New Delhi: The Supreme Court on Thursday refused to pass an interim order to ensure that the committee of creditors (CoC) does not hold any meeting in pursuance of the insolvency proceedings against embattled ed-tech firm Byju's. A bench comprising Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra, however, said it will accord the final hearing in the matter on August 27.
The bench said the developments, which may take place in the meantime, can be negated if it finds there was no merit in the appeal of the US-based creditor Glas Trust Company LLC against the judgment of the insolvency body -- National Company Law Appellate Tribunal (NCLAT).
At the outset, senior advocate Abhishek Singhvi, appearing for Byju's, and Solicitor General Tushar Mehta, representing the Board of Control for Cricket in India (BCCI), said the CoC has been constituted in the meantime and 98 per cent stakes are with the US firm. Singhvi said the CoC has been set up at 7 pm on August 21 and this is quite unfair and will make the case irreversible.
"This COC could have been constituted tomorrow with the court's permission. This whole thing is done to make my argument irreversible," Singhvi said. The solicitor general said the equity be balanced by deferring the meeting of the CoC and moreover, it would amount to allowing the appeal without hearing BCCI and Byju's.
The bench, which did not pass any order, listed the plea for hearing on August 27. The plea was mentioned earlier on August 20 by Byju's and the BCCI and the top court had then also refused to pass an interim order to restrain the Insolvency Resolution Professional (IRP) from constituting a committee of creditors (CoC) in the insolvency proceedings against the ed-tech firm.
In a major setback to Byju's, the top court had on August 14 stayed the verdict of NCLAT, setting aside the insolvency proceedings against the ed-tech major and approving its Rs 158.9 crore dues settlement with the Indian cricket board. The August 2 verdict of the had come as a huge relief for Byju's as it had effectively put its founder Byju Raveendran back in control.
The top court, however, had prima facie 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 Rs 158.9 crore payment related to a sponsorship deal with the BCCI. The top court had directed the BCCI to keep a sum of Rs 158 crore it had received from Byju's after a settlement in a separate escrow account till further orders.
"Issue notice. Pending further orders there shall be a stay of the impugned order of August 2 of NCLAT. In the meantime, BCCI shall maintain the amount of Rs 158 crore, which shall be realised in pursuance of a settlement, in a separate escrow account until further orders," the bench had said. The NCLAT had approved the Rs 158.9 crore dues settlement with the BCCI and set aside the insolvency proceedings against Byju's.
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) had 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.
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. The NCLAT order, however, had a caveat -- any failure to make payments on the specific dates mentioned in the undertaking would automatically lead to a revival of the insolvency proceedings against Byju's.
The tribunal had said the money was paid by Riju Raveendran (brother of Byju Raveendran) through the sale of his shares, taxes have been duly paid and payment is coming through proper banking channels.
As per the undertaking, Riju Raveendran had made a payment of Rs 50 crore on July 31, 2024 against the outstanding dues owed by Byju's to the BCCI. Another Rs 25 crore had to be submitted after a few days, and the remaining Rs 83 crore on August 9 through Real Time Gross Settlement (RTGS).
