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2024 Supreme(Online)(NCLAT) 1350

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Rakesh Kumar Jain, J
Mr. Byju Raveendran – Appellant
Versus
Think & Learn Pvt. Ltd. – Respondent
Company Appeal (AT) (CH) (Ins) No.262/2024 | Company Petition (IB) No. 149/BB/2023 | Company Petition (IB) No. 55/BB/2024

For the Appellants/Petitioners:Mr. Arun Kathpalia, Senior Advocate, Mr. Puneet Bali, Senior Advocate, Mr. Dhyan Chinnappa, Sr. Advocate, Mr. Rishash Gupta, Advocate, Mr. Zulfiguar Memon, Advocate, Mr. Waseem Pangankar, Advocate, Ms. Nadiya Sargureh, Advocate, Mr. Avishkar Singhvi, Advocate, Mr. Swapnil Srivastava, Advocate, Mr. Yashowandhan Dixit, Advocate, Mr. Gargi Patil, Advocate, Mr. Aditi Tiwari, Advocate, Mr. Allan David, Advocate, Mr. Jayesh Srivastava, Advocate, Mr. Yashita Bhardwaj, Advocate, Mr. Kunal Vajani, Adv.
For the Respondents:Mr. Pooja Mahajan, Advocate, Mr. Mahima Singh, Advocate, Mr. Avinash Amarnath, Advocate, Mr. Zubin Joseph, Advocate, Mr. Naman Golechha, Advocate, Mr. Samridhi Shrimali, Advocates for R1, Mr. Tushar Mehta, Sr. Adv., Mr. Satish Parasaran, Sr. Adv., Mr. Krishnava Dutt, Advocate, Ms. Aditi Chaudhury, Advocate, Ms. Bhavya Mohan, Advocate, Ms. Ann Finiya Pereira, Advocate, Ms. Mili Baxi, Advocate, Mr. Tanmay Mehta, Advocate, Mr. Kanu Agarwal, Advocate, Mr. Ashwini Vaidlialingam, Advocate, Mr. Gowri MS Advocate for R2 (BCCI), Mr. Mukul Rohatgi, Sr. Advocate, Mr. Krishnendu Datta, Sr. Advocate, Mr. P.H. Arvindh Pandian, Sr. Advocate

The court allows pre-formation settlements in insolvency proceedings under Section 12A, asserting that settlements benefit all stakeholders and upholding creditor rights.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 9 and Section 12A - Corporate insolvency resolution process - Petition admitted against corporate debtor; suspended director appeals against admission order. Court allows settlement before formation of Committee of Creditors (CoC); money paid from personal funds with tax paid, not tied to offshore financing. (Paras 1, 16, 46)

(B) Settlement - Validity - Court exercises discretion to accept settlement post-appeal, although CoC not yet formed; emphasizes the importance of settled disputes in insolvency proceedings. (Paras 50, 51)

(C) Creditor Rights - Rights of other creditors protected; any valid claims can still be pursued independently. (Paras 21, 44)

Facts of the case:
BCCI filed a petition against Think & Learn Pvt. Ltd. for an amount of Rs. 158,90,92,400/-, leading to the appointment of an Interim Resolution Professional (IRP). Director of the debtor appealed, offering settlement amounts paid from personal funds.

Findings of Court:
Appeal succeeds, settlement accepted; the order of admission is set aside with a restoration caveat in case of breach.

Issues: Can settlements be accepted before CoC formation? Is the source of funds legitimate?

Ratio Decidendi: The court affirms that settlements should be explored and honored pre-CoC under inherent powers, despite concerns over potential claims from other creditors.

Result: Appeal allowed; the impugned order is set aside.

Table of Content
1. initiation of insolvency petition and moratorium imposed. (Para 1 , 2 , 3)
2. application for interim resolution and liberty granted to applicant. (Para 4 , 5 , 6 , 8)
3. payments made from personal sources for settlement. (Para 10 , 11 , 12)
4. claims and financial obligations related to the credit agreement. (Para 15 , 19 , 20 , 22)
5. arguments regarding the approval of settlement and invocation of judicial discretion. (Para 25 , 26 , 29 , 32 , 34 , 36)
6. court's discretion and approval of settlement prior to coc formation. (Para 40 , 46 , 48 , 50)
7. final order approving settlement and addressing future implications. (Para 51)

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain (Oral)

02.08.2024: The Board of Control for Cricket in India (in short ‘BCCI”) filed a Company Petition (IB) No. 149/BB/2023 on 23.09.20223 under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) against Think and Learn Pvt. Ltd. (Corporate Debtor) before the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) for the resolution of an amount of Rs. 1,58,90,92,400/-.

