On September 25, 2024, the Supreme Court criticized the National Company Law Appellate Tribunal (NCLAT) for insufficient reasoning in its decision to close insolvency proceedings against edtech company Byju’s. Chief Justice of India (CJI) DY Chandrachud expressed doubts about the tribunal’s one-paragraph reasoning and suggested that the case could be referred back to NCLAT for reconsideration. The court remarked that the decision lacked adequate analysis, which is critical in such significant cases.
Byju’s Partial Settlement Sparks Skepticism
The Supreme Court further questioned Byju’s decision to settle Rs 158 crore with the Board of Control for Cricket in India (BCCI) while leaving a substantial Rs 15,000 crore unpaid to other creditors. CJI Chandrachud raised a pointed question during the hearing: “Why did you pick up only BCCI and settle it? What about others?” This partial settlement strategy did not sit well with the court, which emphasized the need for fair treatment of all creditors.
Glas Trust’s Challenge to NCLAT’s Decision
Glas Trust Company LLC, a US-based financial creditor holding 99.5% of Byju’s debt, opposed the NCLAT’s decision to close the insolvency proceedings. Senior Advocate Shyam Divan, representing Glas Trust, criticized the tribunal’s decision, calling it “arithmetical” and accusing the NCLAT of sidelining Glas Trust without due consideration. Divan argued that Glas Trust’s significant stake in Byju’s debt should have prevented it from being dropped from the decision-making process.
Next Steps for the Case
The Supreme Court had previously stayed the NCLAT decision, reviving Byju’s insolvency process. With the next hearing scheduled for September 26, 2024, the apex court has indicated that the case might be sent back to NCLAT for fresh deliberation, urging the tribunal to apply a more thorough analysis.
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