Control for Cricket in India (BCCI), funded by Byju Raveendran’s brother, Riju Ravindran. On August 2, the NCLAT dismissed the insolvency proceedings against Byju's after it finalised a Rs 158 crore settlement with the BCCI.
At the recent court hearing, CJI DY Chandrachud observed in the ruling, “See the reasoning in NCLAT order. Which is just a para. This does not show any application of mind at all... Let the Tribunal again apply its mind and see it afresh.”
Additionally, the CJI also questioned if the other lenders of the ed-tech firm would be left hanging if the insolvency process was halted. "Today you (Byju's) have Rs15,000 crores due. Why did you pick up only BCCI and settle it? What about others?”
While mentioning that BCCI is not the only lender who would be affected if the insolvency proceeding against the ed-tech firm was halted, the CJI reportedly said, “BCCI has a small amount due of Rs 158 crore...What about others? They all again have to go through the entire circle.”
In August, the SC stayed the NCLAT’s order that removed the insolvency against the ed-tech firm. The stay took place after an appeal was filed by Glas Trust. The counsel appearing on behalf of Glas Trust highlighted that it was not correct to settle the insolvency proceedings based on the vague words by Riju Ravindran. The counsel reportedly said, “merely by relying upon a vague undertaking given by Riju Ravindran, despite the express objections that the source of funds for such settlement are questionable."
The appeal also highlighted that the NCLAT completely ignored the dishonest and egregious conduct of Riju Ravindran. Meanwhile, the senior counsel representing Byju’s opposed the allegations against them by Glas Trust and highlighted that they were just flexing its muscles.
The senior counsel representing Byju’s said, “You (Glas Trust) keep changing your story. Sometimes you say 'round tripping'; sometimes you say it is personal funds of Riju Raveendran.”