Back
NCLT Bengaluru freezes Byju's auctioned assets after K3 claims ₹150 crore sold for ₹16 crore
The Bengaluru bench of the has ordered a freeze on assets auctioned by the of , the parent company of Byju's, after the RP of a sister entity, , claimed that goods worth approximately ₹150 crore were sold for a mere ₹16 crore.
A Tale of Two Insolvencies
The dispute arises from two separate corporate insolvency resolution processes (CIRP) involving entities of the Byju's group. TLPL was admitted to CIRP in following a petition by the over unpaid sponsorship dues of about ₹159 crore. Byju's K3 Education entered its own CIRP after a by . Consequently, the two companies are managed by different resolution professionals.
The conflict centers on tablets, electronic devices, and other equipment stored in a warehouse where goods belonging to TLPL, Byju's K3, and were kept. The RP of Byju's K3 alleged that assets belonging to K3 were included in an auction conducted by TLPL's RP on , following a notice on . The auction was won by .
Auction Sparks Ownership Battle
Before the NCLT, the RP of Byju's K3 argued that the auction was conducted in undue haste and that the assets sold were critical to K3's own CIRP. It claimed that at least 15 vehicles carrying assets had left the warehouse for Mumbai, raising concerns about . The RP also questioned the lack of documentary evidence establishing TLPL's ownership of all articles sold. It was pointed out that the successful bidder's registered address was an under-construction building found locked on repeated visits, raising suspicions that the bidder might dispose of the assets to avoid litigation.
The RP of TLPL countered that Byju's K3 was merely a service provider and that the hardware and content belonged to TLPL. He argued that the auction was conducted with the approval of TLPL's and that the process had been initiated as early as . The of TLPL supported the applicant, questioning the urgency and the low valuation of the sale.
NCLT Steps In: Preservation Over Prejudice
The NCLT observed that the ownership of the auctioned articles was not conclusively established. The bench comprising Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada noted that even if some assets belonged to TLPL, the ownership of the remainder was unclear. The tribunal emphasized the need to preserve the assets until concrete evidence could be presented, stating that maintaining the would not any party.
Key Observations from the Bench
The tribunal made several significant observations in its order:
"Even if part of the auctioned articles actually belonged to TLPL, the ownership of rest of the articles remains in haze."
"Preserving the auctioned articles, in this background is necessary at least until some concrete evidence comes up. It is not going to anybody including the successful bidder otherwise the altered ground situation cannot be undone."
What the Tribunal Ordered
The tribunal directed the of Comprint Tech Solutions as a party to the proceedings. It ordered both TLPL's RP and Comprint to maintain over the auctioned assets until the next hearing. Comprint was directed to file a detailed inventory of the purchased assets, photographs, and the complete storage address within one week. TLPL's RP was ordered to comply with an earlier disclosure order requiring item-wise details, valuation, auction mechanism, and proceeds account within a week. The applicant was directed to file an amended . Notice of the applications was ordered to be served on Comprint, which has two weeks to file replies.
The Road Ahead
The NCLT has not set aside the auction or determined ownership. The is aimed at preserving the assets while the competing claims are examined. The matter is scheduled for further hearing on . The outcome could have significant implications for the CIRP of both Byju's entities, particularly regarding the value and availability of assets for creditors.
