NCLAT postpones decision on BYJU’S-BCCI settlement amid US lenders’ claims
Byju Raveendran has been instructed to submit an undertaking proving that the source of the funds is legitimate and that no court orders were violated in obtaining the money.
Nikhil Patwardhan
Wednesday July 31, 2024 , 3 min Read
The National Company Law Appellate Tribunal (NCLAT) on Wednesday reportedly postponed its decision on approving the settlement of Rs 158 crore ($19 million) between BYJU’S and the BCCI, amid allegations raised by BYJU’S US-based lenders.
This development came after lawyers representing BYJU’S informed the NCLAT that they had reached an agreement to settle their dispute over the unpaid dues with the Board of Control for Cricket in India (BCCI), according to a source.
The Bengaluru-based edtech company has already paid approximately $6 million on July 30 and plans to settle the remaining amount with two instalments of $3 million and $10 million on August 2 and August 9, respectively.
However, the payment to the BCCI will be made by Riju Ravindran, the brother of Byju Raveendran and one of the major shareholders of the edtech company.
The lawyer representing BYJU'S US-based lenders strongly objected to this settlement, according to the source.
The legal representative said that such a settlement “is tainted because it is being paid with stolen money” and “both brothers have conspired to syphon off the money”. He also read parts of the April 3, 2024 order of the US Bankruptcy Court, and said NCLAT should not allow this money to be used to pay the BCCI unless the source of the funds is known.
The reference to “stolen money” pertains to the disputed $533 million between the two parties.
BYJU’S lawyers said that if there is a breach of a US Court Order, then BYJU’S will suffer consequences in the US, and the Indian courts should not be overly concerned by this, according to the source.
The lawyer for the BCCI said that while the BCCI does not condone anything that BYJU’S has done, it is owed money under a contract, and as long as the money is coming from a bank (and not surreptitiously), the NCLAT should not have any issue, the source added.
However, Raveendran has been instructed to submit an undertaking proving that the source of the funds is legitimate and that no court orders were violated in obtaining the money.
The NCLAT has adjourned the matter until Thursday and instructed the lenders not to establish the Committee of Creditors until then.
This sequence of events began on July 16 when the National Company Law Tribunal (NCLT) in Bengaluru admitted a plea filed by the BCCI, seeking to initiate a corporate insolvency resolution process for BYJU’S parent company, Think and Learn Pvt Ltd.
The corporate insolvency resolution process is a legal process under the Insolvency and Bankruptcy Code (IBC), 2016, aimed at resolving insolvency issues faced by corporate debtors in a time-bound manner, typically through restructuring or liquidation.
The NCLT bench has appointed Pankaj Srivastava as an interim resolution professional (IRP) to carry out the functions mentioned under the IBC. The IRP will carry out the functions as contemplated by Section 15,17,18,19,20,21 of the IBC.
The duties of the IRP under the above-mentioned sections of the IBC include managing the company’s affairs, overseeing its operations and assets, compiling a list of creditors, forming a CoC, conducting CoC meetings, and providing financial updates to facilitate decisions during the insolvency resolution process.
The NCLT is the first instance tribunal for company law matters, while the NCLAT is the appellate body for decisions made by the NCLT.
(The article was updated with additional information.)
Edited by Megha Reddy