2. The company petition was admitted on 16.07.2024, Moratorium under Section 14 of the Code was imposed and Pankaj Srivastava was appointed as the Interim Resolution Professional (in short ‘IRP’).

3. The order dated 16.07.2024 is subject matter of this appeal, challenged by the Suspended Director of the Corporate Debtor, impleading the Corporate Debtor as Respondent No. 1 and the Operational Creditor as Respondent No. 2.

4. In this appeal, an application bearing I.A. No. 727 of 2024 has been filed by Glas Trust Company LLC, based in USA, as the administrative agent and collateral agent of the secured parties on the basis of a credit agreement executed on 24.11.2021 between Morgan Stanley and JP Morgan Chase Bank, N.A (JP Morgan) (as Joint Lead Arrangers and Joint Bookrunners) in which the Corporate Debtor is the Parent Guarantor of Byju’s Alpha, Inc, a Delaware Corporation (the Borrower), to be impleaded as Respondent (hereinafter referred to as the ‘Applicant’).

5. The Applicant also filed a company petition (IB) No. 55/BB/2024 under Section 7 of the Code on 22.01.2024 which was disposed off on 16.07.2024 by the Adjudicating Authority with the following order:-

“1. The present petition is filed on 22.01.2024 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'IBC/ Code), r/wRule 4 of the I & B (Application to Adjudicating Authority) Rules,2016, by GLAS Trust Company LLC (for brevity 'Financial Creditor/Petitioner') inter alia seeking Corporate Insolvency Resolution Process against Think ＆ Learn Private Limited (hereinafter referred as CorporateDebtor/Respondent).

2. Heard the Learned Senior Counsel for the Petitioner and Learned SeniorCounsel for the Respondent.

3.In view of the order passed today i.e., 16.07.2024 by this AdjudicatingAuthority in another Company petition bearing C.P (IB) No.149/BB/2023which is filed by The Board and Control for Cricket in India under Section 9of the I & B Code 2016 r/w Rule 6 of the Insolvency & Bankruptcy（Application to Adjudicating Authority) Rules 2016, against the sameCorporate Debtor herein i.e., Think & Learn Private Limited and since theCorporate Insolvency Resolution Process (CIRP) has been initiated in respectof the Corporate Debtor therein by appointing the IRP, the instant C.P isdisposed of by granting liberty to the Petitioner herein to put-forth theirclaim before the IRP appointed in C.P (IB) No. 149/BB/2023 in accordancewith the provisions of the IBC 2016 and the Regulation made thereunder.

4. However, at the request of the Learned Senior Counsel for the Petitioner, we hereby grant liberty to the Petitioner to seek restoration/revival of the said petition bearing C.P (IB) No.55/BB/2024 depending on the subsequent developments in the matter at the Appellate level; if any.

5.Accordingly, C.P (IB) No.55/BB/2024 is disposed of and all the pending IAs in the pre

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2024 Supreme(Online)(NCLAT) 1350

NATIONAL COMPANY LAW APPELLATE TRIBUNALRakesh Kumar Jain, JMr. Byju Raveendran – AppellantVersusThink & Learn Pvt. Ltd. – RespondentCompany Appeal (AT) (CH) (Ins) No.262/2024 | Company Petition (IB) No. 149/BB/2023 | Company Petition (IB) No. 55/BB/2024

The court allows pre-formation settlements in insolvency proceedings under Section 12A, asserting that settlements benefit all stakeholders and upholding creditor rights.

Cases Referred (1)

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Rakesh Kumar Jain, J
Mr. Byju Raveendran – Appellant
Versus
Think & Learn Pvt. Ltd. – Respondent
Company Appeal (AT) (CH) (Ins) No.262/2024 | Company Petition (IB) No. 149/BB/2023 | Company Petition (IB) No. 55/BB/2024