Supreme Court has this 'huge setback' for Byju's

Edtech giant Byju’s has ‘bad news’. In a significant ruling, the Supreme Court has overturned a previous decision that halted insolvency proceedings against Byju's . The court criticised the National Company Law Appellate Tribunal ( NCLAT ) for exceeding its authority and disrupting the established insolvency process.

According to a report by news agency PTI, the Supreme Court emphasised that the NCLAT should not merely “rubber-stamp” withdrawal applications, but instead adhere to the proper procedures outlined in law.

“The NCLAT cannot be considered a post office that merely puts a stamp on the withdrawal application submitted by the parties to the corporate insolvency resolution process (CIRP),” said the bench of Chief Justice D Y Chandrachud, and Justices J B Pardiwala and Manoj Misra.

It added that the withdrawal plea should have been moved by the IRP (insolvency resolution professional) not by the corporate debtor or other parties.

“As noted above, inherent powers cannot be used to subvert legal provisions, which exhaustively provide for a procedure to permit the NCLAT to circumvent this detailed procedure by invoking its inherent powers,” it said.

The court also rejected Byju's settlement with the Board of Control for Cricket in India ( BCCI ), ordering the cricket board to deposit the settlement amount with a committee of creditors.

What is the case all about
Byju's faced insolvency proceedings after defaulting on a sponsorship agreement worth Rs 158 crore with the BCCI. In August, the NCLAT halted these proceedings and approved a settlement between Byju's and the BCCI.

The NCLT had initiated insolvency proceedings against Byju's in July after the BCCI filed a petition alleging default on the sponsorship payment. However, Byju's challenged the order, arguing that the company was solvent and willing to pay its dues.

NCLAT then decided a timeline over payment of dues. The tribunal, however, warned that any default in the payment schedule would lead to the immediate revival of the insolvency proceedings.