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The Supreme Court has issued a temporary injunction on meetings arranged by the Resolution Professional (RP) handling the insolvency case of troubled edtech Byju’s on September 26. The final decision of the Court on this matter is still pending.
During the court proceedings, the Solicitor General, representing Byju’s creditors, presented conditions for a potential settlement, including the requirement that any payments should not be sourced from Byju’s assets.
The Supreme Court also raised questions regarding the possibility of reaching a settlement outside the established procedures, particularly in relation to Regulation 30A of the Insolvency and Bankruptcy Code (IBC).
The matter also examined the financial records of Think & Learn Pvt Ltd, the parent company of Byju’s. Shyam Divan, representing the Byju’s creditors, pointed out a notable loss of Rs 8,104.68 crore as of March 2022, underscoring the lack of transparency in providing necessary documents as per regulations. He also raised concerns about Byju’s default claims, mentioning the resignation of the company’s auditor in September 2024, which cast doubts on its financial stability.
Byju’s legal team contended that despite owning 99.18 percent of the business, the company has been sidelined in crucial decisions during the insolvency proceedings. They demanded a halt to the insolvency process, citing irregularities in its handling.
All meetings overseen by the Resolution Professional (RP) at Byju’s have been postponed, marking a significant pause in the company’s ongoing insolvency battle.
The case revolves around Byju’s insolvency proceedings and its dispute with US-based lenders, represented by Glas Trust. Glas Trust disputed the payment settlement between Byju’s and the Board of Control for Cricket in India (BCCI), alleging that the Rs 158 crore payment was obtained unlawfully.
Furthermore, Glas Trust lodged an appeal after being ousted from the Committee of Creditors (CoC) by RP Pankaj Srivastava, who determined that Glas Trust no longer met the criteria of representing at least 51 percent of Byju’s creditors. As a result, Glas Trust was removed from the decision-making body.
SC questions Byju’s
The apex court bench, led by Chief Justice of India (CJI) DY Chandrachud, on Wednesday questioned the National Company Law Appellate Tribunal’s (NCLAT) decision to close insolvency proceedings against Byju’s, an edtech firm. The bench expressed concerns about the lack of analysis in the NCLAT’s reasoning for closing the proceedings. It was noted that the NCLAT did not fully consider the matter before reaching a decision, prompting speculation that the case may be remanded back to the NCLAT for further review.
“The reasoning in the NCLAT order is just a paragraph. This does not show any application of mind at all…Let the Tribunal again apply its mind and see it afresh,” the CJI observed, news agency PTI reported.
The bench, also comprising justices J B Pardiwala and Manoj Misra, further expressed concerns over Byju’s decision to settle a mere Rs 158 crore owed to the Board of Control for Cricket in India (BCCI) while leaving a staggering Rs 15,000 crore in total dues unpaid to other creditors, including US-based Glas Trust.
The CJI asked: “Today you (Byju’s) have Rs 15,000 crore due. Why did you pick up only BCCI and settle it? What about others? 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.”
“Why pick up BCCI and settle with them only from your personal assets,” the bench said, adding “The NCLAT accepts this all without applying its mind to it.”
