NCLT admits BCCI petition seeking insolvency proceeding against Byju’s

• Tribunal rejects Byju’s arguments challenging BCCI’s status as an operational creditor and disputing the default of debt, noting pre-existing disputes and email evidence pointing towards the debt owed.
• NCLT’s decision to admit the insolvency plea signifies a step towards resolving the financial dispute between BCCI and Byju’s.

The National Company Law Tribunal (NCLT) in Bengaluru admitted an insolvency plea filed by the Board of Control for Cricket in India (BCCI) against the parent company of ed-tech giant Byju’s over an outstanding debt of Rs158 crore.

The move marks a significant chapter in the ongoing dispute between the two entities and sheds light on the complex intersection of sports sponsorship, commercial agreements, and insolvency proceedings within the realm of corporate law.

Background of the case

The insolvency plea, filed under Section 9 of the Insolvency and Bankruptcy Code (IBC) of 2016, stemmed from a contractual agreement between BCCI and Byju’s for the sponsorship of the Indian cricket team’s jerseys.

The saga began in 2019 when Byju’s took over the sponsorship deal from mobile phone manufacturer OPPO and extended it through 2023.

However, in January 2023, amidst financial challenges, Byju’s announced the non-renewal of its sponsorship deal with BCCI and other sports organisations.

Legal proceedings and tribunal’s decision

Following BCCI’s plea for corporate insolvency resolution, the NCLT, comprising Judicial Member K Biswal and technical member Manoj Kumar Dubey, admitted the application and appointed an interim resolution professional.

The tribunal dismissed Byju’s application to refer the matter to arbitration, citing the established default on debt payment and the inability to postulate a third option beyond admission or rejection of the plea.

In its order, the NCLT emphasised the existence of a debt and default on payment, supported by communications acknowledging the outstanding dues and proposed repayment schedules.

The tribunal rejected Byju’s arguments challenging BCCI’s status as an operational creditor and disputing the default of debt, noting pre-existing disputes and email evidence pointing towards the debt owed.

Legal analysis and implications

The case raises crucial legal questions surrounding the interpretation of contractual obligations, debt default, and the applicability of insolvency proceedings in commercial disputes.

Byju’s contention that the agreement with BCCI did not involve services but only rights transfer, thereby challenging BCCI’s status as an operational creditor, underscores the nuances of defining creditor categories under the IBC.

Moreover, the NCLT’s decision to admit the insolvency plea signifies a significant step towards resolving the financial dispute between BCCI and Byju’s.

The tribunal’s emphasis on the debt default and acknowledgment of repayment communications underscores the importance of documentary evidence in establishing creditor claims in insolvency proceedings.