Photo: IANS
Guwahati, July 16: A Rs 158 crore debt filed by the Board of Control for Cricket in India (BCCI) against the parent company of the ed-tech company Byju's was admitted by the National Company Law Tribunal (NCLT) in Bengaluru on Tuesday.
The BCCI's plea was accepted this morning by a coram comprising technical member Manoj Kumar Dubey and judicial member K Biswal and Pankaj Srivastava was named as an interim resolution professional (as long as he agrees to the position within a week) and requested for progress updates every two weeks.
The order was passed after it was determined that Byju's had violated the terms of the agreement with the BCCI regarding the sponsorship deals for Indian cricket teams' jerseys.
“Accordingly, this Adjudicating Authority is of the considered opinion that there is no reason to deny the petition filed under section 9 of the IBC, 2016 by the Operational Creditor to initiate CIRP against the Corporate Debtor, since the existence of a debt and a default in the payment of debt is clearly established. Therefore, the instant Company Petition bearing CP (IB) No. 149/2023 is admitted against the Corporate Debtor and moratorium is declared in terms of Section 14 of the Code,” the order stated.
Furthermore, the tribunal dismissed an application by the ed-tech firm to refer the matter to arbitration. “It is abundantly clear as laid down by the Hon’ble Apex Court that the Adjudicating Authority has to either reject or Admit the Application and cannot postulate a third option. In this matter, the application U/s 9 of the IBC has been admitted by the Order passed today, therefore, the application for referring the matter for Arbitration is not maintainable,” the order stated in this regard.
The payments mentioned by the BCCI were due in accordance with a contract that Byju's had to sponsor the Indian cricket team's jerseys.
In 2019, BCCI and Byju's first signed a sponsorship deal, with Byju's taking over as the cricket team's jerseys sponsor from mobile phone maker OPPO. Reports state that this deal was originally set to expire in 2022 but was subsequently extended to 2023.
Byju's announced in January 2023 that it would not be renewing its sponsorship deal with BCCI and other partnerships with the International Cricket Council (ICC) and Fédération internationale de football association (FIFA) amid reports of various other financial troubles for the ed-tech company.
Subsequently, in the same year, BCCI submitted its plea to begin a corporate insolvency resolution procedure (CIRP) against Byju’s. In November 2023, the NCLT sought a response from Byju's.
Byju's disagreed with the BCCI's argument on a number of grounds, namely that the deal merely entailed the transfer of specific rights and did not involve any "services."
Thus, it was contended that BCCI could not be considered an "operational creditor" for the purposes of filing a CIRP case under the Insolvency and Bankruptcy Code (IBC) against Byju's.
Byju's further claimed that BCCI had not demonstrated that the former had defaulted on a debt. According to Byju, there were prior disagreements amongst the parties that would prevent CIRP from being started.
In its ruling on July 16, the NCLT dismissed each of these claims. The tribunal made several remarks, including noting emails exchanged between the parties that suggested Byju's was owed money by the BCCI.
“The Respondent herein (Think & Learn) has time and again acknowledged and duly planned a repayment schedule for the outstanding dues by sending the above mentioned emails; the condition of there being a ‘Debt’ and a ‘Default’ for the purposes of Section 9 of the IBC is held to be satisfied,” the tribunal said.
