The Supreme Court on Thursday directed the interim resolution professional (IRP) of Byju’s to maintain the status quo and not hold any meetings of the Committee of Creditors (CoC).
A Bench of Chief Justice of India (CJI) DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, reserved their verdict on the appeal by US-based lender Glas Trust challenging the National Company Law Appellate Tribunal’s decision to halt insolvency proceedings against Think and Learn Pvt Ltd, the parent company of Byju’s.
“Until the judgment is pronounced, the interim resolution professional shall maintain the status quo and shall not hold any meeting of the committee of creditors,” the Court said.
Solicitor General Tushar Mehta, appearing for the Board of Control for Cricket in India (BCCI), laid down conditions for a possible settlement, including ensuring that any payment must not come from Byju’s assets. He reiterated that their condition to accept the money from Byju’s was that it should be ‘clean,’ tax-paid money, and from a proper channel.
The court, during the hearing, asked Byju’s and BCCI if the rules, particularly Regulation 30A of the Insolvency and Bankruptcy Code (IBC), allow settlement outside the set procedures.
The said rule deals with an application for withdrawal made to the company law tribunal.
Shyam Divan, appearing for the US lender, said there was a loss of Rs 8,104.68 crore as of March 2022, and certain documents were not furnished to them. He also raised issues with Byju’s default claims, pointing out that the auditor for the company resigned in September 2024, possibly due to the company’s financial state.
The Supreme Court on Wednesday had raised concerns about the National Company Law Appellate Tribunal (NCLAT) order, which closed the insolvency proceedings against beleaguered edtech firm Byju’s, saying that the appellate tribunal “did not apply its mind at all”.
“See the reasoning in the NCLAT order, which is just a paragraph (para 44). This does not show any application of mind at all… Let the tribunal again apply its mind and see it afresh,” Chief Justice of India DY Chandrachud said while hearing the appeal filed by US-based lender Glas Trust Company, challenging the NCLAT order approving the settlement of Rs 158 crore between the edtech firm and the BCCI.
The top court also asked Byju’s lawyers why they chose to settle with just the BCCI when there are several other lenders. “When the quantum of the debt is so large, can one creditor walk away saying one promoter is ready to pay me? Why pick up BCCI and only settle with them? Out of your personal assets? You have today a debt of Rs 15,000 crore,” the CJI said.
The apex court said: “We will send it (the Byju’s matter) back to NCLAT; let them consider it afresh, let them apply their mind, and see where the money is coming from,” the CJI had observed.
The NCLAT had on August 2 noted that “money being offered by the largest shareholder and former promoter (Riju Raveendran) has nothing to do with the US lenders, which gives the court power to rule”.
It also said that Tushar Mehta, appearing for the BCCI, had said they would not accept “tainted” money and that the money being offered is income generated in India. The appellate tribunal noted that the money is coming from a proper channel.
Mehta had pleaded with the top court to not overturn the NCLAT verdict. “Kindly consider the consequences if the appeal is allowed,” Mehta said.
The CJI, however, said that while the BCCI amount is only Rs 158 crore, there are others who will be affected if they close insolvency proceedings against Byju’s. “BCCI has a small amount due of Rs 158 crore… What about others? They will all again have to go through the entire circle,” the CJI said.
Background
The appellate tribunal had in its August 2 order said the settlement was being arrived at before the Committee of Creditors (CoC) could be formed, and considering the source of the money (for settlement) was not in dispute, it did not have a reason to keep the company in the insolvency process.
Byju’s US-based lenders had opposed the settlement. They had told the NCLAT that the money being used for repayment is tainted as it is part of $533 million that had gone “missing”.
Riju Raveendran, brother of the company’s founder Byju Raveendran and a board member, had told the NCLAT that the money being paid to the BCCI was “clean”. His counsel had told the court that the money being paid to the BCCI was not part of the “missing” $533 million as alleged by the US-based lenders. The missing money is at the heart of a fight between the US-based lenders and Byju’s parent company Think & Learn.
A day after the NCLAT order gave Byju control of his company, he filed a caveat in the Supreme Court to be informed if the US-based lenders decided to appeal against the order. Glas Trust then moved the apex court against the NCLAT order.
First Published: Sep 26 2024 | 7:52 PM IST
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