Safiya Malik

The National Company Law Tribunal (NCLT) has ordered disciplinary proceedings against the Resolution Professional (RP) overseeing the insolvency process of a prominent ed-tech company, citing actions “prejudicial to the interests” of stakeholders. The tribunal removed the RP, quashed all prior decisions made under his oversight, and reconstituted the Committee of Creditors (CoC) to include previously excluded financial entities. The bench found the RP’s conduct “not fit and proper” and directed the Insolvency and Bankruptcy Board of India (IBBI) to initiate an investigation. Separately, the tribunal deferred ruling on an application by a major sports body seeking to settle disputes with the company’s former management.

The NCLT bench, comprising Judicial Member K Biswal and Technical Member Ravichandran Ramaswamy, adjudicated disputes arising during the Corporate Insolvency Resolution Process (CIRP) of Think & Learn Pvt. Ltd., parent company of Byju’s. The proceedings were initiated in July 2023 following a petition by the Board of Control for Cricket in India (BCCI) over unpaid dues. On October 23, 2023, the Supreme Court vacated a National Company Law Appellate Tribunal (NCLAT) order that had paused insolvency proceedings to facilitate a settlement between BCCI and Byju’s founder Byju Raveendran. The apex court remanded the matter to NCLT to reconsider BCCI’s settlement application under Section 12A of the Insolvency and Bankruptcy Code (IBC), which permits withdrawal of insolvency petitions upon creditor approval.

During subsequent proceedings, financial creditors Glas Trust and Aditya Birla Finance challenged the RP’s decision to exclude them from the CoC, leaving only one creditor with 100% voting rights despite initially holding 0.2%. The CoC, tasked with approving resolution plans, had been reduced to a single entity, raising concerns about procedural fairness. The RP, Pankaj Srivastava, defended his decision, asserting compliance with statutory requirements.

BCCI, represented by Senior Advocate CK Nandakumar, urged the tribunal to prioritize its Section 12A application, arguing that a settlement would nullify the insolvency admission. Riju Raveendran, brother of Byju’s founder, through Senior Advocate KG Raghavan, stated the Supreme Court’s directive to reconsider the settlement. Byju Raveendran’s counsel, Senior Advocate Dhyan Chinappa, sought access to pleadings against the RP.

Glas Trust and Aditya Birla Finance, represented by Senior Advocates Uday Holla and Pramod Nair respectively, alleged the RP’s exclusion of legitimate financial creditors undermined the CIRP’s integrity. The RP’s counsel, Senior Advocates Ramji Srinivasan and Aditya Sondhi, contested these claims.

The tribunal concluded that the RP’s actions “were prejudicial to the interests of the CIRP and stakeholders,” noting his failure to adhere to procedural mandates. “The conduct of the IRP in the present case has been filed with the intent to mislead the tribunal,” the order stated. It further observed that the RP’s disqualification of Glas Trust and Aditya Birla Finance lacked justification and deprived the CoC of diverse creditor representation. “The above conduct on part of IRP needs to be dealt by way of disciplinary proceeding by the IBBI. Hence, the IBBI may conduct the necessary investigation in this matter,” the bench directed.

The tribunal observed the RP’s statutory obligation to ensure transparency, stating his decisions “compromised the foundational principles of the IBC.” It rejected the RP’s interpretation of financial debt validity, noting Glas Trust and Aditya Birla Finance had submitted “conclusive evidence” of their claims.

The NCLT ordered:

1. Immediate removal of Pankaj Srivastava as RP.

2. Reconstitution of the CoC to include Glas Trust and Aditya Birla Finance, empowering the new committee to appoint a replacement RP.

3. Quashing of all prior CoC decisions ratified under the former RP.

4. Initiation of disciplinary proceedings against the RP by the IBBI.

The bench deferred its decision on BCCI’s Section 12A application, directing parties to submit supplemental affidavits.

Case Title: The Board of Control for Cricket in India VS THINK & LEARN PRIVATE LIMITED
Case Number: C.P. (IB)/149/BEN/2023
Bench: Judicial Member K Biswal, Technical Member Ravichandran Ramaswamy

[Read/Download order]