On September 25, 2024, the Supreme Court criticised the National Company Law Appellate Tribunal (NCLAT) for inadequate reasoning in its decision to close insolvency proceedings against edtech company Byju's. Chief Justice of India (CJI) DY Chandrachud expressed doubts over the tribunal's one-paragraph reasoning and suggested that the case may be referred back to the NCLAT for reconsideration. The court remarked that the decision lacked adequate analysis, which is crucial in such important cases.
Byju's partial settlement raises suspicions
Supreme Court questions Byju's settlement decision Board of Control for Cricket in India (BCCI) has Rs 158 crore While other creditors were not paid Rs 15,000 crore. During the hearing, CJI Chandrachud raised a sharp question: “Why did you single out and settle only BCCI? What about others?” This partial settlement strategy did not go down well with the court, which stressed the need for fair treatment of all creditors.
Glass Trust challenges NCLAT's decision
Glass Trust Company LLC, a US-based financial creditor that holds 99.5% of Byju's debt, opposed NCLAT's decision to close bankruptcy proceedings. Senior advocate Shyam Divan, representing Glass Trust, criticised the tribunal's decision, calling it “arithmetical” and accused NCLAT of sidelining Glass Trust without due consideration. Divan argued that Glass Trust's significant stake in Byju's debt should not have been excluded from the decision-making process.
Next steps in the case
The Supreme Court had earlier stayed the NCLAT order, thereby resuming Byju’s bankruptcy process. The next hearing is scheduled for September 26, 2024, with the apex court indicating that the matter may be referred back to the NCLAT for fresh deliberations, and urging the tribunal to apply a more nuanced analysis.
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