NCLAT Suspends Hearing On Byju's-BCCI Settlement On Allegations Of 'Round-Tripping' Money

NCLAT Suspends Hearing On Byju's-BCCI Settlement On Allegations Of 'Round-Tripping' Money

Earlier, the National Company Law Tribunal admitted the cricket board’s plea and directed insolvency proceedings against the ed-tech firm

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) has asked the now-suspended promoters of Byju's to furnish an undertaking that over Rs.158 crore to be paid by Riju Raveendran (brother of Byju's founder Byju Raveendran) is not tainted and not against the order passed by a US-based court.

The tribunal deferred its decision on the settlement between Byju's and the Board of Control for Cricket in India (BCCI) after its US-based creditor alleged 'round-tripping' of the money by the ed-tech firm's founder.

It directed the interim resolution professional (IRP) of Think and Learn Pvt Ltd, which owns Byju's, not to constitute a Committee of Creditors (CoC) till 01 August.

Byju's lawyers had handed over a draft memorandum of settlement between Byju's and the BCCI. According to the terms and conditions, the money would be paid in two instalments of Rs.50 crore each and the rest in the third instalment. One tranche was already paid.

The payment is being handled by Riju, one of the largest shareholders in the company.

While appearing as an intervener in the matter for the US-based creditor Gas Trust LLC, which claimed default of Rs.8,000 crore loan, senior advocate Mukul Rohatgi alleged that the money was from 'round tripping'.

He requested the tribunal not to accept the settlement, terming the money ‘tainted’ and stolen from his client. He also questioned how a company, unable to pay salaries to its employees and whose coaching centres were shutting, arranged the finances.

Rohatgi alleged that Byju and Riju conspired and stole USD 500 million from the US-based creditor.

While reading a judgment delivered by a Delaware-based court of the US, in a bankruptcy case against the company’s US entity Byju's Alpha, the lawyer added, "It is our money, which has been withdrawn by these fellows.”

In the May 2024 judgment, the US court ruled that Riju failed to make a serious effort to find out what happened to the cash and deceived the courts.

Rohatgi said that his client had filed a Section 7 plea to initiate the Corporate Insolvency Resolution Process (CIRP) against Think & Learn, which is currently under abeyance. He hinted that if the matter was resolved, he would pursue the insolvency plea filed by the US-based creditor.

Appearing for the promoter, lawyer Arun Kathpalia contended that the amount was paid by Riju and there was no embargo on him on making the payment.

While appearing for the BCCI, Solicitor General of India Tushar Mehta said it did not matter whether the money was from Riju or Byju's. He argued that if the money was transparent, BCCI had a right to it.

Over the allegation of round-tripping, senior advocate Dhyan Chinnappa, appearing for the former promoters said that the overseas fund was to source the operations.

He stated, "It cannot be brought to India. Riju raised this money to save the company."

The NCLAT was hearing a petition filed by Byju's, challenging the initiation of insolvency proceedings against Think & Learn.

Last month, the Bengaluru bench of the National Company Law Tribunal (NCLT) had admitted BCCI’s plea and directed the initiation of CIRP against Byju's.

BCCI had approached NCLT under the Insolvency and Bankruptcy Code (IBC) over a default of Rs.158.9 crore by Think & Learn, at one time considered India's most valuable startup worth USD 22 billion.

To take care of the debt-ridden firm, the NCLT had suspended the board of Think & Learn as per the provisions of the IBC and appointed an IRP.