The Supreme Court on Wednesday expressed doubts over whether the National Company Law Appellate Tribunal (NCLAT) had applied its mind while deciding to close insolvency proceedings against ed-tech firm Byju's [Glas Trust Company LLC v. Byju Raveendran and ors].
The Court indicated that it is inclined to send the matter back to the NCLAT to take a fresh decision.
"See the reasoning in NCLAT order. Which is just a para. This does not show any application of mind at all…Let the Tribunal again apply its mind and see it afresh," Chief Justice of India (CJI) DY Chandrachud observed while hearing an appeal challenging the NCLAT ruling.
A Bench of CJI Chandrachud with Justices JB Pardiwala and Manoj Misra was hearing an appeal filed by US-based financial creditor Glas Trust challenging the NCLAT's decision to halt insolvency proceedings earlier initiated against Think & Learn, the parent company of Byju's.
CJI Chandrachud today also expressed concern over whether creditors of Byju's - other than the Board of Cricket Control for India (BCCI) - would be left in the lurch if the insolvency process were to be halted.
"Today you (Byju's) have ₹15,000 crores due. Why did you pick up only BCCI and settle it? What about others?" he asked.
Solicitor General Tushar Mehta represented the BCCI and urged the Court not to overturn the NCLAT's verdict.
"Please consider the consequences if the appeal is allowed," Mehta submitted.
The Court, however, pointed out that the BCCI is not the only stakeholder affected by the closing of insolvency proceedings against Byju's.
"BCCI has a small amount due of ₹158 crores...What about others? They all again have to go through the entire circle," CJI Chandrachud noted.
The insolvency resolution proceedings against Byju's were initiated in June by the National Company Law Tribunal (NCLT) in Bengaluru on a plea by the BCCI. The BCCI claimed that Byju's owed it ₹158 crore as part of cricket jersey sponsorship deals.
However, BCCI later submitted that it had reached a settlement with Byju's, whereby Riju Raveeendran, the brother of Byju's founder Byju Raveendran, would clear these dues out of his personal funds.
Recording this settlement, the NCLAT at Chennai had closed the insolvency proceedings against Byju's.
This was opposed by Glas Trust, which had raised concerns that stolen money that was due to financial creditors may be used by Byju's to repay the BCCI.
On August 14, the top court stayed the NCLAT decision and revived the insolvency process against Byju's.
On August 22, it declined to defer or order any stay on the operations of a Committee of Creditors (CoC) formed to oversee the corporate insolvency resolution process (CIRP).
During today's hearing, Senior Advocate Shyam Divan appeared for Glas Trust and termed the "arithmetical reasoning" relied on by the NCLAT as "unacceptable."
"NCLAT is expected to carry some basic maths…Now, without any notice to us, we (Glas Trust) have been dropped entirely from the committee of creditors. This is unprofessional," Divan added.
"We have 99.5 percent stake...we cannot be removed…Personal money cannot be recovered under Section 12A," Senior Advocate Kapil Sibal (also for Glas Trust) added.
The Bench, however, opined that the dispute over the removal of Glas Trust from the CoC could be pursued before the NCLAT.
Representing Byju's, Senior Advocates AM Singhvi and NK Kaul questioned Glas Trust's actions, including allegations that Byju and Riju Raveendran were absconding.
"So many statements with perjury. That we are absconding. Me and my brother visited India on 12 occasions...They are now world record holders, of two people teaching students. This is only about a large corporate entity flexing its muscles," Singhvi said.
"He visited last time also...How can they call me absconding?...There was no default of payment. You (Glas Trust) keep changing your story. Sometimes you say 'round tripping', sometimes you say it is personal funds of Riju Raveendran. Ultimately the onus is on you...to prove the statements being made," Kaul added.
The hearing will continue tomorrow.
Advocates Prateek Kumar, Raveena Rai, Smriti Nair, Nishant Sharma and Anshula Laroiya from law firm Khaitan & Co are also among the counsel representing Glas Trust LLC.
Advocates Zulfiquar Memon, Waseem Pangarkar and Nadiya Sarguroh from MZM Legal LLP are also among the counsel representing Byju Raveendran.
SG Mehta is being assisted by Advocate Kanu Agrawal, and briefed by Argus Partners, in his appearance for the BCCI.
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