Byju’s, the leading edtech startup in India, has filed an application to refer its dispute with the Board of Control for Cricket in India (BCCI) to an arbitrator, according to lawyers representing the company at the National Company Law Tribunal (NCLT). The company has also filed objections to the insolvency petition filed by BCCI, which claims dues of Rs 158 crore as an operational creditor.
Background of the Dispute
The dispute arose after Byju’s failed to pay the sponsorship money to BCCI after the expiry of the contract in March 2023. Byju’s had taken over the sponsorship rights from Oppo in 2019 and had agreed to pay Rs 440 crore per year for five years. However, due to the Covid-19 pandemic and the subsequent lockdowns, Byju’s faced financial difficulties and could not honour its obligations.
BCCI’s Insolvency Plea
BCCI filed an insolvency plea against Byju’s under Section 9 of the Insolvency and Bankruptcy Code 2016 on September 8, 2023, and the NCLT admitted the plea on November 28, 2023. BCCI alleged that Byju’s had defaulted on Rs 158 crore, excluding TDS, and had issued a general notice to Byju’s through an email dated January 6, 2023. BCCI sought the appointment of an interim resolution professional to take over the management of Byju’s and initiate the corporate insolvency resolution process.
Byju’s Arbitration Application
Byju’s, on the other hand, contended that there was an arbitration clause in the agreement with BCCI, which required any dispute to be resolved by arbitration. Byju’s also claimed that it was in negotiations with BCCI to settle the matter amicably and that it had offered to pay Rs 100 crore as a one-time settlement. Byju’s argued that the insolvency proceedings were premature and motivated by malice.
NCLT’s Decision
The NCLT has posted the matter for further hearing on February 7, 2024, and has asked BCCI to file its reply to Byju’s objections and arbitration application. The NCLT will have to decide whether to refer the dispute to arbitration or proceed with the insolvency process. The outcome of this case will have significant implications for both Byju’s and BCCI, as well as for other creditors and stakeholders involved.