New Delhi, Sep 26 (PTI) The Supreme Court on Thursday directed the insolvency resolution professional (IRP) to maintain status quo and not to hold any meeting of the committee of creditors (CoC) in the matter pertaining to insolvency proceedings against ed-tech firm Byju’s.
The top court also reserved its verdict on a plea of US firm Glas Trust Company LLC against the verdict of National Company Law Appellate Tribunal (NCLAT) setting aside the insolvency proceedings against Byju’s and approving its Rs 158.9 crore dues settlement with the BCCI.
“The arguments have concluded. The judgement is reserved. Until the judgment is pronounced, the interim resolution professional (IRP) shall maintain status quo and not hold any meeting of the committee of creditors (CoC),” a bench comprising Chief Justice D Y Chandrachud and justices J B Pardiwala and Manoj Misra said.
The interim direction was passed after senior advocate Kapil Sibal, appearing for the US firm, alleged Glas Trust Company LLC, which has more than 99 per cent stakes in the CoC, has been ousted from the CoC by present IRP.
The IRP is appointed under the IBC (Insolvency and Bankruptcy Code) by the National Company Law Tribunal to temporarily manage the ailing company’s finances and his role is to conduct the corporate insolvency resolution process and assess the firm’s operations as a going concern.
Solicitor General Tushar Mehta, appearing for the Board of Control for Cricket in India (BCCI), resumed advancing his submissions and said there was nothing wrong with the settlement of the cricket body’s claim.
He said there were two conditions that the money should be untainted and it should not come from the assets of corporate debtor Byju’s.
Senior advocate Shyam Divan, also appearing for the US firm, said the NCLAT could not have allowed this kind of settlement with the BCCI.
On Wednesday, the top court questioned the verdict of NCLAT setting aside the insolvency proceedings against Byju’s and approving its dues settlement with BCCI.
Observing that the NCLAT did not apply its mind while closing the insolvency proceedings against the ed-tech major, the bench had said it may send back to the appellate tribunal for fresh adjudication.
The NCLAT, on August 2, granted relief to the embattled ed-tech firm by setting aside the insolvency proceedings against it after approving its Rs 158.9 crore dues settlement with the BCCI.
The verdict had come as a huge relief for Byju’s as it had effectively put its founder Byju Raveendran back in control.
However, the relief remained short-lived as the top court, on August 14, 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 company is in debt of Rs 15,000 crore. When the quantum of the debt is so large, can one creditor (BCCI) walk away saying one promoter is ready to pay me,” the CJI had asked.
“Why pick up BCCI and settle with them only from your personal assets,” the bench had said, adding “The NCLAT accepts this all without applying its mind to it.” While senior advocates Abhishek Singhvi and N K Kaul appeared for Byju’s, Sibal and Divan represented the US firm.
The solicitor general appeared for the BCCI which was earlier asked to keep the amount of Rs 158.9 crore, received as part of the settlement, in a separate bank account.
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.
Byju’s had to pay a sponsorship fee. The company met its obligations till the middle of 2022 but defaulted on subsequent payments of Rs 158.9 crore.
After insolvency proceedings were initiated, Byju’s entered into a settlement with the BCCI.
On July 16, the Bengaluru bench of the National Company Law Tribunal (NCLT) admitted ‘Think and Learn’, Byju’s parent company, to the insolvency resolution process on a plea filed by the BCCI over default in payment of outstanding dues of almost Rs 158.9 crore.
While suspending the board of the ed-tech firm, the NCLT had appointed an interim resolution professional to run the operations of the company, suspended the company’s board of directors and brought it under moratorium by freezing its assets.
The US-based lenders suspected that the settlement amount was being diverted from the credit they had extended to Byju’s. PTI SJK ABA SJK KSS KSS
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