supreme court It on Wednesday rejected the decision of the National Company Law Appellate Tribunal (NCLT) by which it had stayed insolvency proceedings against troubled edtech company Byju’s. Chief Justice DY Chandrachud, Justice JB A bench of Justices Pardiwala and Manoj Mishra also set aside the NCLAT order allowing Byju’s to pay dues of Rs 158.9 crore to the Board of Control for Cricket in India (BCCI). The court directed the cricket board to deposit the settlement amount of Rs 158.9 million with the committee of creditors.
Supreme Court reprimanded NCLT
The court said that US company Glass Trust Company LLC, being a lender, has the right to intervene as an affected party in cases related to corporate insolvency proceedings in the NCLT, NCLAT and the Supreme Court. The top court charged the bankruptcy appeal tribunal NCLAT for violating rules relating to stay of insolvency proceedings against Byju’s by invoking its inherent powers. “The NCLAT cannot be treated as a post office that merely stamps withdrawal applications filed by parties to the Corporate Insolvency Resolution Process (CIRP),” the court said.
The use of discretionary powers was not appropriate
The Court said that the motion to dismiss should have been filed by the IRP (Insolvency Resolution Professional) and not by the debtor company or other parties. In the prevailing circumstances, the exercise of discretionary powers by NCLAT was not appropriate. The court said: “As mentioned above, inherent powers cannot be used to override statutory provisions.” The court was considering the petition of US firm Glass Trust Company LLC against the NCLAT order. The Court directed that the amount of Rs 158 crore, including accrued interest (if any), be kept in a separate escrow account as per the August 14 order. BCCI is directed to submit it to the Committee of Creditors (CoC). The court said the COC is further directed to keep the amount in a separate account until further proceedings and follow further directions of the National Company Law Tribunal.
NCLT had ordered to stop the bankruptcy proceedings
On August 2, NCLAT ordered closure of insolvency proceedings against Byju’s after approving the Rs 158.9 crore dues deal with the Board of Control for Cricket in India (BCCI). The decision came as a huge relief to Byju’s as it effectively returned its founder Byju Raveendran to the position of control. However, this relief was short-lived as in a blow to Byju’s, the top court stayed the NCLAT decision on August 14. The case pertains to Byju’s failure to pay Rs 158.9 crore related to a sponsorship deal with BCCI.
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