October 23, 2024: In a significant legal development, the Supreme Court of India has set aside a ruling from the National Company Law Appellate Tribunal (NCLAT) that halted insolvency proceedings against the prominent edtech company Byju's. The court's decision, delivered by a three-judge bench led by Chief Justice DY Chandrachud, comes in response to a challenge from US-based creditor Glas Trust Company LLC regarding a settlement that Byju's reached with the Board of Control for Cricket in India (BCCI).

The Supreme Court ruled that the NCLAT had failed to properly assess the case when it approved the settlement of Rs 158.9 crore, which had raised concerns among creditors. The court emphasized that the NCLAT should not act merely as a "post-office" for withdrawal applications related to insolvency cases and criticized the tribunal for not following due process in its approval of the settlement.

"The NCLAT should have stayed the composition of the Committee of Creditors (CoC) instead of prematurely closing the insolvency proceedings," the bench noted, ordering that the settlement amount, currently held in an escrow account, be transferred to the CoC's account.

The verdict comes more than four months after the Supreme Court had previously paused the NCLAT's ruling, labeling it "unconscionable" and signaling the complexities surrounding Byju's financial management. The apex court's decision also opens the door for fresh adjudication in the ongoing insolvency matters concerning the edtech giant.

The NCLAT had initially granted relief to Byju's in August, allowing the company to resume operations under the leadership of its founder, Byju Raveendran, following the approval of the settlement with the BCCI. However, the Supreme Court's latest ruling effectively reinstates the scrutiny of Byju's financial obligations, marking a new chapter in the company's turbulent legal saga.