Byju’s-BCCI Settlement At Risk Over Fund Siphoning Allegations, NCLAT To Rule Today
If the appellate tribunal accepts the settlement, the insolvency proceedings may go out of the window completely, leaving other lenders to start all over again.
Syphoning of funds and trying to settle its insolvency dispute using them with the Cricket Board BCCI are among the new allegations against Byju’s. The edtech startup has been admitted into insolvency by the National Company Law Tribunal bench of Bangalore since July 16 in the proceedings initiated by the Board of Control for Cricket in India.
However, since a lot of such proceedings had been filed against the company by several entities, asking for the same relief, the bankruptcy tribunal had dismissed them all after giving the insolvency order for BCCI. It just didn't make any sense to hear about similar cases when the relief they sought was already given in the one filed by BCCI.
But things have changed. On one hand, Byju's and the BCCI are standing shoulder to shoulder again, ready to settle the Rs 158.9 crore dispute. On the other hand, a faction of US lenders is alleging that the funds being used by the edtech company are being siphoned. This faction even has a US court ruling against Byju's.
The issue is that if the appellate tribunal accepts the settlement, the insolvency proceedings may go out of the window completely, leaving other lenders to start all over again.
During the hearing, Senior Advocate Mukul Rohatgi, representing the US lenders, argued that Byju's has prioritised paying the BCCI over salaries and provident funds for employees. He expressed concern that the company is seeking approval from the Tribunal for these payments despite allegations of fund syphoning.
Rohatgi noted that he had no specific issue with the BCCI receiving the money but questioned the legitimacy of the company's request, suggesting that the funds could be hidden offshore. He characterised the petition as highly misplaced.
The NCLAT raised the question of whether it could exercise discretion in approving the settlement involving Byju's, especially when allegations of the company's founder, Byju Raveendran, being a fugitive were brought up.
Senior Counsel Arun Kathpalia, appearing for Byju’s, responded by clarifying that there was no concrete evidence to label the individuals as fugitives, specifically noting that Riju Raveendran, Byju’s brother, who has offered to pay the settlement amount to BCCI, has not been accused of such.
The NCLAT is set to deliver its judgement on Friday after arguments.
