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In a significant legal development, the Supreme Court of India has overturned a decision by the National Company Law Appellate Tribunal (NCLAT) that had closed the insolvency proceedings against the embattled edtech giant Byju's. The court's ruling stemmed from an appeal filed by the US-based creditor Glas Trust Company LLC, who contested the NCLAT's prior judgment that accepted a settlement agreement between Byju's and the Board of Control for Cricket in India (BCCI) for a sum of Rs 158.9 crore. The Supreme Court deemed the NCLAT's decision as an overstepping of its authority, stating that it cannot be seen as a simple post-office for stamping withdrawal applications without proper legal process.
The apex court highlighted the NCLAT's failure to meticulously scrutinize the settlement agreement and its disregard for the legal process. Instead of directly approving the withdrawal application, the NCLAT should have, in the opinion of the Supreme Court, mandated a formal application for withdrawal and ensured a proper composition of the Committee of Creditors (CoC). The court deemed the NCLAT's actions as a subversion of legal procedures and ultimately set aside the NCLAT's judgment, reopening the insolvency proceedings against Byju's.
The Supreme Court's decision has far-reaching implications for Byju's and the edtech industry as a whole. The company, which had already faced significant financial challenges, now faces the prospect of renewed insolvency proceedings. The reinstatement of the insolvency process could result in a restructuring of Byju's operations, potentially leading to changes in its ownership structure, management, or financial arrangements. The case serves as a reminder of the importance of adherence to legal procedures and due diligence in insolvency proceedings, emphasizing the need for courts to maintain the integrity of the legal process and uphold the rights of all creditors.
Source: Supreme Court sets aside tribunal order stopping insolvency process against Byju's