StartupTalky

Tag: NCLAT

  • NCLAT Acknowledges WhatsApp and Meta’s Argument Against CCI’s Penalty

    The appeals submitted by Meta Platforms and WhatsApp against an order issued by the Competition Commission of India (CCI), a fair trade regulator, that imposed a penalty of INR 213.14 crore for abusing market dominance were admitted by the appellate panel NCLAT on 16 January. A two-member bench of the National Company Law Appellate Tribunal (NCLAT) stated that the matter needs to be taken into account after hearing Meta and CCI’s initial statements. “We conclude that consideration should be given to the submission made by the parties. The NCLAT bench, which included Justice Ashok Bhushan as its chair, declared that it accepted both appeals. However, NCLAT stated that it will make a decision next week regarding the temporary respite to maintain the CCI order. The attorneys representing WhatsApp and Meta Platform asked the appellate tribunal to halt the CCI order during the hearings. The attorney representing the Competition Commission of India, however, disagreed.

    What was the issue?

    The CCI fined social media giant Meta INR 213.14 crore on November 18 for using unfair business practices in connection with the 2021 WhatsApp privacy policy modification. The NCLAT, which has appellate jurisdiction over CCI orders, has received challenges to this order from Meta Platforms and WhatsApp. Speaking on behalf of Meta and WhatsApp, Senior Advocates Kapil Sibal and Mukul Rohatgi argued that the CCI had overreached itself in making a decision about WhatsApp’s privacy policy while the case was still pending before a Supreme Court Constitution Bench.

    The entity’s privacy policy now includes CCI. It is in front of five Supreme Court judges. According to him, it lacks the authority to handle it. Furthermore, there isn’t a complaint in this instance, and CCI reached an “erroneous conclusion” regarding dominance without considering the “effect analysis” of that. According to Sibal, “Without an effect analysis, you cannot come to the conclusion,” and the CCI hasn’t even looked at the specific data being shared. Additionally, he said that CCI had prohibited WhatsApp from using data gathered on its platform for advertising reasons with other Meta firms or Meta company goods for five years and that “they are trying to destroy the business model.”

    Monetisation is the Key to Any Business

    Sibal went on to say that no software can thrive without generating revenue, noting that comparable platforms like Signal and Telegram have their own revenue schemes. Additionally, search applications make money in different ways. Additionally, he requested an emergency stay on the CCI order, which was due on February 19. According to Sibal, NCALT can take up the issue and make a decision after the Supreme Court rules on the privacy policy and the legislative regulations are established. “Moreover, the balance of convenience is in our favour, as we have been operating this for years,” he continued.

    WhatsApp spokesperson Mukul Rohatgi stated that everyone can use the app for free and that no one is being charged for sending “Good Morning to Good Night” messages that include videos. How is it possible for anyone to live on a free model? This sharing isn’t ominous. This is merely a business plan. These days, Facebook and WhatsApp are owned by the same company. He claimed that this type of sharing is harmless and not destructive. On behalf of the CCI, attorney Samar Bansal, however, disagreed with these claims, arguing that the CCI’s investigation and the Supreme Court case did not overlap. In response to a bench question, he stated that competition law examines commercial data, whereas data privacy law exclusively examines personal data.

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  • SC Questions NCLAT Ruling on Approving Byju’s INR 158.9 Crore BCCI Settlements

    On 25 September 2024, the Supreme Court questioned Byju’s choice to pay off the Board of Control for Cricket in India (BCCI) for INR 158 crore, while leaving behind significant amounts owed to other creditors, such as US lender Glas Trust Co LLC, totaling INR 15,000 crore.

    Chief Justice DY Chandrachud headed a bench that questioned why BCCI was the only organization chosen to pay off its debts. But what about other people? Can a creditor simply walk away and claim that a single promoter is prepared to pay them when the amount of the debt is so substantial? Was it derived from your assets? The CJI stated, “You have a debt of INR 15,000 crore today.”

    The trustee for lenders owing $1.2 billion, GLAS Trust, is appealing the settlement reached between the Edutech company and BCCI, claiming that the funds paid by Byju Raveendran’s brother Riju Ravindran were tainted. The top court is currently considering these arguments.

    The NCLAT’s order, which had authorized an INR 158.9 crore dues settlement deal between the BCCI and Think & Learn Pvt Ltd, the parent firm of BYJU’s, an Edutech major, was stayed by the bench last month.

    BCCI Raising Concerns Over NCLAT’s Order

    The National Company Law Appellate Tribunal’s ruling to set aside the July 16 judgment that started Think & Learn’s insolvency procedures was questioned by the top court as well, even though the decision was made in only one paragraph and without “applying its mind at all.” Examine the logic in the NCLAT sequence. It is merely a paragraph. This demonstrates absolutely no application of the mind. The CJI added, “Let the tribunal apply its mind once more and see where the money is coming from.”

