Riju Raveendran Moves NCLT Against TLPL's CCD Pact With Glas Subsidiary

Riju Raveendran has moved the insolvency tribunal NCLT against the Compulsory Convertible Debenture agreement between Think & Learn Pvt Ltd and a wholly-owned subsidiary of Glas Trust Co, Byju's US-based financial creditor, alleging it to be violative of FDI and FEMA regulations.

The agreement was inked to raise finance to participate in the ongoing rights issue of Aakash Educational Service Pvt Ltd (AESL) after Glas Trust failed to get a stay order from the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court.

Now, Glas, holding 99.25% voting rights in Think & Learn Pvt Ltd (TLPL), which owns insolvent bound edtech firm Byju's, is attempting to raise money illegally, purportedly to participate in the right issue of AESL, Riju alleged in his interim application filed before the NCLT.

Riju, a suspended director and promoter of TLPL, said the CCD (Compulsory Convertible Debenture) is drafted to look like FDI under FEMA. Still, it is actually like an ECB (external commercial borrowing), a foreign debt in substance, which is prohibited. Moreover, the same is simultaneously also treated as interim finance/CIRP cost under IBC, which is legally impossible.

TLPL owns around 25.7% stake in AESL, which is now going for a rights issue after the Supreme Court on November 3, 2025, gave a go-ahead, rejecting the petition filed by Glas Trust.

Based on its entitlement, TTPL on October 29, 2005, received an offer letter from AESL for subscription of rights issue of approximately ₹25.75 crore, Riju said in his plea moved before the Bengaluru bench of NCLT, while quoting the minutes of CoC (Committee of Creditor) meeting held on November 5.

In the said meeting, the Glas representative proposed to subscribe to the CCD of TLPL through its wholly-owned subsidiary, pursuant to which the subscription money would be used by TLPL for the rights issue of AESL.

Citing the lack of funds with TLPL to participate in the AESL rights issue, the Glas Trust representative said the decision to raise funds through its subsidiary will help to raise funds in the short timelines required for participation.

In the meeting, Glas shared a "draft debenture subscription agreement, along with a draft resolution, for issuance and allotment of CCDs worth ₹100 crore in one or more tranches, according to the petition filed by Riju.

This was placed in the CoC meeting held on November 5, in which Glas supported it while two other members - Aditya Birla Capital and Incred refrained, citing a lack of internal approvals on this.

However, the resolution professional approved it, as Glas has 99.42% voting rights, and he was instructed to proceed with the necessary compliances to give effect to this.

Riju submitted that his representatives, who were present in the meeting, had raised serious concerns and asked whether the approval of NCLT was required for an 'unusual financial instrument' being used when TLPL is going through CIRP (Corporate Insolvency Resolution Process) and lacks market-based valuation.

"Despite these serious concerns being raised by the Applicant's representative, the RP proceeded to declare the resolutions approved and instructed himself to expedite compliance measures. Evidently, neither the RP nor GLAS addressed any of the substantive concerns raised by the Applicant's Representative regarding the legality, enforceability, or commercial propriety of the proposed CCD arrangement," said Riju.

After this, Riju moved the NCLT, terming the CCD subscription agreement terms as "invalid and unenforceable under indian law".

He requested the NCLT to "set aside Resolution Nos. 1 to 7 passed at the meeting of the CoC of TLPL held on November 5, 2025" and to "declare that the 'Compulsorily' Convertible Debentures Subscription Agreement, if any, executed between the Resolution Professional and GLAS Trust Company LLC and/or its wholly-owned subsidiary, as void, illegal, and unenforceable under Indian law".

Riju also alleged that such instruments manifestly fail the 'fully, compulsorily and mandatorily convertible' test under the NDI Rules and RBI Circular No. 74, and therefore, constitute unauthorised external commercial borrowing in direct violation of FEMA.

Riju also alleged that such instruments manifestly fail the 'fully, compulsorily and mandatorily convertible' test under the NDI Rules and RBI Circular No. 74, and therefore, constitute unauthorised external commercial borrowing in direct violation of FEMA.

"This is an inherent and fatal contradiction. The term 'compulsorily convertible' denotes mandatory conversion without choice, while the option of confers discretion on the holder' - these are logically and legally irreconcilable concepts. In effect, an instrument cannot be both," he said, submitting "GLAS has proposed issuance of purported CCDs to deliberately circumvent ECB regulations".

CCDs proposed in the present case are "compulsorily convertible at the option of the debenture holder" and therefore, not fully and compulsorily convertible within the meaning of the ECB Master Direction; they constitute debt instruments within the ECB framework.

The matter is expected to be heard this week by an NCLT bench.