Supreme Court overturns NCLAT’s decision terminating insolvency case against Byju’s; settlement amount to be transferred to CoC’s escrow account
On Wednesday, the Supreme Court overturned the decision made by the National Company Law Appellate Tribunal (NCLAT) to terminate the insolvency case against Byju’s, a prominent edtech company, after agreeing to pay Rs 158.9 crore to the Board of Control for Cricket in India (BCCI).
A three-member bench led by Chief Justice of India DY Chandrachud ordered that the settlement amount maintained in a separate escrow account following the pause on the NCLAT order must now be transferred to the Committee of Creditors’ (CoC) escrow account.
The bench, also comprising Justices JB Pardiwala and Manoj Misra, delivered its verdict on a plea by the US-based creditor Glas Trust Company LLC, which challenged the NCLAT’s earlier verdict.
“The NCLAT should not be seen as a mere rubber stamp for withdrawal applications filed by the IRP. No formal request was submitted for withdrawal, the ex-director of the corporate debtor, as the first respondent, went directly to NCLAT,” it said.
Also read: AAP leader Satyendar Jain granted bail in Money Laundering Case
“Despite these grave deviations, the NCLAT still approved the settlement… Exercise of inherent powers cannot be done to subjugate the legal process and the NCLAT should have stayed the composition of CoC instead. Thus, we allow the appeal and set aside the NCLAT judgement.”
The highest court instructed a new review of the case, noting that the tribunal did not properly consider when concluding the insolvency proceedings.
The Wednesday’s verdict came more than four months after Supreme Court halted the NCLAT verdict as “unconscionable”.
On August 14, the court also stayed the implementation of the NCLAT order and notified Byju’s and others about the appeal of Glas Trust Company LLC against the insolvency appellate tribunal’s decision.
On August 2, the ed-tech firm was given relief by the tribunal as they halted insolvency proceedings following approval of their settlement with the BCCI.