    Speaking on behalf of the BCCI, Solicitor General Tushar Mehta pleaded with the top court to take into account the ramifications if the appeal (of Glas Trust) is granted and to refrain from overturning the NCLAT’s decision. In support of Glas Trust, senior attorney Shyam Divan argued that the NCLAT had incorrectly approved the settlement despite clear objections that the settlement’s funding source was questionable. This was done by relying solely on a vague commitment provided by Riju Ravindran. NK Kaul and AM Singhvi, Byjus’ senior counsel, opposed the Glas Trust’s appeal and its actions, which included allegations that Byju and Riju Raveendran were absconding.

    Byju Raveendran, the founder of Byju’s, is involved in multiple legal proceedings. These include a payment dispute of INR 158 crore with the Indian cricket board and a dispute involving a $1.2 billion term loan with US lenders. Their problems are made worse by the fact that the Enforcement Directorate of India is looking into claims of INR 9,362.35 crore in Foreign Exchange Management Act violations.

    BYJU’S Faces Legal Challenges: BCCI’s Insolvency Petition Accepted by NCLT
    Explore the latest developments as the country’s education tech giant BYJU’s encounters significant financial and legal issues.
    StartupTalkyNitin Konde

  • The Supreme Court Has Temporarily Halted the Appeals Tribunal’s Decision Over the BYJU’S-BCCI Settlement

    On Wednesday, the Supreme Court issued a stay of the NCLAT ruling that had set aside the insolvency proceedings against the ed-tech major. This effectively enabled Byju Raveendran, the owner of the company, to regain control of the business.

    The ruling of the NCLAT that approved the settlement of Byju’s dues with the BCCI amounts to INR 158.9 crore, but the highest court has placed that verdict on hold. This decision has put a strong blow on Byju’s.

    The order was issued in response to a pleading by Glas Trust Company LLC, a creditor situated in the United States, against the verdict of the NCLAT. Glas Trust Company LLC asserts that they are owed one billion dollars by Byju’s.

    Additionally, a panel that was led by Chief Justice DY Chandrachud ordered the Board of Control for Cricket in India (BCCI) to maintain a separate account for the INR 158.9 crore that it had received from Byju’s as a result of a settlement.

    Insolvency proceedings against BYJU’S were halted on August 2 after the National Company Law Appellate Tribunal (NCLAT) gave its approval to the settlement of INR 158.9 crore in dues with the BCCI.

    How This Decision Can Bring More Trouble for BYJU’S

    Following the decision of the Supreme Court, the insolvency proceedings against BYJU’S will resume. This will result in the ed-tech major, which was previously valued at USD 22 Billion, being placed under the control of an insolvency administrator chosen by the court.

    At the beginning of this month, Byju Raveendran was able to restore control of the company after the National Company Law Appellate Tribunal (NCLAT) dismissed the insolvency procedures that were being brought against the startup.

    The cricket regulating body of India filed a complaint, stating that the company had not been paid its sponsorship dues, which resulted in the company being placed in the process of going bankrupt. After some time, the two parties reached a settlement on the issue, and an appeals tribunal put a stop to the insolvency procedures.

    Why BYJU’S Is Going Through a Financial Crunch?

    The fast growth and forceful strategy of acquisitions employed by BYJU’S have put a heavy burden on its financial resources. Many are worried about the company’s long-term viability because of its substantial need for outside finance, despite the fact that it has raised billions in cash.

    Despite the initial boost to online education caused by the COVID-19 pandemic, the market became saturated, which affected Byju’s growth trajectory.

    Misleading advertising, unauthorised charges, and trouble getting your money back are just a few of the customer service issues that have plagued Byju’s. Not only have these problems damaged the company’s image, but they have also prompted lawsuits.

    Members of the Enforcement Directorate and the Ministry of Corporate Affairs (MCA) are among the regulatory agencies that are constantly monitoring the operations of the company.

    Investigations have been initiated due to allegations of financial irregularities, such as disparities in revenue recognition and possible violations of the Foreign Exchange Management Act (FEMA).

    At the heart of both the company’s success and its present problems has been Byju Raveendran, founder and CEO of Byju’s. Now that stakeholders and investors are demanding answers about the company’s performance, his leadership is under scrutiny.

    BYJU’S Faces Legal Challenges: BCCI’s Insolvency Petition Accepted by NCLT
    Explore the latest developments as the country’s education tech giant BYJU’s encounters significant financial and legal issues.
    StartupTalkyNitin Konde