NCLAT directs NCLT to settle the case with Byju's and BCCI within a week.

Important development: _REFERENCE was made that the National Company Law Appellate Tribunal has directed the National Company Law Tribunal to decide within a week the plea by Byju's for settlement and withdrawal of leave on the insolvency proceedings against the elearning major. It has been pretty much in the press quite a bit, essentially because it involves the settlement between Byju's and Board of Control for Cricket in India and the company's battle with insolvency procedure initiated over a year ago.

On February 8, 2025, an order by the Chennai bench of NCLAT, comprised of Justices Rakesh Kumar Jain and Jatindranath Swain, made a direction for the decision with regard to the plea filed by Byju's to be communicated by NCLT within seven days. It does so after the former promoter of Byju's and the brother to its founder, Byju Raveendran, had challenged an earlier order made by NCLT on issues pertaining to the reconstitution of the CoC for the company.

The directions issued by NCLAT were categorical that it expects an order to be passed expeditiously by NCLT on the subject but, at the same time, underlined that no judgments have been passed by the appellate tribunal concerning the facts of the case per se. The field is thus open for further deliberation by NCLT, and there is no preconceived notion from the appellate tribunal in this regard.

Judgment by NCLT earlier and appeal by Raveendran: The case has been presented on an order passed on January 2025 wherein the Bengaluru bench of the NCLT had made an order of taking disciplinary actions against Pankaj Srivastava-a resolution professional in control over the insolvency process of Byju's. The NCLT had further cancelled the reconstitution of the Committee of Creditors done by the Interim Resolution Professional on August 31, 2024. It has specifically excluded Glas Trust and Aditya Birla Finance from the committee that has come under a lens.

As such, Riju Raveendran, who was always against the decision, says that this time restructuring should not have been taken when, after all, fact of the matter is that Byju's were discussing with BCCI for some settlement that would force withdrawal of the insolvency petition filed en masse. "Settled at all cost as settlement is there even before CoC came into picture, said Raveendran".

He also won a Supreme Court judgment that has given Byju's an occasion to seek greater relief under law after settlement, he said directly reconstitution by NCLT is clearly conflicting with such judgments, and he has an argument that reconstitution by the tribunal is premature and inappropriate.

Settlement with BCCI and the Insolvency Debate

The crux of the legal battle has been the settlement talks between Byju's and the BCCI. Due to a financial crisis, insolvency proceedings were initiated against Byju's starting from mid-2024. The bench of NCLT at Bengaluru initiated the Corporate Insolvency Resolution Process in July 2024. The company had filed for insolvency proceedings against the parent company of Byju's, Think & Learn, as they hadn't paid their dues relating to sponsorship rights.

Things, however took a different turn when Byju's promoter agreed to pay Rs 158 crore as part of a settlement deal and the NCLAT had temporarily set aside the insolvency order. It, however remained only a short-term relief since Glas Trust that represented U.S.-based lenders filed an appeal against the order given by the NCLAT before the Supreme Court.

It is basically a case about whether the settlement with BCCI, which was agreed to even before the reconstitution of the CoC, should have withdrawal implications from insolvency proceedings. Byju's has contended that the settlement must have an immediate effect on the current process of insolvency as it forms a crucial step in the settling of financial problems of the company. But as Raveendran articulates in his petition before NCLAT, this intent of the settlement must reflect through the actions of the tribunal.

A Critical Week Awaits

Adding to its wisdom, NCLAT directed NCLT to pass its order on the issue within a week which puts heavy pressure on this tribunal to adjudicate on this issue sooner rather than later since both Byju's and BCCI are looking at this matter as an opportunity to settle the issue and thus the result of this order will be crucial for the future of the company, whether the future is out of the insolvency proceedings or not.

Though the NCLAT has not said anything about the facts of the case, its direction to NCLT is very clear: it has to decide expeditiously. This order may open up a way for settlement between Byju's and its creditors, which will enable the company to concentrate on business revival keeping in mind the interest of all stakeholders, including its creditors.

Even as the legal battle brews, the week ahead will decide the course for Byju's, BCCI, and a host of other financial players participating in the bankruptcy process.