Twist in Byju's Saga: NCLAT Judge Recuses

In a dramatic development, a National Company Law Appellate Tribunal (NCLAT) judge has recused himself from hearing the India's once-high-flying edtech giant, Byju's, appeal against insolvency proceedings. Justice Sharad Kumar Sharma, a Chennai bench member, cited a conflict of interest due to his previous role as a senior counsel for the Board of Control for Cricket in India (BCCI), the primary creditor in the case.

"NCLAT Chennai refused to hear the case, as the bench member has been counsel for BCCI in the past. Chairperson is requested to form a bench to hear the matter," Byju's Spokesperson told TICE News.

A Conflict of Interest Forces Recusal

Justice Sharma's decision came to light on July 29th when he declared, "I went through the entire case papers and realized that ultimately, the beneficiary is going to be BCCI. So, I do not want to get involved with this," as per court records.

BCCI vs. Byju's: A High-Stakes Legal Battle

The cricket pitch has unexpectedly become a courtroom as BCCI and edtech giant Byju's engage in a high-stakes legal showdown. The battleground? A Rs 158 crore debt owed by Byju's parent company, Think and Learn, for unpaid sponsorship rights.

On July 16, the NCLT Bengaluru dealt a significant blow to Byju's by initiating insolvency proceedings against Think and Learn. This move, triggered by the BCCI's insolvency plea, placed the company under the stringent provisions of the Insolvency and Bankruptcy Code (IBC). A resolution professional was immediately appointed to oversee the company's affairs.

Byju's founder, Byju Raveendran, has been on a frantic legal offensive. Initially approaching the Karnataka High Court, he subsequently shifted the battleground to the NCLAT, only to face a stern rebuke from the bench for forum shopping. The NCLAT questioned the wisdom of withdrawing a case from one court to file it in another, highlighting the potential for delaying tactics. Undeterred, Raveendran returned to the High Court, seeking an emergency stay on the insolvency proceedings.

As the legal drama unfolded, Byju's anticipated Justice Sharma's recusal and filed a petition to transfer the case to the NCLAT, Delhi. However, the BCCI vehemently opposed this move, accusing Raveendran of yet another attempt to manipulate the legal process.

With the Karnataka High Court deferring its decision until the NCLAT resolves the recusal issue, the stage is set for a crucial legal battle that could determine the fate of one of India's most valued startups.

Legal Battle Intensifies: Byju's Grapples with Insolvency Threat

The embattled edtech firm is fighting to stay afloat amidst a Rs 158 crore debt to the BCCI. Founder Byju Raveendran has been aggressively challenging the insolvency proceedings initiated by the cricket board. His legal team had offered to settle the entire amount through his brother, Riju Raveendran, but the recusal has thrown a spanner in the works.

As the case takes multiple twists and turns, Byju's legal team is now focused on securing a hearing before a different NCLAT bench. The company has also sought a stay on insolvency proceedings from the Karnataka High Court, where the matter is also being contested.

BCCI's Stance Remains Firm

The BCCI, on the other hand, has adopted a hardline approach, accusing Byju's of forum shopping and delaying tactics. The cricket board remains steadfast in its pursuit of recovering the unpaid dues.

High Stakes for India's Edtech Sector

The outcome of this legal battle will not only determine the fate of Byju's but also have far-reaching consequences for the Indian edtech industry. With the company once valued at a staggering USD 22 billion, the case has captured the nation's attention, highlighting the risks and challenges faced by startups in the fast-paced digital economy.

Join Our Thriving Entrepreneurial Community

Follow TICE News on Social Media and create a strong community of Talent, Ideas, Capital, and Entrepreneurship. YouTube  | Linkedin | X (Twitter) | Facebook | News Letters