Supreme Court on Wednesday questioned the National Company Law Appellate Tribunal (NCLAT) order which closed the insolvency proceedings against Byju's by allowing a Rs 158 crore settlement between the Edtech firm and the Board of Control for Cricket in India (BCCI). The top court today orally remarked that NCLAT did not appear to have properly applied its mind to the order.
The bench comprising CJI DY Chandrachud, Justices JB Pardiwala and Manoj Misra was hearing the challenge to the NCLAT's order by a US-based lender Glas Trust Company LLC.
"See the reasoning in NCLAT order...This does not show any application of mind at all." CJI Chandrachud remarked.
The top court today questioned that why Byju's picked up BCCI and only settled with them that too using personal assets.
"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 debt of 15000 crores," CJI asked Byju's.
While hearing arguments, the CJI further expressed an inclination to send the NCLAT order back.
"We will send it back to NCLAT, let them consider afresh, let them apply their mind..." CJI remarked.
The top court will resume hearing the arguments in the case tomorrow.
Earlier, the top court refused to stay the meeting of the Committee of Creditors formed by the Resolution Professional in relation to the insolvency resolution of Byju's.
The Supreme Court on August 14 had stayed the National Company Law Appellate Tribunal (NCLAT) order that allowed Board of Control for Cricket in India (BCCI) to settle its dues with Byju on latter paying Rs 158 crore.
A bench-led by CJI D Y Chandrachud while hearing a petition by Glas Trust Company LLC, asked BCCI to maintain the Rs 158 crore in a separate excrow account.
On August 2, the NCLAT Chennai Bench allowed settlement between BCCI and Byju which involves the repayment of Rs 158 crores to the BCCI. The NCLAT order was passed by the bench of judicial member Rakesh Kumar Jain and technical member Jatindranath Swain.
The NCLAT bench allowed the settlement after recording an undertaking that the repayment is being personally funded by Riju Raveendran (Byju Raveendran's brother) and not taken from money that should go to financial creditors.
Folllowing this order by the NCLAT bench, Glas Trust, which represented some lenders of a Byju's group, filed an appeal before the apex court, challenging the verdict that allowed Byju's and BCCI settlement.
The NCLAT order also halted the insolvency proceeding which was initiated by the National Company Law Tribunal (NCLT), Bengaluru on the BCCI's plea against Byju's in June.
The BCCI had moved the NCLT seeking to recover dues through a bankruptcy proceeding against the troubled EdTech firm. However, the NCLAT order also stayed the insolvency proceeding against Byju's.
The settlement claim arises from a 'Team Sponsor Agreement' signed between Byju's and BCCI on July 25, 2019. According to this agreement, Byju's got the exclusive right to display its trademark/brand name on the kit of the Indian cricket team, place advertisements during the telecast of cricket series, and hospitality and non-hospitality tickets for every ticketed match organised by BCCI.
According to the NCLT order, Byju's was the sponsor of the Indian cricket team and availed the services for a period up until March 31, 2023. After March 31, 2022, Byju's made payment in full only against one invoice for the India-South Africa cricket series held in June 2022 amounting to Rs 25.35 crore but failed to pay for subsequent invoices.