SC questions Byju's: 'You have Rs 15,000 crore due. Why did you pick up only BCCI's Rs 158 cr and settle it?'

The Supreme Court on Wednesday questioned the National Company Law Appellate Tribunal’s (NCLAT) order to close insolvency proceedings against edtech firm Byju's. A Supreme Court bench, led by Chief Justice of India (CJI) DY Chandrachud, noted that the NCLAT’s reasoning and closing of the proceedings lacked sufficient analysis.

The bench observed that the NCLAT did not apply its mind while closing the insolvency proceedings against the ed-tech major. It hinted that the case could be sent back to the NCLAT for reconsideration.

"The reasoning in the NCLAT order is just a paragraph. This does not show any application of mind at all…Let the Tribunal again apply its mind and see it afresh," the CJI observed, news agency PTI reported.

The bench, also comprising justices J B Pardiwala and Manoj Misra, further expressed concerns over Byju’s decision to settle a mere Rs 158 crore owed to the Board of Control for Cricket in India (BCCI) while leaving a staggering Rs 15,000 crore in total dues unpaid to other creditors, including US-based Glas Trust.

The CJI asked: "Today you (Byju’s) have Rs 15,000 crore due. Why did you pick up only BCCI and settle it? What about others?"

"The company is in debt of Rs 15,000 crore. When the quantum of the debt is so large, can one creditor (BCCI) walk away saying one promoter is ready to pay me," the CJI asked.

"Why pick up BCCI and settle with them only from your personal assets," the bench said, adding "The NCLAT accepts this all without applying its mind to it."

On August 2, the NCLAT provided relief to the troubled ed-tech company by overturning the insolvency proceedings against it. This decision came after approving the settlement of its Rs 158.9 crore dues with the Board of Control for Cricket in India (BCCI).

The ruling was a significant win for Byju's, putting founder Byju Raveendran back in control. Unfortunately, this relief was short-lived as the higher court, on August 14, deemed the NCLAT decision as "unconscionable" and halted its enforcement. Notices were issued to Byju's and others in response to the appeal filed by the company's US-based creditor, Glas Trust Company LLC, against the judgment of the insolvency appellate tribunal.