- Thursday, September 12, 2024
The ed-tech firm’s US-based creditor Glas Trust Company LLC had appealed against the judgment of the insolvency appellate tribunal
By: Shajil Kumar
IN A setback to embattled Byju’s, the Supreme Court on Wednesday stayed the verdict of the National Company Law Appellate Tribunal (NCLAT), which had allowed a settlement between the ed-tech major and the Board of Control for Cricket in India (BCCI).
In its August 2 verdict, the NCLAT had set aside the insolvency proceedings against Byju’s and approved its ₹1.58 billion (£14.65 million) dues settlement with the Indian cricket board.
This ruling had effectively put its founder Byju Raveendran back in control.
The top court 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 US-based creditor Glas Trust Company LLC against the judgment of the insolvency appellate tribunal.
The case stemmed from Byju’s default on a ₹1.58 billion payment related to a sponsorship deal with the BCCI.
The bench comprising chief justice D Y Chandrachud and justices JB Pardiwala and Manoj Misra directed the BCCI to keep a sum of ₹1.58 billion it had received from Byju’s in a separate escrow account till further orders.
The bench did not agree to the submission of Solicitor General Tushar Mehta, appearing for the BCCI, that the NCLAT order should not be stayed without hearing the cricket board.
“I am saying this before your lordships for the first time that we are not heard. We have an answer to everything,” Mehta said.
The bench said it had not asked the BCCI to deposit the money with the court but in a dedicated escrow account.
It also did not agree with the submission of senior advocate Abhishek Singhvi, who represented the troubled ed-tech firm, that the NCLAT order be not stayed without hearing the Byju’s.
The court, however, concurred with senior advocate Shyam Divan, representing the US-based lender, that the NCLAT verdict deserved to be stayed.
Case history
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.
Under the agreement, Byju’s had to pay a sponsorship fee. The company met its obligations till the middle of 2022 but defaulted on subsequent payments of ₹1.58 billion.
After insolvency proceedings were initiated, Byju’s entered into a settlement with the BCCI.
The NCLAT had approved the settlement dues with BCCI and set aside insolvency proceedings against Byju.
The US-based lenders suspected that the settlement amount was being diverted from the credit they had extended to Byju’s.
The appellate tribunal had also dismissed the allegation of ’round-tripping’ levelled by Byju’s US-based lenders, saying they failed to provide any evidence in support of their claims. (PTI)
