NCLAT Backs Aditya Birla Finance in BYJU’S CoC
• Byju Raveendran Loses CoC Appeal
• Tribunal Rules Against BYJU’S Founder in Insolvency Case
• NCLAT Upholds Creditor Rights in BYJU’S Dispute
Unmesh Gujarathi
Sprouts News Exclusive
Contact: +91 9322755098
Sprouts News Exclusive
Contact: +91 9322755098
The NCLAT has dismissed Byju Raveendran’s appeal challenging the inclusion of Aditya Birla Finance in BYJU’S Committee of Creditors. Upholding the NCLT order, it ruled that an IRP cannot unilaterally reconstitute the CoC, reinforcing creditor rights and procedural safeguards under the Insolvency and Bankruptcy Code in high-value insolvency cases.
In a significant ruling for India’s insolvency framework, the National Company Law Appellate Tribunal (NCLAT) in Chennai has dismissed an appeal by Byju Raveendran, suspended director and promoter of Think & Learn Pvt. Ltd. (BYJU’S), challenging the constitution of the Committee of Creditors (CoC) in the company’s ongoing corporate insolvency resolution process (CIRP).
The decision affirms the January 29 order of the National Company Law Tribunal (NCLT), Bengaluru, which had restored Aditya Birla Finance Limited (ABFL) as a financial creditor and ordered disciplinary proceedings against then Interim Resolution Professional (IRP) Pankaj Srivastava for procedural overreach.
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Contents
- NCLAT Backs Aditya Birla Finance in BYJU’S CoC
- • Byju Raveendran Loses CoC Appeal
- • Tribunal Rules Against BYJU’S Founder in Insolvency Case
- • NCLAT Upholds Creditor Rights in BYJU’S Dispute
- Click Here To Download the News Attachment
- CIRP Origin: BCCI Petition Triggers Insolvency Process
- Controversial Reconstitution and Removal of Key Creditors
- NCLAT: No Provisional CoC in IBC Framework
- Key Legal Takeaways for Insolvency Practitioners
- High-Profile Legal Representation
- SIT Observes Broader Implications
- BYJU’S Under Fire:
CIRP Origin: BCCI Petition Triggers Insolvency Process
The insolvency process began on July 16, 2024, when the Board of Control for Cricket in India (BCCI) filed a petition before NCLT Bengaluru against BYJU’S. IRP Pankaj Srivastava subsequently invited creditor claims and, on August 21, 2024, constituted a CoC with:
•Glass Trust Company LLC – 99.41% voting share
•Aditya Birla Finance Ltd – 0.41% voting share
•InCred Financial Services Ltd – 0.18% voting share
•ICICI Bank Ltd – Nil claim
This structure gave Glass Trust Company LLC — with claims exceeding ₹11,400 crore — overwhelming voting power, while ABFL’s admitted claim was ₹47.12 crore.
Controversial Reconstitution and Removal of Key Creditors
On August 31, 2024, Srivastava reconstituted the CoC, controversially removing Glass Trust and ABFL, leaving InCred Financial Services as the sole member with 100% voting rights. ABFL was reclassified as an operational creditor, while Glass Trust’s claim was deemed contingent.
The NCLT found this action procedurally improper, stating that such a reconstitution was beyond the IRP’s powers and prejudicial to the CIRP’s integrity. It restored the August 21 CoC, reinstated ABFL as a financial creditor, nullified resolutions of the reconstituted CoC, and referred the IRP to the Insolvency and Bankruptcy Board of India (IBBI) for disciplinary action.
NCLAT: No Provisional CoC in IBC Framework
Byju Raveendran challenged the NCLT’s order before NCLAT, arguing that the initial CoC was “provisional” and subject to revision by the IRP. The appellate tribunal rejected this stance, citing the Insolvency and Bankruptcy Code (IBC) and established precedents.
“There is no provision in the Code allowing an RP to review the status of a creditor already included in the CoC on his own,” the NCLAT ruled.
