‘Illegal Foreign Debt’: Raveendran Opposes GLAS Trust’s CCD Funding for Aakash Rights Issue

A major controversy has erupted within Byju's parent company, Think & Learn Private Limited. Suspended director Byju Ravindran has filed a complaint with the NCLT, saying that the main lender, GLAS Trust, is trying to get illegal foreign borrowings in the form of ECBs, camouflaged as FDI.

He says that a ₹100 crore CCD deal entered into for TLPL's subscription to the Aakash rights issue represents a brazen contravention of the provisions of FEMA and IBC. In this case, Byju Raveendran has said the CCD deal infringes Indian FDI and foreign exchange management act regulations and is, in essence, structured as foreign direct investment in the form of an ECB, which is strictly prohibited.

In this case, AESL (Aakash) has received approval from the Supreme Court for a rights issue. TLPL, which holds approximately 25.7% of AESL, needed approximately ₹25.75 crore to fund its rights issue, but TLPL is currently undergoing insolvency proceedings (CIRP) and lacks the funds. Consequently, GLAS Trust, through its US subsidiary, proposed issuing CCDs worth up to ₹100 crore to TLPL to raise funds.

Regarding the allegations, Raveendran alleges that the CCDs were deliberately portrayed as foreign direct investment (FDI), while they were actually foreign direct investment (ECB), which is illegal. At the same time, it is being described as interim financing during the CIRP, which is not possible.

It is noteworthy that, according to Ravindran, it is legally impossible for an instrument to be converted both by compulsion and by option. Furthermore, according to RBI and FEMA regulations, this CCD is essentially unauthorized foreign debt. Ravindran has requested the NCLT to cancel all seven resolutions passed at the November 5th CoC meeting and declare the CCD agreement with GLAS Trust invalid.