The Supreme Court on Thursday directed the interim resolution professional (IRP) of Byju’s to maintain the status quo and not hold Committee of Creditors (CoC) meetings.
A Bench of Chief Justice of India (CJI) DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, reserved its verdict on the appeal filed by US-based lender, Glass Trust against the decision of the National Company Law Appellate Tribunal to stay insolvency proceedings against Think and Funda Pvt Ltd, Byju’s parent company.
“Until a decision is issued, the interim decision expert will maintain the status quo and will not hold any meeting of the creditors’ committee,” the Court said.
Attorney-general Tushar Mehta, representing the Board of Control for Cricket in India (BCCI), imposed conditions on the possibility of compensation, including ensuring that any payment must not come from Byju’s assets. He also emphasized that their condition for accepting Byju’s money is that it must be ‘clean,’ tax-free money, and from the right channel.
The court, during the hearing, asked the Byju’s and the BCCI whether the laws, particularly Regulation 30A of the Insolvency and Bankruptcy Code (IBC), allow for payments without formal procedures.
The said rule is in respect of the revocation petition filed in the court of law of the company.
Shyam Divan, who represented the American lender, said that there was a loss of Rs 8,104.68 crore as of March 2022, and some documents had not been provided to them. He also raised concerns about Byju’s claims of default, pointing out that the company’s auditor resigned in September 2024, possibly due to the company’s financial situation.
On Wednesday, the Supreme Court expressed concern over the order of the National Company Law Appellate Tribunal (NCLAT), which closed the fraud case of Byju’s company, saying that the appellate court “did not use its mind at all”.
“Look at the logic of the NCLAT system, which is just a section (section 44). This does not show any common sense at all… Let the court use its own mind and reconsider,” said Chief Justice of India DY Chandrachud while hearing a petition filed by US-based lender Glass Trust Company challenging the NCLAT order. which you approved. settlement of Rs 158 crore between an edtech firm and BCCI.
The high court also asked Byju’s lawyers why they chose to settle with just BCCI when there were many other creditors. “If the debt is so big, can a lender go and say that one promoter is ready to pay me? Why did you choose BCCI and stick with it only? Without your personal belongings? Today he has a debt of Rs 15,000 crore,” the CJI said.
The apex court said: “We will refer it (Byju’s case) back to the NCLAT; let them rethink, use their minds, see where the money is coming from,” the CJI said.
The NCLAT on August 2 observed that “the money given to the major shareholder and former promoter (Riju Raveendran) is not related to the US lenders, which gives the court jurisdiction”.
It also said that Tushar Mehta, representing the BCCI, said that they will not accept “dirty” money and that the money offered is money earned in India. The appeals court noted that the money comes from the right channel.
Mehta urged the high court not to overturn the NCLAT decision. “Please consider the consequences if the appeal is allowed,” said Mehta.
The CJI, however, said that although BCCI’s value is only Rs 158 crore, there are others who will be affected if they close the proceedings of Byju’s fraud. “BCCI has a shortfall of Rs 158 crore… What about others? They will have to go through the entire cycle again,” the CJI said.
It’s the background
The appellate court in its order dated August 2 said that the settlement will be reached before the Committee of Creditors (CoC) is formed, and given the source of the (settlement) money was not disputed, it has no reason. keeping the company in the bankruptcy process.
Byju’s US-based lenders objected to the payment. They had told the NCLAT that the money used for restitution is tainted as it is part of the $533 million that was “lost”.
Riju Raveendran, brother of the company’s founder Byju Raveendran and a board member, told NCLAT that the money paid to BCCI was “clean”. His lawyer told the court that the money paid to BCCI was not part of the “lost” $533 million as claimed by US creditors. The missing money is at the heart of the battle between US-based lenders and Byju’s parent company Think & Learn.
A day after the NCLAT order gave Byju control over his company, he filed a notice in the Supreme Court to be notified if the US lenders decide to challenge the order. The Glas Trust then moved the high court against the NCLAT order.
First published: Sep 26 2024 | 7:52 PM IST