GLAS Trust Company LLC vs BYJU Raveendran & Ors

Bench: 3 — Dhananjaya Y Chandrachud, J B Pardiwala, Manoj Misra

In Brief

In this landmark judgment, the Supreme Court set aside the NCLAT's approval of a Rs 158 crore settlement between debt-ridden edtech company Byju's (Think and Learn Pvt Ltd) and the BCCI that had terminated insolvency proceedings. The Court held that once insolvency proceedings are admitted, all creditors become stakeholders. The NCLAT erred by invoking inherent powers to approve settlement without following the exhaustive statutory procedure under Section 12A of the IBC and Regulation 30A—which requires applications to go through the Interim Resolution Professional and the NCLT. The Court found procedural violations and inadequate scrutiny of the settlement funds' source, particularly concerning potential violation of a US Delaware Court injunction. The insolvency proceedings were restored, and the settlement amount was directed to be held in escrow pending further NCLT directions.

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Insolvency and Bankruptcy Code Corporate Insolvency Resolution Process Settlement and Withdrawal Inherent Powers Procedural Regularity Financial Creditors Operational Creditors Committee of Creditors Asset Dissipation Fraudulent Transfer

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