Karnataka HC Rejects BYJU’S Plea In BCCI Case
In a significant legal development, the Karnataka High Court has refused to admit the plea lodged by the embattled edtech company, BYJU’S, against a previous order by the National Company Law Tribunal (NCLT). This order was concerning an insolvency petition filed by the Board of Control for Cricket in India (BCCI) over unpaid dues amounting to INR 158 Crore, related to a jersey sponsorship deal with the Indian cricket team.
The case arises from a dispute over sponsorship payments, with BYJU’S, India’s leading educational technology company, facing allegations of unpaid dues. These dues are in connection to its sponsorship agreement with BCCI, the governing body for cricket in India. The controversy has brought to light the financial and contractual challenges faced by one of the flagbearers of the Indian startup ecosystem.
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Following the unfavorable ruling by the NCLT, which admitted BYJU’S parent entity, Think and Learn Pvt Ltd, into insolvency over the INR 158 Crore dues, BYJU’S had sought recourse at the Karnataka High Court. The court’s decision not to admit the plea has led the edtech firm to consider appealing against the order at the National Company Law Appellee Tribunal (NCLAT), with plans to do so imminently.
This legal setback comes at a particularly troubled time for BYJU’S, whose founder and CEO, Byju Raveendran, has voiced concerns that the insolvency proceedings might precipitate a wave of resignations among the company’s workforce. The edtech giant took over as the Indian cricket team’s sponsor in 2019 from Chinese smartphone manufacturer OPPO, with a contract that was intended to run until March 2022. Subsequently, BYJU’S expressed an intention to extend this sponsorship for an additional year. However, in a sudden turn of events, the company withdrew from the sponsorship agreement in December 2022 amid financial and regulatory challenges.
BYJU’S has argued that following the contract’s termination, the BCCI failed to render any services that could justify the claim of INR 158 Crore as an operational debt. The edtech firm posited that the BCCI’s insistence on the dues lacked a legal basis, a claim that was disputed and overturned by the NCLT. The Tribunal, in its ruling on July 16, cited email exchanges that demonstrated the continuation of the sponsorship arrangement and related services until September 15, 2023. This evidence led to the conclusion that BYJU’S continued to benefit from sponsorship rights, thereby dismissing the company’s objection to the insolvency proceedings.
The contentious issue at the heart of the legal battle between BYJU’S and the BCCI throws into relief the complex interplay between sponsorship agreements and financial obligations within the realm of sports and business. As BYJU’S prepares to take its case to the NCLAT, stakeholders in both the educational technology sector and the cricketing world are keenly observing the developments, aware of the potential implications for corporate sponsorships and the financial health of startups.
The dispute underscores the challenges companies may face when navigating high-stake sponsorship deals, especially against the backdrop of the economic pressures and regulatory complexities that characterize the current business environment. The outcome of this legal tussle will likely set a precedent for how similar disputes are resolved in the future, making it a landmark case in the intersection of sports, education technology, and corporate law.