The tribunal also endorsed the NCLT’s strong observation that the IRP’s reconstitution — which left a single member with only 0.18% of the original voting rights — could “only be termed mischievous.”
Key Legal Takeaways for Insolvency Practitioners
The judgment reinforces that resolution professionals cannot unilaterally alter creditor classifications once the CoC is constituted, except under provisions explicitly provided in the IBC.
The NCLAT clarified that valid initial acts of the IRP cannot be nullified solely because later actions were improper, rejecting the appellant’s argument that all IRP actions be voided due to alleged misconduct.
This ruling is likely to be cited in future disputes involving creditor admission, CoC restructuring, and IRP powers under the IBC framework.
High-Profile Legal Representation
The case saw heavyweight legal representation:
•For Byju Raveendran: Senior Advocates Guru Krishnakumar & Abhijit Sinha with a team of advocates including V Shyamohan, Sradhaxna Mudrika, and others.
•For Aditya Birla Finance: Advocates Aparajitha Vishwanath, Sneha Parthasarathy, and Ahaan Mohan.
•For Present RP Shailendra Ajmera: Senior Advocate Abhinav Vasisht with Chandhiok & Mahajan’s team.
•For Glass Trust: Senior Advocate Krishnendu Datta with supporting counsel.
•For Riju Raveendran: Senior Advocate Haripriya Padmanabhan.
SIT Observes Broader Implications
The Sprouts News Investigation Team (SIT) notes that the NCLAT’s decision carries wider implications for creditor rights and governance in high-value insolvency cases. The judgment reinforces procedural safeguards in India’s insolvency regime and underscores the need for strict adherence to statutory powers by resolution professionals.
In a corporate landscape where creditor disputes can shape the trajectory of debt resolution, the ruling serves as a precedent-setting case for transparency, procedural compliance, and creditor protection.
Also Read: Godrej Aristocrat Fire NOC Denied, Buyers Demand Refunds.
BYJU’S Under Fire:
Financial Irregularities, Layoffs, and Regulatory Heat Tarnish Edtech Giant’s
Financial Mismanagement and Auditor Exit Raise Red Flags
BYJU’S, once celebrated as India’s most valuable edtech startup, has faced repeated scrutiny over its financial practices. In 2023, global auditor Deloitte resigned, citing delays in filing statutory financial results and a lack of transparency in disclosures. Soon after, major investors, including Peak XV Partners (formerly Sequoia India), exited the company’s board. These developments fueled concerns over corporate governance failures and compliance gaps in one of India’s most high-profile unicorns.
Mass Layoffs and Employee Backlash Erode Public Trust
Amid mounting losses, BYJU’S initiated large-scale layoffs in 2022–2023, affecting thousands of employees across sales, content, and operations teams. Former staff alleged arbitrary terminations, delayed severance packages, and high-pressure sales tactics imposed during their tenure. Labour rights groups criticised the company for prioritising cost-cutting over employee welfare, a move that further dented its employer brand reputation.
Regulatory Scrutiny and ED Probe Over Fund Flows
The company’s aggressive global expansion and acquisition strategy have come under the radar of the Enforcement Directorate (ED) for alleged foreign exchange violations under FEMA. Investigations have examined the routing of overseas investments, fund transfers to subsidiaries, and compliance with lending agreements. US-based lenders have also filed lawsuits alleging breach of debt covenants, adding an international legal dimension to BYJU’S troubles. According to Sprouts News Investigation Team (SIT), such multi-jurisdictional probes indicate deep-rooted compliance risks in BYJU’S operational model.
Customer Complaints and Sales Ethics in Question
Beyond boardrooms and regulatory offices, BYJU’S has faced heavy criticism from parents and students for alleged misleading sales practices. Consumer courts have received complaints of false promises, refund delays, and aggressive subscription pitches targeting financially vulnerable families. Education experts argue that the company’s aggressive revenue-driven culture undermines the ethical foundations of edtech. For Sprouts News Investigation Team (SIT), this blend of financial, operational, and ethical controversies positions BYJU’S as a cautionary case in startup governance.
