Not given a fair hearing by NCLT as counsel was unavailable: Byju’s RP tells NCLAT

Pankaj Srivastava, who was earlier tasked to serve as the Interim Resolution Professional (IRP) in the ongoing insolvency proceedings against ed-tech firm Byju's, has moved an appeal against the order of the National Company Law Tribunal (NCLT) that had called for the initiation of disciplinary proceedings against him..Srivastava has contended that he was not heard properly before the NCLT order against him was passed. He added that the NCLT’s order is contrary to established legal norms. According to him, the order contains unreasonable and unfair observations and was passed without affording him a fair opportunity to be heard. He argued that the NCLT failed to consider his defences and counter-statements, overlooked his lack of vested interest, and unfairly made observations without basis. The IRP contended that he was denied a fair hearing, as his counsel was unavailable when the matter was heard. The IRP told the NCLAT that he was ‘castigated’ and his conduct was held to be misleading without giving him an opportunity to be heard. He has contended that the the NCLT heard him in person briefly and passed the order. Srivatsava further submitted that he has not withheld any documents or records. While not a legal professional and not necessarily proficient in drafting pleadings and documents, he has ensured that all relevant documents were submitted to the NCLT in a timely manner, he added. .On January 29, the NCLT called on the Insolvency and Bankruptcy Board of India (IBBI) to initiate disciplinary proceedings against Srivastava after concluding that he had acted in bad faith during the Corporate Insolvency Resolution Process (CIRP) concerning Byju’s. Following this, IBBI immediately issued a notice to commence disciplinary proceedings against him. At the heart of NCLT’s decision was the fact that IRP had in August 2024 initially admitted Glas Trust and Aditya Birla into the Committee of Creditors (CoC) of Byju's. However, a short while later, he disqualified them as financial creditors and removed them from the CoC. This made way for another financial creditor, who had previously had 0.2 per cent of the vote on the CoC, to get 100 per cent voting rights.The NCLT concluded that the IRP acted with intent to mislead the tribunal and that his actions were prejudicial to the CIRP process. The IRP's conduct was deemed unfit for a tribunal officer, leading to the direction for disciplinary action against him. The NCLT in its order also reinstated Glas Trust and Aditya Birla in the CoC. Further, a direction was issued for the replacement of the RP in the CoC meeting. The NCLT nullified all the decisions made by the CoC between August and then as well. .Srivastava has challenged this order, contending that under Section 18(1)(b) of the Insolvency and Bankruptcy Code, 2016, the IRP is responsible for consolidating all claims. He argued that the initial acceptance of a claim as a "financial debt" was based on provisional verification and subject to revision. Subsequently, the claims of Glas Trust and Aditya Birla were reclassified as operational debts, given the nature of the agreement between them and Byju’s, Srivastava said. This agreement involved services and loss indemnification rather than a direct loan, he reasoned. However, according to Srivastava, the NCLT disregarded essential criteria for classifying these debts as "financial debts." He has, therefore, urged the NCLAT to overturn the NCLT's order or, alternatively, expunge the negative observations against him and halt the disciplinary proceedings..Riju Raveendra’s appeal.Meanwhile, Byju Raveendran’s brother and Byju's promoter Riju Raveendran has filed an independent appeal challenging the admission of Glas and Aditya Birla into the CoC. In his appeal, Raveendran has contended that the NCLT could not have reconstituted the CoC during the pendency of the application for withdrawal of CIRP on account of a settlement proposed with the Board of Control for Cricket in India (BCCI). Raveendran has contended that a full settlement had been reached with the BCCI before the CoC was even formed, making the withdrawal application the most pressing matter. According to Riju Raveendran, the NCLT’s decision to reconstitute the CoC effectively dismisses the withdrawal application without a formal ruling.The appeal also highlighted that the Supreme Court granted BCCI and Riju Raveendran the liberty to pursue appropriate remedies following the settlement. According to Raveendran, the NCLT's move to prioritise CoC formation over the withdrawal application, directly contradicted the Supreme Court's mandate. He has contended that the tribunal should have first addressed the withdrawal application, as its outcome would determine the necessity of CoC reconstitution..Furthermore, he has questioned the validity of Aditya Birla Finance Limited's (ABFL) status as a financial creditor, arguing that their relationship with Byju's was based on a service agreement, not a loan. He further argues that Glas Trust Company LLC's claim is contingent due to ongoing litigation.Raveendran’s appeal was listed before the Chennai Bench of NCLAT on Thursday. However, the matter has now been referred to the appellate tribunal’s Chairperson as a Judicial Member recused from hearing the case. Srivastava’s case is expected to be listed along with Raveendran’s plea when it comes up for hearing next.