BYJU’S dodges potential “death” as NCLAT approves Rs 158 Cr BCCI settlement

BYJU’S dodged a potential “death” as the NCLAT, in an order on Friday, approved the Rs 158 crore settlement between the embattled edtech firm and the BCCI after multiple hearings.

The National Company Law Appellate Tribunal (NCLAT) order, however, noted that if there is a breach of the undertaking given by Riju Ravindran, Byju Raveendran’s brother and a major shareholder in the edtech company, the NCLT order dated July 16 will automatically come back into effect.

“In view of the aforesaid facts and circumstances, in view of the undertaking given, and affidavit filed, the settlement between the parties is hereby approved. And as a result…the appeal succeeds and the impugned order is set aside. However, with a caveat that in case there is a breach in the undertaking given, the order dated 16 July, 2024, passed against the present appellant shall automatically revive,” Justice Rakesh Kumar Jain, said during the NCLAT hearing on August 2, 2024.

This decision comes as a major relief for BYJU’S and its promoters, including Raveendran, who will resume leadership of the company as the corporate insolvency resolution process (CIRP) for BYJU’S parent company, Think and Learn Private Limited (TLPL), is set aside.

CIRP, which stands for Corporate Insolvency Resolution Process, is a legal process under the Insolvency and Bankruptcy Code (IBC), 2016, aimed at resolving insolvency issues faced by corporate debtors in a time-bound manner, typically through restructuring or liquidation.

The events began on July 16 when the National Company Law Tribunal (NCLT) in Bengaluru admitted a plea filed by the Board of Control for Cricket in India (BCCI), seeking to initiate a CIRP for TLPL.

BCCI was pursuing a claim for a total outstanding amount of Rs 158.90 crore from BYJU’S, not including deducted taxes and applicable interest. The case against BYJU’S parent company, filed in September last year and officially registered in November, underwent multiple hearings at the NCLT.

“BCCI is accepting this offer because it is coming from a disclosed source from out of tax paid money and through a banking channel. The source is not subject matter of any suit,” said Solicitor General Tushar Mehta, representing the cricket board.

During yesterday’s powerful legal showdown Mehta had highlighted the intention to wrap up the agreement and settle the dispute between the parties. 

“We are at a stage where the CoC is not yet constituted. There is a party who is offering to pay the amount. There is a party who is offering to accept the amount,” he had noted on August 1.

Mehta also emphasised the importance of understanding the broader context, stating that the objective and intent of the IBC is to prevent the company from going into liquidation, which signifies its “death.”

The lawyers representing BYJU’S US-based lenders had urged the NCLAT to reject this settlement and proceed with the standard process, which would include the formation of the Committee of Creditors (CoC).

“What he wants is six more months for us to hang around here and there, challenge for admission which will happen, and in that six months, whatever is left will go to the ground,” Senior Advocate Mukul Rohatgi had said, adding that the brothers have “swallowed” $533 million.

The US-based lenders of BYJU’S were represented by Senior Advocates Rohatgi, Krishnendu Datta, and Arvindh Pandian.

On Thursday, an undertaking was presented on behalf of Ravindran as he is making the payment to the BCCI to settle the dues. It was intended to prove that the source of the funds being used to settle the dues with the BCCI is legitimate and that no court orders were violated in securing the money.

Ravindran’s undertaking stated that the money being used to clear the dues came from his personal funds. He accumulated approximately Rs 3,600 crore by selling shares of BYJU’S parent company, TLPL, between May 2015 and January 2022. Ravindran claimed he paid Rs 1,050 crore in income tax, with the remaining about Rs 2,600 crore infused back into TLPL.

“As a matter of record, the amounts that remained with Riju were used to pay the first tranche of settlement amount in the amount of Rs 50 crore to BCCI on 30th of June 2024. From liquidation of Riju’s personal assets in India, which will be used to pay the balance amount of settlement amount,” Senior Advocate Punit Bali, representing BYJU’S, noted.

The Senior Advocate stated that the first of the two remaining tranches, amounting to Rs 25 crore, is to be paid on August 2, with the remaining Rs 83 crore to be paid by or before August 9.

“As it has been generally said, that the first hour of justice is the hour of compromise, and where it is a case of the payment of money by the debtor to the creditor, and where the offer has been made by one of the suspended directors at the behest of the CD (corporate debtor or BYJU’S) to bury the hatchet forever with the OC (operational creditor or BCCI), the court can invoke Rule 11 for the purpose of exploring a settlement between the parties,” Justice Jain noted on Friday.

BYJU’S in a statement said, “The honourable presiding judge invoked Rule 11 of the NCLAT Rules, 2016 to return the control of Think & Learn Private Limited, the holding company of BYJU’S, back to its promoters. The NCLAT rejected allegations made by the certain US based lenders that the source of the money being used to settle the BCCI dues was not transparent or trustworthy.”

“All the teams at BYJU’S continue to work hard to strengthen stakeholder confidence and reinforce their commitment,” it added.

While BYJU’S and the BCCI have reached a settlement, the beleaguered edtech giant is still entangled in a web of legal disputes with investors and lenders, including several cases before the NCLT. 

Amidst this turmoil, BYJU’S employees are anxiously watching the developments, hoping their careers won’t suffer further damage given the uncertainty surrounding the edtech company. Approximately 3,000 employees had lodged claims with the Interim Resolution Professional.

(The copy was updated with additional information.)