The Supreme Court overturned the National Company Law Appellate Tribunal’s (NCLAT) decision to close insolvency proceedings against Byju’s following a settlement with the Board of Control for Cricket in India (BCCI) worth approximately Rs 158 crores.
The Apex Court directed that the amount of Rs 158 crores be deposited into an escrow account managed by the Committee of Creditors, and shall be maintained by them. The Supreme Court held that the NCLAT’s approval of the settlement between Byju’s and BCCI contravened essential procedural requirements under the Insolvency and Bankruptcy Code (IBC).
A Supreme Court bench, headed by Chief Justice DY Chandrachud and comprising Justices JB Pardiwala and Manoj Misra, delivered the judgment in an appeal filed by US-based financial creditor Glas Trust, challenging the National Company Law Appellate Tribunal’s (NCLAT) decision to halt insolvency proceedings against Think & Learn, Byju’s parent company.
The Supreme Court held that the NCLAT erroneously exercised its inherent powers under Rule 11 of the NCLAT Rules, 2016, in approving the withdrawal of the insolvency proceedings. The Court emphasized that a prescribed procedure governs the withdrawal of insolvency applications, which must be adhered to rigorously.
The Court clarified that upon admission of the Corporate Insolvency Resolution Process (CIRP), the Interim Resolution Professional (IRP) assumes control over the debtor’s affairs, and any application withdrawal must be routed through the IRP.
On August 2, the NCLAT provided relief to the beleaguered ed-tech company, Byju’s, by setting aside the insolvency proceedings initiated against it, after approving its settlement of Rs 158.9 crore in dues owed to the BCCI. The NCLAT verdict provided significant respite for Byju’s, effectively restoring founder Byju Raveendran’s control over the company’s financial and operational management.
However, the relief remained short-lived as the Apex Court intervened on August 14, calling the NCLAT verdict as “unconscionable.”
