In a significant legal development, the Supreme Court of India has overturned the National Company Law Appellate Tribunal’s (NCLAT) decision that had previously approved a settlement between Byju’s and the Board of Control for Cricket in India (BCCI). This ruling revives the insolvency proceedings against the embattled edtech firm, Byju’s, adding another chapter to its ongoing financial challenges.
Background: The Dispute with BCCI
The dispute traces back to a sponsorship agreement between Byju’s and BCCI, where Byju’s allegedly defaulted on payments amounting to ₹158 crore. In response, BCCI initiated insolvency proceedings against Byju’s parent company, Think and Learn Pvt Ltd, in July 2024. To resolve the matter, Riju Raveendran, Byju’s brother and a major shareholder, proposed a settlement by offering to pay the outstanding dues from his personal funds.
NCLAT’s Initial Approval
On August 2, 2024, the NCLAT accepted the settlement proposal, setting aside the insolvency proceedings. The tribunal dismissed allegations from Byju’s U.S.-based lenders, represented by Glas Trust, who accused the company of “round-tripping” funds. The NCLAT found no substantial evidence to support these claims and approved the settlement, contingent upon timely payments as per the agreed schedule .
Supreme Court’s Intervention
However, the Supreme Court intervened on October 23, 2024, setting aside the NCLAT’s order. The apex court highlighted procedural lapses, noting that the settlement should have been processed through the company’s insolvency resolution professional and the National Company Law Tribunal (NCLT), rather than directly through the appellate tribunal. Consequently, the court directed that the ₹158 crore settlement amount, along with any accrued interest, be deposited with the committee of creditors overseeing Byju’s insolvency proceedings .
Implications of the Supreme Court’s Ruling
The Supreme Court’s decision has several implications:
- Revival of Insolvency Proceedings: The ruling reinstates the insolvency process against Byju’s, subjecting the company to further scrutiny and potential restructuring.
- Financial Scrutiny: The court’s directive to deposit the settlement amount with the committee of creditors ensures that the funds are managed transparently and in accordance with insolvency regulations.
- Impact on Stakeholders: This development affects various stakeholders, including Byju’s investors, employees, and creditors, who are closely monitoring the company’s financial stability.
The Supreme Court’s intervention underscores the importance of adhering to proper legal procedures in financial settlements. As Byju’s navigates these legal challenges, the outcome will significantly influence the company’s future operations and its standing in the edtech industry.
