Appellate Tribunal Upholds NCLT’s Direction on Settlement Placement Before CoC
In a significant development for Byju’s insolvency proceedings, the National Company Law Appellate Tribunal (NCLAT) has dismissed the appeals filed by the Board of Control for Cricket in India (BCCI) and Riju Raveendran that sought to withdraw insolvency proceedings initiated against the edtech giant. The two-member Chennai bench of the NCLAT, comprising Justice Rakesh Kumar Jain and Jatindranath Swain, upheld the earlier directions passed by the National Company Law Tribunal (NCLT), Bengaluru.
The appeals had challenged the NCLT’s February 10, 2025 order, which mandated that any proposed settlement offer be placed before the newly constituted Committee of Creditors (CoC). The CoC includes US-based Glas Trust, the trustee for lenders to whom Byju’s owes approximately $1.2 billion.
Highlights
-
NCLAT affirms that settlement proposal must be evaluated by the CoC.
-
Dismisses argument that Form FA was filed before CoC was constituted.
-
Reiterates mandatory CoC approval under Section 12A of the IBC if filed post-CoC formation.
Regulatory Framework: Timing of Form FA Filing Deemed Critical
At the heart of the dispute was the interpretation of the timing of the Form FA submission—a formal application to withdraw the Corporate Insolvency Resolution Process (CIRP). The appellants argued that since their Form FA was submitted before the CoC was formally constituted, it should be governed by Regulation 30A(1)(a) of the Insolvency and Bankruptcy Code (IBC), which does not require CoC approval.
However, the NCLAT rejected this, stating that the Form FA was submitted on November 14, 2024—after the CoC’s constitution—and thus falls under Regulation 30A(1)(b). Accordingly, Section 12A of the IBC, which mandates 90% CoC approval for withdrawal, remains applicable.
The tribunal clarified:
“If the application under Section 12A is filed under Regulation 30A(1)(a) before the constitution of CoC, then 90% CoC approval is not necessary. But if it is filed after, then the full force of Section 12A applies.”
Highlights
-
Regulation 30A(1)(a) applies before CoC formation; 30A(1)(b) applies post-CoC.
-
November 14, 2024 filing date places Form FA under post-CoC regulations.
-
CoC consent thus becomes a statutory requirement.
Background: CIRP and Supreme Court Interventions
The CIRP against Byju’s parent entity, Think & Learn Pvt Ltd, was admitted on July 16, 2024, based on BCCI’s Rs 158.90 crore operational creditor claim linked to a 2019 Team Sponsorship Agreement. An Interim Resolution Professional (IRP) was subsequently appointed. A settlement deal was later brokered between BCCI and Byju’s, with Riju Raveendran moving to have the insolvency process stayed.
Initially, the NCLAT had set aside the CIRP on August 2, 2024. However, this order was challenged by Glas Trust, a key financial creditor with a claim of $984.3 million, before the Supreme Court. On October 23, 2024, the apex court quashed the NCLAT’s stay order and directed BCCI to pursue the settlement through the NCLT.
In line with this, BCCI submitted Form FA to the IRP on August 16, 2024, but instructed the IRP to delay the filing until the Supreme Court appeal concluded—a delay that ultimately proved detrimental to their procedural argument.
Highlights
-
Supreme Court invalidated earlier NCLAT stay on August 2, 2024.
-
Glas Trust’s appeal emphasized financial creditor rights over operational settlements.
-
Delay in IRP’s filing of Form FA was initiated by BCCI itself, weakening its argument.
CLAT: Delay in Filing Blamed on Appellant’s Own Instructions
Addressing arguments about procedural delay, the NCLAT stated that the IRP’s delay in filing the withdrawal application was not a breach, as the appellants themselves had instructed the IRP to wait until the Supreme Court ruled on the appeal. The judgment explicitly dismissed the contention that the IRP was at fault for not submitting Form FA within the three-day limit stipulated under Regulation 30A(3).
The NCLAT ruled:
“We do not agree with the Appellant… because of the fact that the Appellant himself had directed / asked the RP to file form FA only after the dismissal of the appeal which was otherwise allowed on 23.10.2024.”
The tribunal concluded by dismissing both appeals filed by BCCI and Riju Raveendran, although it did so without awarding costs.
Highlights
-
IRP not at fault for filing delay; acted as instructed by BCCI.
-
Appeals dismissed in full; NCLAT upholds NCLT directive for CoC review.
-
Glas Trust retains strategic leverage over settlement outcomes.
