The insolvency appellate tribunal NCLAT on Wednesday deferred its decision on the settlement between Byju’s and the cricket board BCCI after its US-based creditor accused the edtech firm’s founder of ’round-tripping’ the money. The Chennai bench of the NCLAT has directed the now-suspended promoters of Byju’s to provide an undertaking by Thursday that the over Rs 158 crore to be paid by Riju Raveendran (brother of Byju’s founder Byju Raveendran) is not tainted and does not violate a US-based court ruling.

Meanwhile, the National Company Law Appellate Tribunal (NCLAT) has asked the interim resolution professional (IRP) of Think and Learn Pvt Ltd, which owns Byju’s, not to form a Committee of Creditors (CoC) until the next hearing date, August 1. During the proceedings, lawyers representing Byju’s presented a draft memorandum of settlement between Byju’s and the Board of Control for Cricket in India (BCCI).

According to the terms and conditions, the money will be paid in two installments of Rs 50 crore each, with the balance due in the third installment. One tranche was already paid on Tuesday. The payment is being made by Riju, who is also one of the company’s top owners.

Senior counsel Mukul Rohatgi, who was standing as an intervener in this case for US-based creditor Gas Trust LLC, which is claiming default on Rs 8,000 crore loans, claimed that the money came from ’round tripping’. “The source is tainted. How can the court allow settlement?,” said Rohatgi, and asked “has it (money) come from an official account” of Byju’s? Rohatgi further alleged that both Byju and Riju conspired and stole $500 million belonging to the US-based creditor.

He asked NCLAT not to accept the settlement, calling it “tainted money” which was stolen from his client. He also questioned how a company, which is not even able to pay salaries to its employees and whose coaching centres are getting closed, has now arranged the money. “It is our money which has been withdrawn by these fellows,” said Rohatgi while reading a judgement delivered by a Delaware-based court of the US, in a bankruptcy case against Byju’s US entity Byju’s Alpha.

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In the May 2024 decision, the US court stated that Riju not only failed to make a meaningful effort to determine what happened to the cash, but also misled the court.

Rohatgi further stated that it has filed a section 7 plea seeking the beginning of insolvency proceedings against Think & Learn, which is now pending. He implied that once this problem is resolved, he will pursue the insolvency petition filed by the US-based creditor.

Arun Kathpalia, representing the promoter, stated that Riju has paid the money and that there is no embargo on him making the payment. Tushar Mehta, Solicitor General of India, who represents the cricket body, stated that it makes no difference if the money comes from Riju or Byju. If the money is transparent, the BCCI has a right on it, he argued.

Over the allegation of round-tripping, senior advocate Dhyan Chinnappa, appearing for the former promoters said the overseas fund is to fund overseas operations. “It cannot be brought to India,” he said adding “Riju has raised this money to save the company.” NCLAT was hearing a petition filed by Byju’s, challenging the initiation of insolvency proceedings against Think & Learn.

On July 16, the Bengaluru bench of the National Company Law Tribunal (NCLT) recommended the beginning of Corporate Insolvency Resolution Proceedings (CIRP) against Byju’s, accepting the BCCI’s appeal. BCCI had approached NCLT under the Insolvency and Bankruptcy Code (IBC) about a default of Rs 158.9 crore by Think & Learn, which was previously India’s most valuable startup worth USD 22 billion.

The NCLT has suspended the Think & Learn’s board of directors in accordance with IBC regulations and appointed an interim resolution professional (IRP) to oversee the debt-ridden company.

(with inputs from PTI)