Supreme Court Overturns NCLAT’s Bankruptcy Ruling for Byju’s, Ensures Payment to BCCI

The Supreme Court on Wednesday set aside the order of the National Company Law Appellate Tribunal (NCLAT) terminating the bankruptcy proceedings against edtech giant Byjus to clear Rs 158.9 crore to the Board of Control for Cricket in India (BCCI).

A three-judge bench headed by Chief Justice DY Chandrachud ordered that the settlement amount kept in a separate escrow account under the terms of the NCLAT order be deposited in the Load Committee’s escrow account -credit (COC).

A bench comprising justices JB Pardiwala and Manoj Mishra delivered the judgment on a petition filed by US-based creditor Glass Trust Company LLC against the earlier NCLAT order.

“NCLAT cannot be treated as a post office which stops withdrawal applications thus moving the IRP… No formal application for withdrawal was made and the first respondent, who was a deputy director of the agency’s creditor, the NCLAT directly,” he said.

“Despite these major differences, the NCLAT still approved the settlement… Inherent powers cannot be used to subjugate the legal proceedings, but the NCLAT should to have stopped the members of the CoC. Therefore, we allow the appeal and set aside the NCLAT. judgment.”

The Supreme Court ordered a new judgment in the case stating that the court did not exercise its discretion while concluding bankruptcy cases. Wednesday’s decision comes more than four months after the Supreme Court stayed the NCLAT ruling, calling it “inconclusive”.

During the hearing on August 14, the court suspended the operation of the NCLAT order while giving notice to Baiju and others in the appeal by Glass Trust Company LLC against the judgment of the Bankruptcy Appellate Tribunal.

On August 2, the tribunal gave relief to the ed-tech company by staying the bankruptcy proceedings against it after agreeing to a settlement with BCCI.

The order came as a relief to Byjus as it put Byjus founder Baiju Ravindran back in control of the company’s finances and operations.