The Supreme Court has upheld the National Company Law Appellate Tribunal's decision to reinstate the original Committee of Creditors in the insolvency proceedings of Byju's parent company, Think & Learn Private Ltd, dismissing an appeal by founder Byju Raveendran.
Key Points
- The Supreme Court dismissed Byju Raveendran's appeal, upholding the NCLAT's order to reinstate the original Committee of Creditors (CoC) for Think & Learn Private Ltd (Byju's parent company).
- The reinstated CoC includes Glass Trust Company LLC, holding over 99 per cent voting share, and Aditya Birla Finance Ltd, which was reclassified as a financial creditor.
- The NCLT and NCLAT ruled that the Interim Resolution Professional (IRP) lacked authority to unilaterally alter the CoC or reclassify creditors after its formation.
- An inquiry has been directed against the IRP, Pankaj Srivastava, for his conduct in modifying the CoC without proper approval.
- The Supreme Court stated that the litigation had 'gone far beyond' and declined to interfere with the 'perfect order' from the NCLT and NCLAT.
The Supreme Court on Monday declined to interfere with an order of the National Company Law Appellate Tribunal (NCLAT) that reinstated the original Committee of Creditors (CoC) in the insolvency proceedings of Think & Learn Private Ltd (TLPL), the parent company of Byju's.
The restored/original CoC includes Glass Trust Company LLC as a lender.
A Bench of Justices J B Pardiwala and Vijay Bishnoi dismissed an appeal filed by Byju's founder and suspended director Byju Raveendran.
Court's Stance on the Dispute
"This is now too much. This litigation has gone far beyond... Perfect order. NCLT, NCLAT, we will not interfere... The inquiry initiated against the RP shall proceed further expeditiously in accordance with law," the Court said.
The Bench curtailed detailed arguments from Raveendran's counsel.
When allegations of collusion involving the Resolution Professional (RP) were raised, the court dismissed those claims.
The dispute arises from the insolvency process initiated against TLPL in July 2024 on a plea by the Board of Control for Cricket in India (BCCI).
Following admission, the Interim Resolution Professional (IRP) invited claims from lenders.
Glass Trust Company LLC had filed claims exceeding Rs 11,432 crore, while Aditya Birla Finance Ltd submitted a claim of Rs 47.12 crore as a lender.
On August 21, 2024, the IRP constituted the CoC comprising Glass Trust, Aditya Birla Finance, Incred Financial Services Ltd and ICICI Bank Ltd. Glass Trust held over 99 per cent voting share, while Aditya Birla Finance had around 0.41 per cent.
IRP's Actions and Subsequent Challenges
Days later, the IRP reworked the CoC by reclassifying Aditya Birla Finance as an operational creditor and treating Glass Trust's claim as uncertain, thereby excluding both entities.
The revised CoC dated August 31, 2024 retained only Incred Financial Services as a financial creditor with complete voting control.
This move led to multiple challenges before the National Company Law Tribunal, with creditors questioning the IRP's authority to alter the CoC after its formation.
Under IBC, financial creditors (or simply lenders) lend money for interest (banks, bondholders) and have voting rights on the CoC.
Operational creditors are owed money for goods, services, or wages (vendors, employees, government), usually have no voting rights, and are paid after financial creditors.
Tribunal's Rulings and Supreme Court Affirmation
By an order dated January 29, 2025, the tribunal set aside the revised CoC and reinstated the original composition of August 21, 2024.
It also restored Aditya Birla Finance's status as a financial creditor and invalidated decisions taken by the reconstituted CoC.
The NCLT held that the IRP, Pankaj Srivastava, lacked the authority to reclassify creditors or modify the CoC without approval of the adjudicating authority, and directed the Insolvency and Bankruptcy Board of India to conduct an inquiry into his conduct.
Upholding this, the appellate tribunal ruled that the IRP's role is administrative rather than adjudicatory, and that the composition of a CoC, once formed, cannot be altered unilaterally.
It also noted that the Insolvency and Bankruptcy Code does not recognise the concept of a "provisional" CoC, and observed that the IRP's actions appeared misleading and detrimental to the process.
Challenging these findings, Raveendran contended before the top court that the initial CoC formation was flawed and that the IRP's subsequent steps were part of a legitimate verification exercise.
The Supreme Court, however, rejected the appeal.
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