NCLAT defers decision on BYJU’S-BCCI settlement after two-hour marathon session

After a marathon two-hour session, the National Company Law Appellate Tribunal (NCLAT) kept everyone in suspense for another day on Thursday, deferring its decision on the Rs 158 crore settlement between BYJU’S and the Board of Control for Cricket in India (BCCI) for the second day in a row.

The court ran out of time listening to the arguments, leaving the final decision up in the air. The NCLAT adjourned the matter until Friday, instructing that the Committee of Creditors not be established until then.

Today’s session at the National Company Law Appellate Tribunal (NCLAT) was a powerful legal showdown. Senior Advocates Punit Bali and Arun Kathpalia represented BYJU’S with fervour, while Solicitor General Tushar Mehta stood firm for the BCCI.

The US-based lenders of BYJU’S were represented by Senior Advocates Mukul Rohatgi, Krishnendu Datta, and Arvindh Pandian, alongside Advocates for the Interim Resolution Professional (IRP). Senior Advocate Gaurav Joshi represented the Qatar Investment Authority.

Thursday’s session began with the presentation of an undertaking on behalf of Riju Ravindran, Byju Raveendran's brother and a major shareholder in the edtech company, as he is making the payment to the BCCI to settle the dues. It was intended to prove that the source of the funds being used to settle the dues with the BCCI is legitimate and that no court orders were violated in securing the money.

This was required as ​the lawyers representing BYJU’S US-based lenders strongly objected to this settlement on Wednesday, noting that such a settlement “is tainted because it is being paid with stolen money”.

The reference to “stolen money” pertains to the disputed $533 million between the two parties.

“Riju states that he has not received any portion of the $533 million that are subject matter of the proceedings before the Delaware bankruptcy court. And accordingly no part of these funds have been or will be used to pay the BCCI,” Bali said.

Under the credit agreement dated November 24, 2021, a group of lenders represented by GLAS Trust disbursed $1.2 billion to BYJU’S Alpha, a subsidiary of Think and Learn Private Limited (TLPL).

“Riju also confirmed that he has not directly or indirectly in any form or manner received any sum of money from disbursements made under the credit agreement,” Bali noted.

“The only foreign remittance received by him since the execution of the credit agreement is from two secondary sales of his shareholding in TLPL in January 2022 and November 2022, totalling approximately $109 million,” Bali said.

Ravindran’s undertaking stated that the money being used to clear the dues came from his personal funds. He accumulated approximately Rs 3,600 crore by selling shares of BYJU’S parent company, TLPL, between May 2015 and January 2022. Ravindran claimed he paid Rs 1,050 crore in income tax, with the remaining about Rs 2,600 crore infused back into TLPL.

“As a matter of record, the amounts that remained with Riju were used to pay the first tranche of settlement amount in the amount of Rs 50 crore to BCCI on 30th of June 2024. From liquidation of Riju’s personal assets in India, which will be used to pay the balance amount of settlement amount,” Bali noted.

The Senior Advocate stated that the first of the two remaining tranches, amounting to Rs 25 crore, is to be paid on August 2, with the remaining Rs 83 crore to be paid by or before August 9.

Following these comments from BYJU’S side, Solicitor General Tushar Mehta, representing the cricket board, highlighted the intention to wrap up the agreement and settle the Rs 158 crore dispute between the parties.

“We are at a stage where the CoC is not yet constituted. There is a party who is offering to pay the amount. There is a party who is offering to accept the amount,” he noted.

He also emphasised the importance of understanding the broader context, stating that the objective and intent of the Insolvency and Bankruptcy Code (IBC) is to prevent the company from going into liquidation, which signifies its “death.” 

Challenging the notion of a settlement, Senior Advocate Rohatgi bolstered his arguments with numerous past cases and verdicts, while pointing out discrepancies in the figures presented in Ravindran’s undertaking. He also accused the brothers of being “fugitives from justice,” adding a dramatic twist to the proceedings.

Rohatgi also highlighted a recent US court judgment issued on Wednesday, which mandates that Ravindran pay $10,000 per day until he assists in locating $533 million that BYJU’S is alleged to have concealed from US lenders.

He urged the NCLAT to reject this settlement and proceed with the standard process, which would include the Committee of Creditors (COC).

“What he wants is six more months for us to hang around here and there, challenge for admission which will happen, and in that six months, whatever is left will go to the ground,” Rohatgi said, adding that the brothers have “swallowed” $533 million.

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An advocate representing the IRP noted that they have received Form C from the lenders for $1.3 billion in dues, along with claims from 3,000 employees.

The intense arguments from all sides created a dramatic legal spectacle for the people present in the courtrooms as well as over 200 viewers watching the proceedings unfold online. The lawyers swung the case back and forth, referencing numerous past instances to bolster their points.

Towards the end, Senior Advocate Kathpalia, representing BYJU’S, sought to wrap things up by addressing the key points of contention.

He noted that the issue of round-tripping doesn’t arise, as Ravindran stated he has received no money other than from the two sales in January and November. “So with that, this entire discussion of these US processes fails,” he added.

Towards the end of a compelling and well-structured series of arguments, Kathpalia remarked, “This is a services company; insolvency starts, it’s the end of the company.”

The 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 NCLT is the first instance tribunal for company law matters, while the NCLAT is the appellate body for decisions made by the NCLT.

(The copy was updated with arguments presented in the court.)