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NEW DELHI – In a significant development for the embattled edtech company Byju’s, the Supreme Court has reinstated insolvency proceedings that had been previously halted by the National Company Law Appellate Tribunal (NCLAT). The top court’s ruling emphasized that Byju’s must adhere to the guidelines of the Insolvency and Bankruptcy Code (IBC) in addressing its ₹158 crore debt owed to the Board of Control for Cricket in India (BCCI).
This decision marks a turning point in Byju’s ongoing financial troubles, effectively shifting the management of the company’s financial affairs from its founder, Byju Raveendran, to its creditors. The ruling comes as a victory for Glas Trust Co. LLC, a U.S.-based creditor, which had contested the NCLAT’s earlier move to halt the insolvency process.
As part of the court’s order, Byju’s has been directed to deposit the ₹158 crore settlement amount into an escrow account managed by the Committee of Creditors (CoC). This directive follows an earlier ruling from the court on September 26, which instructed the interim resolution professional (IRP) to maintain the status quo until a final judgment was delivered.
While Byju’s and the BCCI may continue to negotiate their settlement, the court stressed that any such proceedings must take place under the supervision of the IRP and CoC, in full compliance with the IBC.
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A three-judge bench led by Chief Justice D.Y. Chandrachud strongly criticized the NCLAT for overstepping its authority by using its inherent powers under Rule 11 of the NCLAT Rules, 2016, to permit the withdrawal of the insolvency application. The Supreme Court highlighted that once an insolvency case is admitted, only the IRP has the legal standing to submit withdrawal applications, not the company’s management or other parties.
The ruling also pointed out that the NCLAT had bypassed the National Company Law Tribunal (NCLT), which holds primary jurisdiction over such matters. The Supreme Court underscored that this was a significant legal oversight and clarified that all withdrawal or settlement applications must follow the procedures outlined in Section 12A of the IBC and Regulation 30-A of the IBBI Rules.
The case will now return to the NCLT for further proceedings, with clear instructions that any settlement proposals must be filed by the IRP. Legal experts note that the Supreme Court’s decision reaffirms the importance of following established legal procedures in insolvency cases.
