In a sharp rebuke to the embattled ed-tech company Byju’s, the Supreme Court has questioned why the firm chose to settle only with the Board of Control for Cricket in India (BCCI) while grappling with an overall debt of ₹15,000 crore. The court’s remarks came during a hearing on the National Company Law Appellate Tribunal’s (NCLAT) decision to close insolvency proceedings against Byju’s.
The NCLAT had granted relief to Byju’s on August 2 by approving a ₹158.9 crore settlement with the BCCI, allowing founder Byju Raveendran to regain control of the company. However, the Supreme Court on August 14 stayed the tribunal’s decision following an appeal by Glas Trust Company LLC, a US-based creditor of Byju’s.
The top court has now asked the BCCI to keep the settlement amount in a separate bank account until further orders. “The company is in debt of ₹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?” asked a bench headed by Chief Justice D Y Chandrachud.
The court questioned the rationale behind the settlement and hinted at the possibility of sending the case back to the appellate tribunal for further scrutiny. “Why pick up BCCI and settle with them only from your personal assets? The NCLAT accepted this without applying its mind,” the bench observed.
During the hearing, senior advocate Shyam Divan, representing Glas Trust LLC, argued that the settlement with the BCCI was improper and that the NCLAT erred in halting insolvency proceedings against Byju’s. He described the money paid to the cricket board as “tainted” and criticized the removal of Glas Trust from the committee of creditors by the interim resolution professional (IRP) overseeing Byju’s insolvency case.
In defense of Byju’s, advocates Abhishek Singhvi and NK Kaul stated that the settlement amount was paid from the personal assets of Riju Raveendran, brother of Byju Raveendran, and that there was no impropriety in NCLAT’s decision. Solicitor General Tushar Mehta, appearing for the BCCI, supported this stance, asserting that the payment did not involve company funds.
The Supreme Court’s scrutiny has brought renewed focus on the financial struggles of Byju’s, once considered a poster child of India’s burgeoning ed-tech sector. The firm’s debt crisis has raised questions about corporate governance and financial management, particularly in relation to its high-profile sponsorship deal with the BCCI.
The agreement, signed in 2019, granted Byju’s exclusive rights to display its brand on the Indian cricket team’s kit. The company fulfilled its obligations until mid-2022, after which it defaulted on the ₹158.9 crore sponsorship fee, leading to the current legal entanglement.
The Supreme Court is set to continue hearing the case today, with all eyes on its ruling, which could have significant implications for Byju’s future and the broader ed-tech industry.
