Shock to Byju’s, Supreme Court overturns the order to stop bankruptcy proceedings, agreement with BCCI also affected

New Delhi: Today the Supreme Court has given a big blow to the giant company Byju. The court set aside the order of the National Company Law Appellate Tribunal (NCLAT) which had approved the Rs 158 crore settlement between Byju (Think and Learn Pvt Ltd) and the Board of Control for Cricket in India (BCCI). In this way the Supreme Court has overturned the previous decision of NCLAT. It contained an order to stop the insolvency proceedings against Byju after reaching a settlement with BCCI. Rs 158 crore deposited by BCCI in an escrow account as per the previous court order will now be transferred to an escrow account managed by the Committee of Creditors (CoC). Will be transferred to. This decision has been given by the bench headed by CJI DY Chandrachud and comprising Justices JB Pardiwala and Manoj Mishra. Senior advocates Shyam Divan and Kapil Sibal appeared on behalf of Glas Trust, while senior advocate Dr. Abhishek Manu Singhvi appeared on behalf of Byju. Solicitor General Tushar Mehta represented BCCI

What did the Supreme Court say?,
Criticizing NCLAT, the top court observed that NCLAT had prematurely terminated the Corporate Insolvency Resolution Process (CIRP). NCLAT had wrongly used its inherent powers under Rule 11 of the NCLAT Rules, 2016 to withdraw the insolvency case.

NCLAT erred in allowing the insolvency application to be withdrawn by invoking its inherent powers under Rule 11 of 2016. When a specific procedure is provided for withdrawal of an insolvency application, the NCLAT cannot exercise its inherent powers.

The court said that the application for withdrawal can be submitted only through the Interim Resolution Professional (IRP), as was done in this case, and not by the parties themselves. The Supreme Court clarified that once the Corporate Insolvency Resolution Process (CIRP) is accepted, the IRP takes over the affairs of the debtor, and the application has to go through the IRP for withdrawal. NCLT is the tribunal handling insolvency cases, not a ‘post office’ that automatically clears withdrawals, and NCLAT overstepped its role by approving the deal between Byju’s and BCCI.

The court further said that there was no formal application for withdrawal in this case. Instead of approving the settlement, NCLAT should have stayed the formation of the Committee of Creditors (CoC) and directed the parties to follow due process of law under Section 12A of the IBC, which provides for withdrawal of insolvency applications. Works.

understand what is the matter
Byju’s legal troubles have surfaced on many fronts. The New York courts, NCLT, NCLAT and the Supreme Court of India are all in talks with the company over the repayment of billions of dollars of loans with various creditors, including BCCI and its US-based creditor Glass Trust.

It all started in June 2023 when Byju’s missed interest payments on a $1.2 billion term loan. This led to differences with his/her US-based creditors, led by the Glass Trust. Creditors accused Byju’s of non-payment of loans and demanded repayment, while Byju’s argued that the loan terms were being unjustly manipulated.