Troubled BYJU’S Faces Setback in Karnataka High Court Rejection of NCLT Order Challenge

Troubled edtech firm BYJU’S faced a significant setback as the Karnataka High Court rejected its plea challenging the National Company Law Tribunal (NCLT) order regarding the Board of Control for Cricket in India’s (BCCI) insolvency plea. Despite its efforts to seek relief, the court did not admit BYJU’S petition, leaving the company to pursue further legal recourse.

BYJU’S is reportedly planning to approach the National Company Law Appellate Tribunal (NCLAT) again on Monday, July 22. The edtech firm is seeking to overturn the NCLT’s decision, which has significant financial implications for the company.

The controversy stems from an unpaid dues claim by the BCCI amounting to INR 158.9 crore, related to sponsorship rights. On July 16, the NCLT admitted BYJU’S parent company, Think and Learn Pvt Ltd, into insolvency due to these outstanding payments. The dispute dates back to 2019 when BYJU’S took over the Indian cricket team’s sponsorship from Chinese smartphone maker OPPO, with the agreement initially set to run until March 2022.

After the initial sponsorship period, BYJU’S sought to extend the agreement for another year. However, in December 2022, the edtech giant abruptly exited the sponsorship deal with the BCCI, citing financial and regulatory challenges. This exit has since led to legal battles over the unpaid dues.

In January, BYJU’S legal team moved the NCLT against the BCCI’s plea, seeking to initiate insolvency resolution proceedings and requesting the intervention of an arbitrator. BYJU’S argued that the BCCI did not provide any services after the contract termination, rendering the claims of unpaid dues invalid as operational credit. However, the NCLT, in its July 16 order, rejected BYJU’S objections. The tribunal highlighted email communications between the parties that indicated the sponsorship arrangement and related services were still in effect until September 15, 2023, and that BYJU’S continued to avail all rights as a sponsor.

The ongoing insolvency proceedings have raised concerns about the potential impact on BYJU’S workforce. Byju Raveendran, the founder and CEO of BYJU’S, has reportedly stated that the proceedings could “force” thousands of its employees to resign, exacerbating the company’s already troubled state.