NCLAT Postpones Ruling On Byju's-BCCI Settlement Amid 'Round-Tripping' Allegations

The National Company Law Appellate Tribunal, on Wednesday, postponed its decision regarding the settlement between Byju's and the Board of Control for Cricket in India, after allegations of "round-tripping" by the edtech firm's founder emerged from a US-based creditor.

The Chennai bench of NCLAT has instructed the now suspended promoters of Byju's to provide an undertaking by Thursday, assuring that the Rs 158-crore payment by Riju Raveendran (brother of Byju's founder Byju Raveendran) is legitimate and not in violation of a US court order.

Additionally, NCLAT has ordered the interim resolution professional of Think and Learn Pvt., which owns Byju's, to refrain from forming a Committee of Creditors until Aug. 1, which is the next hearing date.

During the proceedings, the legal team of Byju's presented a draft settlement memorandum between the edtech company and BCCI.

The terms specify that the payment will be made in three installments—two of Rs 50 crore each, with the remaining amount in a third installment. One tranche has already been paid on Tuesday.

The payments are being made by Riju, a major shareholder in the company.

However, Senior Advocate Mukul Rohatgi, representing US-based creditor Gas Trust LLC., which claims an Rs 8,000-crore loan default, accused Byju's of using "tainted money" obtained through "round-tripping".

He urged NCLAT to reject the settlement, questioning the source of the funds, especially given Byju's financial struggles, including unpaid salaries and closed coaching centers.

Rohatgi alleged that Byju and Riju conspired to misappropriate $500 million from the US-based creditor, citing a May 2024 Delaware court judgment in a bankruptcy case against Byju’s US entity, Byju’s Alpha.

The judgment indicated that Riju failed to account for the missing funds and misled the court.

Rohatgi also hinted at pursuing insolvency proceedings against Think & Learn if the settlement is approved.

Arun Kathpalia, representing the promoters, insisted that the payment from Riju was legitimate and unrestrained. Solicitor General of India Tushar Mehta, representing BCCI, argued that as long as the money is transparent, BCCI has a right to it.

Dhyan Chinnappa, representing the former promoters, stated that the overseas funds were meant for overseas operations and could not be repatriated to India.

NCLAT was reviewing Byju's appeal against the initiation of insolvency proceedings against Think & Learn.

On July 16, NCLT Bengaluru had ordered Corporate Insolvency Resolution Proceedings against Byju's, following BCCI's plea under the Insolvency and Bankruptcy Code, over a default of Rs 158.9 crore.

NCLT had also suspended the board of Think & Learn and appointed an IRP to manage the debt-ridden company.

(With inputs from PTI)