The Supreme Court on Wednesday cancelled the National Company Law Appellate Tribunal's (NCLAT) order which closed the insolvency proceedings against edtech giant Byju's for accepting a Rs 158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI).
A three-bench headed by Chief Justice of India DY Chandrachud directed that the settlement amount maintained in a separate escrow account pursuant to the stay of the NCLAT order, will have to be deposited into the escrow account of the Committee of Creditors (CoC).
The bench, also comprising Justices JB Pardiwala and Manoj Misra, delivered its verdict on a plea by the US-based creditor Glas Trust Company LLC, which challenged the NCLAT's earlier verdict.
"The NCLAT cannot be considered a post-office which will stamp such withdrawal applications being moved by the IRP... There was no formal application made for withdrawal, the first respondent who was a former director of corp debtor, had moved NCLAT directly," it said.
"Despite these grave deviations, the NCLAT still approved the settlement... Exercise of inherent powers cannot be done to subjugate the legal process and the NCLAT should have stayed the composition of CoC instead. Thus, we allow the appeal and set aside the NCLAT judgement."
The top court ordered fresh adjudication in the case while observing that the tribunal did not apply its mind while closing the insolvency proceedings.
Wednesday's verdict came more than four months after the Supreme Court paused the NCLAT verdict, calling it "unconscionable".
During the hearing on August 14, the court also stayed the operation of the NCLAT order while issuing notices to Byju's and others on the appeal of Glas Trust Company LLC against the judgement of the insolvency appellate tribunal.
On August 2, the tribunal granted relief to the embattled ed-tech firm by setting aside the insolvency proceedings against it after approving its settlement with the BCCI.
The order came as relief for Byju's as it had effectively put its founder Byju Raveendran back in control of the company's finances and operations.
