On August 14, the Supreme Court stayed the verdict of NCLAT, setting aside the insolvency proceedings, approving its ₹158.9 crore dues settlement with the Indian cricket board.
| Photo Credit: Reuters
The Supreme Court on Wednesday (September 11, 2024) said it will hear on September 17 the appeal of U.S.-based creditor Glas Trust Company LLC against a judgment of the National Company Law Appellate Tribunal (NCLAT), which had stayed insolvency proceedings against ed-tech firm BYJU’s and approved its ₹158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI.)
A Bench comprising Chief Justice D.Y. Chandrachud and Justices J.B. Pardiwala and Manoj Misra was urged by a battery of lawyers that the plea be heard urgently keeping in mind the subsequent developments in the case.
The plea was mentioned by senior advocate N.K. Kaul, appearing for the ed-tech major, that the case needed to be heard at the earliest. The submission was supported by Solicitor General Tushar Mehta, appearing for the BCCI, and senior lawyer Abhishek Singhvi, also appearing for the ed-tech firm.
Mr. Kaul said another plea in the case has also been filed and that is listed for hearing on September 17 and hence, the present plea be either heard on that day or the hearings in both the cases be advanced to this Friday. “We will hear both the pleas on September 17,” the CJI said.
Senior advocate Shayam Divan, appearing for the U.S.-based creditor, said let the matters be heard together on September 17. Earlier on August 22, the Bench had refused to pass an interim order to ensure that the Committee of Creditors (CoC) does not hold any meeting in pursuance of the insolvency proceedings against the embattled ed-tech firm. It had listed the plea for a final hearing on August 27.
The Bench had said the developments, which may take place in the meantime, can be negated if it finds there was no merit in the appeal of the U.S.-based creditor against the judgment of appellate insolvency tribunal NCLAT.
The plea was mentioned earlier also on August 20 by Byju’s and the BCCI and the top court had then also refused to pass an interim order to restrain the Insolvency Resolution Professional (IRP) from constituting a committee of creditors (CoC) in the insolvency proceedings against the ed-tech firm.
In a major setback to Byju’s, the top court, on August 14, stayed the verdict of NCLAT, setting aside the insolvency proceedings against the ed-tech major and approving its ₹158.9 crore dues settlement with the Indian cricket board.
The August 2 verdict of the NCLAT had come as a huge relief for Byju’s as it had effectively put its founder Byju Raveendran back in control.
The top court, however, had prima facie termed the NCLAT verdict as “unconscionable” and stayed its operation while issuing notices to Byju’s and others on the appeal of the ed-tech firm’s U.S.-based creditor against the judgment of the insolvency appellate tribunal.
The case stemmed from Byju’s default on a ₹158.9 crore payment related to a sponsorship deal with the BCCI. The top court had directed the BCCI to keep a sum of ₹158 crore it had received from Byju’s after a settlement in a separate escrow account till further orders.
“Issue notice. Pending further orders there shall be a stay of the impugned order of August 2 of NCLAT. In the meantime, BCCI shall maintain the amount of ₹158 crore, which shall be realised in pursuance of a settlement, in a separate escrow account until further orders,” the Bench had said.
The NCLAT had approved the ₹158.9 crore dues settlement with the BCCI and set aside the insolvency proceedings against Byju’s. Byju’s had entered into a “Team Sponsor Agreement” with the BCCI in 2019. Under the agreement, the ed-tech firm got exclusive rights to display its brand on the Indian cricket team’s kit and some other benefits. Byju’s had to pay a sponsorship fee. The company met its obligations till the middle of 2022 but defaulted on subsequent payments of ₹158.9 crore.
After insolvency proceedings were initiated, Byju’s entered into a settlement with the BCCI. On July 16, the Bengaluru Bench of the National Company Law Tribunal (NCLT) had admitted ‘Think and Learn’, Byju’s parent company, to the insolvency resolution process on a plea filed by the BCCI over default in payment of outstanding dues of almost ₹158.9 crore.
While suspending the board of the ed-tech firm, the NCLT had appointed an interim resolution professional to run the operations of the company, suspended the company’s board of directors, and brought it under moratorium by freezing its assets.
The U.S.-based lenders suspected that the settlement amount was being diverted from the credit they had extended to Byju’s.
Published – September 11, 2024 12:20 pm IST
