SC questions NCLAT's handling of Byju's insolvency case, suggests reconsideration

The Supreme Court on September 25 raised significant concerns regarding the National Company Law Appellate Tribunal's (NCLAT) decision to halt insolvency proceedings against edtech giant Byju's. The court suggested that the tribunal's one-paragraph reasoning lacked the necessary depth and analysis, hinting that the case might need to be reconsidered.

A bench led by Chief Justice of India (CJI) DY Chandrachud questioned the logic behind Byju's decision to settle Rs 158 crore owed to the Board of Control for Cricket in India (BCCI) while ignoring a much larger debt of Rs 15,000 crore owed to other creditors, including US-based Glas Trust. "Why did you pick up only BCCI and settle it? What about others?" the CJI asked Byju's legal representatives.

The NCLAT had previously closed insolvency proceedings after Byju's board member Riju Raveendran personally settled the dues with the BCCI. However, Glas Trust, which holds a 99.5% stake in Byju's debt, filed an appeal, arguing that other creditors had been unjustly sidelined.

Representing Glas Trust, Senior Advocate Shyam Divan criticised the NCLAT's decision as lacking proper consideration, particularly noting that the tribunal failed to include Glas Trust in the creditor's committee. "This is unprofessional... We have been dropped entirely," he stated.

Byju's legal team, led by Senior Advocates AM Singhvi and NK Kaul, refuted the allegations, arguing that the settlement with the BCCI did not disadvantage other creditors. They dismissed claims that Byju's founder and key executives were absconding, with Singhvi attributing the dispute to aggressive tactics by large creditors.

The Supreme Court had previously stayed the NCLAT ruling in August, reopening the insolvency proceedings. With a scheduled hearing on September 26, the apex court has strongly hinted that the NCLAT should reconsider its earlier decision.