New Delhi: The Supreme Court on Wednesday (October 23) set aside an order of the National Company Law Appellate Tribunal (NCLAT) stopping insolvency proceedings against ed-tech firm Byju’s.
A bench comprising Chief Justice of India (CJI) and Justices JB Pardiwala and Manoj Misra delivered its verdict while deciding an appeal filed by US firm Glas Trust Company LLC challenging the NCLAT order.
The bench also set aside the NCLAT order approving Byju’s Rs 158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI) and directed the BCCI to deposit the settlement amount of Rs 158.9 crore with a committee of creditors.
Apex court ordered for fresh adjudication in the case
The top court ordered for fresh adjudication in the case, saying that the NCLAT did not apply its mind while closing the insolvency proceedings against Byju’s.
Apex court rapped NCLAT for flouting established rules in stopping insolvency proceedings against Byju’s
The court, while rapping the NCLAT for flouting established rules in stopping the insolvency proceedings against Byju’s by taking recourse to its inherent powers, said that Glas Trust Company LLC, which is a US firm, being the creditor, has the locus to intervene in matters related to the corporate insolvency proceedings at NCLT, NCLAT and in the Supreme Court as an affected party.
The bench said that the NCLAT cannot be considered a post office that merely puts a stamp on the withdrawal application submitted by the parties to the corporate insolvency resolution process (CIRP) and added that the withdrawal plea should have been moved by the IRP (insolvency resolution professional) not by the corporate debtor or other parties.
Exercise of discretionary powers by the NCLAT was not warranted: Apex court
The bench further said that the exercise of discretionary powers by the NCLAT was not warranted in the present circumstances.
“As noted above, inherent powers cannot be used to subvert legal provisions, which exhaustively provide for a procedure to permit the NCLAT to circumvent this detailed procedure by invoking its inherent powers,” the bench said.
NCLAT set aside the insolvency proceedings against Byju’s after approving its Rs 158.9 crore dues settlement with BCCI
The NCLAT had on August 2, in a relief to Byju’s, set aside the insolvency proceedings against Byju’s after approving its Rs 158.9 crore dues settlement with the BCCI.
The operation of the NCLAT verdict, however, was stayed by the apex court on August 14, terming it as “unconscionable” and it also issued notices to Byju’s and others on the appeal filed by Glas Trust Company LLC against the NCLAT verdict.
