Riju moves NCLT against TLPL’s Compulsory Convertible Debenture pact with Glas subsidiary
New Delhi: Riju Ravindran has moved the National Company Law Tribunal (NCLT) challenging the Compulsory Convertible Debenture (CCD) agreement between Think & Learn Pvt Ltd (TLPL) and a subsidiary of Glas Trust Co, Byju’s US-based financial creditor. He alleges the arrangement violates FDI and FEMA regulations.
According to Riju, the CCD agreement was executed to raise funds for TLPL to subscribe to the ongoing rights issue of Aakash Educational Services Ltd (AESL) after Glas Trust failed to secure a stay from the NCLAT and the Supreme Court. Glas, which holds over 99 per cent voting rights in TLPL, is allegedly attempting to raise money “illegally” through this structure to participate in AESL’s rights issue.
Riju, a suspended director and promoter of TLPL, claimed the CCD resembles a FEMA-compliant FDI instrument but is, in substance, an external commercial borrowing, which is prohibited. He added that treating the same instrument as interim finance or CIRP cost under the Insolvency and Bankruptcy Code is “legally impossible.”
TLPL owns about 25.7 per cent in AESL, which received approval from the Supreme Court on November 3 to proceed with its rights issue. Based on this entitlement, TLPL received an offer letter on October 29 for subscription worth around Rs 25.75 crore.
Riju’s petition cites minutes of the CoC meeting on November 5, where a Glas representative proposed subscribing to TLPL’s CCDs through its wholly-owned subsidiary, with the raised funds to be used for AESL’s rights issue. Due to TLPL’s lack of funds, Glas said this route would enable timely participation.
Glas circulated a draft debenture subscription agreement and draft resolution for issuing CCDs worth up to Rs 100 crore in one or more tranches. While Glas supported the proposal, two other CoC members — Aditya Birla Capital and Incred — refrained, citing pending internal approvals. However, the resolution professional cleared it, as Glas held 99.42 per cent voting rights, and was asked to proceed with compliance formalities. Riju said his representatives objected, questioning the need for NCLT approval for such an “unusual financial instrument” amid an ongoing Corporate Insolvency Resolution Process. He alleged that neither the resolution professional nor Glas addressed concerns over legality, enforceability, or commercial rationale.
Riju has asked the NCLT to set aside all resolutions passed at the November 5 CoC meeting and declare the CCD agreement “void and unenforceable” under Indian law. He argues the CCDs fail the mandatory convertibility test under NDI Rules and RBI guidelines and effectively constitute unauthorised external commercial borrowing. The matter is expected to be heard by the NCLT this week.
