Karnataka High Court directs NCLT to decide pleas to remove Byju's RP within two weeks

The Karnataka High Court recently barred the Committee of Creditors (CoC) of Byju's parent company Think and Learn from meeting and taking decisions on the company's affairs till the National Company Law Tribunal (NCLT) decides on the applications to remove the company's Resolution Professional (RP).

On October 25, the High Court, in a petition filed by Glas Trust Company, had granted an interim stay on the CoC meeting scheduled for that date. Glas Trust had moved the High Court as the NCLT was not in session.

The latest order passed by Justice Hemant Chandangoudar, which was uploaded on November 7, said,

"This petition was filed primarily on the grounds that the NCLT was not holding hearings...Now that the NCLT will resume sittings from 04.11.2024, this petition is disposed of with directions to the NCLT, Bengaluru, to consider all pending applications, including any further applications that may be filed by Respondent No. 1, within two weeks from the next hearing date...The interim order passed by this Court on 25.10.2024 is hereby extended until the disposal of the petitioner’s pending application."

The order, however, clarifies that the RP is at liberty to file an application before the NCLT, Bengaluru seeking disbursement of funds for salary payments, statutory dues and other expenses.

"If such an application is filed, the NCLT, Bengaluru, is directed to consider the application in accordance with the law after providing an opportunity for all parties to be heard," the order said.

Senior Advocates Udaya Holla and Srinivas Raghavan, along with Advocates Nikhilesh M Rao and Mithel Reddy R appeared for Glas Trust.

Senior Advocate Vikram Huilgol and Advocate Prateek Rath represented the RP. Advocate Bhavya Gayan Mohan appeared for BCCI.

On November 4, Aditya Birla Finance and Glas Trust Company filed applications to replace the RP of Byju's parent company Think and Learn.

On that date, Senior Advocate Uday Holla, who appeared for Glas Trust, told the NCLT that the RP had classified just one creditor as a financial creditor, as a result of which the CoC comprises just one creditor with 100% voting rights.

The CoC is a group of financial creditors who call the shots of a company once it is admitted to the Corporate Insolvency Resolution Process (CIRP). Operational creditors do not get a vote in CoC meetings.

Sources close to the development told Bar & Bench that the creditor who initially had 0.2% voting rights in the CoC now has 100% voting rights due to the RP's disqualification of Glas Trust and Aditya Birla Finance.

The plea is expected to be heard in the coming week.

The Supreme Court on October 23 allowed the appeal filed by US-based financial creditor Glas Trust challenging the National Company Law Appellate Tribunal (NCLAT) decision to halt insolvency proceedings initiated against Think & Learn, the parent company of Byju’s. 

The judgment set aside the NCLAT order which accepted the settlement between Byju Raveendran and the Board of Control For Cricket in India (BCCI), on whose plea the NCLT Bengaluru in July admitted Byju's to the the insolvency process .

The matter has now been remitted back to NCLT to decide the next course of action in the insolvency case.

[Read order]