On Wednesday, the Supreme Court annulled a decision by the National Company Law Appellate Tribunal (NCLAT) that had closed insolvency proceedings against edtech giant Byju’s after it settled a financial dispute with the Board of Control for Cricket in India (BCCI).
The dispute centered on unpaid dues exceeding Rs 158 crore related to Byju’s jersey sponsorship deal with the BCCI.
A bench led by Chief Justice DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, ruled that the BCCI must transfer the amount it deposited in an escrow account, following an earlier interim order, to the escrow account controlled by Byju’s Committee of Creditors (CoC).
This decision came after the Court noted that the NCLAT had failed to thoroughly assess the case before reaching its earlier conclusion.
The apex court has ordered a fresh adjudication of the insolvency matter, finding that the NCLAT had not adequately considered the broader implications of the settlement.
The controversy dates back to 2 August, when the NCLAT approved a settlement between Byju’s and the BCCI.
Byju’s US-based lenders alleged that the company used tainted funds for the repayment to BCCI, but the settlement dismissed their claims.
The lenders contended that the company misappropriated the money for the settlement, but the tribunal ruled that no substantial evidence supported these accusations.
The NCLAT’s ruling, however, had included a conditional clause: if Byju’s failed to meet its payment deadlines, insolvency proceedings would automatically resume.
According to the settlement, Byju’s founder, Byju Raveendran, had already paid Rs 50 crore by July 31, with another Rs 25 crore due by 2 August, and the remaining amount set to be transferred within a week.
This settlement stemmed from a larger financial crisis that surfaced when the BCCI filed an insolvency plea against Think and Learn Private Ltd, the parent company of Byju’s, in mid-July.
The Bengaluru Bench of the National Company Law Tribunal (NCLT) admitted the plea, prompting Byju’s to appeal to the Chennai Bench of the NCLAT shortly after.
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