 "Don't hold lenders' meet till verdict is out: Supreme Court to Byju's IRP")
The Supreme Court on Thursday directed the beleaguered ed-tech firm Byju’s interim resolution professional (IRP) to maintain status quo and not hold any meetings of the Committee of Creditors until the verdict on a plea by a US-based lender challenging the National company Law Appellate Tribunal’s (NCLAT) decision to halt insolvency proceedings against Byju’s parent company Think and Learn Private Limited is out.
The Bench comprising Chief Justice of India (CJI) DY Chandrachud and Justices JB Pardiwala and Manoj Misra reserved their verdict on the appeal by US-based lender Glas Trust Company.
“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 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 the Byju’s and BCCI if the rules, particularly Regulation 30A, of the Insolvency and Bankruptcy Code (IBC), allow settlement outside of 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, adding that certain documents were not furnished to them. He also flagged issues with Byju’s default claims, pointing out that the auditor for the company resigned in September 2024, probably due to the company’s financial state.
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The top court on Wednesday had raised concerns about the National Company Law Appellate Tribunal (NCLAT) order, which closed the insolvency proceedings against Byju’s, saying that the appellate tribunal “did not apply its mind at all”.
“See the reasoning in NCLAT order. Which is just a para (para 44). This does not show any application of mind at all… Let the Tribunal again apply its mind and see it afresh," CJI Chandrachud said, while hearing the appeal filed by the US-based lender, 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 picked just BCCI to settle with 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, 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 BCCI, had said they will not accept “tainted” money and the money being offered is income generated in India. The money is coming from proper channel, noted the appellate tribunal.
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 ₹158 crore... What about others? They all again have to go through the entire circle,” the CJI said.
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 insolvency process.
Byju’s US-based lenders had opposed the settlement. They had told the NCLAT that the money being used for the repayment is tainted as it is part of $533 million that had gone “missing”.
Riju Raveendran, brother of 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, Byju filed a caveat in the Supreme Court to be informed if the US-based lenders decided to appeal against the order. Glas Trust had then moved the apex court against the NCLAT order.