NCLT order upheld by NCLAT in BYJU’S insolvency
The original CoC was reinstated by the NCLT, which referred the IRP to the Insolvency and Bankruptcy Board of India for disciplinary action.
The National Company Law Appellate Tribunal (NCLAT) in Chennai has dismissed the appeal filed by Byju Raveendran, suspended director and promoter of Think and Learn Pvt. Ltd., against the order of the Bengaluru Bench of the National Company Law Tribunal (NCLT). That NCLT order had restored Aditya Birla Finance Limited (ABFL) as a financial creditor and directed disciplinary proceedings against interim resolution professional (IRP) Pankaj Srivastava.
The insolvency proceedings against BYJU’s commenced on July 16 last year, following a petition by the Board of Control for Cricket in India (BCCI). On August 21, the IRP initially formed a Committee of Creditors (CoC) with Glass Trust Company, Aditya Birla Finance, InCred Financial Services, and ICICI Bank. ABFL held a 0.41% voting share, while Glass Trust held a 99.41% voting share.
However, just 10 days later, the IRP reconstituted the CoC, removing both Glass Trust and ABFL, and leaving InCred Financial as the sole member with 100% voting rights. Glass Trust’s claim was classified as contingent, and ABFL was reclassified as an operational creditor. The NCLT found this action beyond the powers of the IRP and prejudicial to the resolution process. Accordingly, the original CoC was reinstated, and the IRP was referred to the Insolvency and Bankruptcy Board of India for disciplinary action.
Agreeing with the NCLT’s findings, the appellate tribunal held that there is no provision in the Insolvency and Bankruptcy Code (IBC) allowing a resolution professional to change the status of a creditor or remove an existing CoC member without the adjudicating authority’s approval. Once formed, the CoC is final, except for the limited circumstance of adding a new financial creditor whose claim is admitted later.
The NCLAT endorsed the NCLT’s view that the IRP’s conduct was meant to mislead and was unbecoming of an officer of the tribunal. It also rejected the argument that the initial CoC formation was merely provisional, and refused to set aside all actions of the IRP solely because later acts were improper.
The application filed by Byju Raveendran’s brother, Riju Ravindran, was also dismissed, as it did not raise any new grounds for appeal. The NCLAT concluded that the NCLT had considered all relevant aspects before issuing its directions and that its order required no interference.