# GLAS Trust Company LLC v. BYJU Raveendran & Ors

- **Citation:** 2024 INSC 811
- **Court:** Supreme Court of India
- **Decided:** 2024-10-23
- **Case number:** Civil Appeal No. 9986 of 2024
- **Bench:** Dr Dhananjaya Y Chandrachud
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/glas-trust-company-llc-v-byju-raveendran-ors-37285
- **Pages:** 53

## Headnote

Whether the appellant, who was not a party to the settlement
between the second respondent-BCCI (Operational Creditor) and
the Corporate Debtor, has locus in the proceedings before this
Court; whether the NCLAT erred in invoking its inherent powers
under Rule 11 of the NCLAT Rules 2016 in the presence of a
prescribed procedure for withdrawal of Corporate Insolvency
Resolution Process (CIRP) and settlement of claims between
parties; and without prejudice to the above, whether the NCLAT
adequately addressed the objections raised by the appellant,
while exercising its discretionary power under Rule 11 of the
NCLAT Rules 2016.
Headnotes†
Insolvency and Bankruptcy Code, 2016 - s.62 - Appeal to
Supreme Court - "any person aggrieved" - Appellant claiming
to be a Financial Creditor, if falls within the ambit of the phrase
"any person aggrieved" and has the locus standi to institute
the present appeal:
Held: Yes - Under Section 62 governing statutory appeals to
the Supreme Court from the orders of the NCLAT, "any person"
aggrieved by the order of the NCLAT may file an appeal before
the Supreme Court - Section 61 which provides for appeals to
NCLAT from orders of the NCLT uses similar language - The
use of the phrase "any person aggrieved" indicates that there is
no rigid locus requirement to institute an appeal challenging an
order of the NCLT, before the NCLAT or an order of the NCLAT,
before this Court - Any person who is aggrieved by the order may
* Author
[2024] 10 S.C.R.
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GLAS Trust Company LLC v. BYJU Raveendran & Ors.
institute an appeal, and nothing in the provision restricts the phrase
to only the applicant creditor and the corporate debtor - Once the
CIRP is initiated, the proceedings are no longer restricted to the
individual applicant creditor and the corporate debtor but rather
become collective proceedings (in rem), where all creditors, such
as the appellant, are necessary stakeholders - Appellant is not
an unrelated party to the CIRP, but is an entity whose claims had
been verified by the IRP. [Paras 75, 76]
Insolvency and Bankruptcy Code, 2016 - s.12A - National
Company Law Appellate Tribunal Rules, 2016 - r.11 - CIRP
Regulations 2016 - Regulation 30A - Second respondent-BCCI
(an Operational Creditor had executed the 'Team Sponsor
Agreement' with the Corporate Debtor-third respondent) filed
application under Section 9 of the IBC, w.r.t an operational
debt of approx. Rs.158 crore payable by the third respondent
under the aforesaid Agreement - Petition admitted by NCLT,
CIRP initiated against third respondent - Invoking inherent
powers under Rule 11, NCLAT approved a settlement between
the parties and set aside the order of NCLT - When the
settlement was sought by the first respondent (former director
of the Corporate Debtor) before NCLAT, the Section 9 petition
had already been admitted and the Section 7 petition had also
been disposed of on that basis - However, admittedly, the
CoC had not been constituted - NCLAT stayed the formation
of the CoC:
Held: In such cases, the legal framework mandates that an
(i) application for withdrawal be moved; (ii) the application has to
be moved through the IRP; and (iii) it be placed before the NCLT
for approval - None of these requirements were met - Despite
grave deviations, NCLAT still proceeded with approving the
settlement and setting aside the CIRP by invoking its inherent
power under Rule 11 - Recourse to Rule 11 was not warranted -
'Inherent powers' cannot be used to subvert legal provisions, which
exhaustively provide for a procedure - To permit the NCLAT to
circumvent this detailed procedure by invoking its inherent powers
under Rule 11 would be contrary to the carefully crafted procedure
for withdrawal - NCLAT provided no reasons for deviating from
this procedure or the urgency to approve the settlement without
following the procedure - The correct course of action by the
NCLAT would have been to stay the constitution of the CoC and
1804
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[2024] 10 S.C.R. 1802 : 2024 INSC 811
GLAS Trust Company LLC
v.
BYJU Raveendran & Ors.
(Civil Appeal No. 9986 of 2024 )
23 October 2024
[Dr Dhananjaya Y Chandrachud,* CJI,
J.B. Pardiwala and Manoj Misra, JJ.]
Issue for Consideration
Whether the appellant, who was not a party to the settlement
between the second respondent-BCCI (Operational Creditor) and
the Corporate Debtor, has locus in the proceedings before this
Court; whether the NCLAT erred in invoking its inherent powers
under Rule 11 of the NCLAT Rules 2016 in the presence of a
prescribed procedure for withdrawal of Corporate Insolvency
Resolution Process (CIRP) and settlement of claims between
parties; and without prejudice to the above, whether the NCLAT
adequately addressed the objections raised by the appellant,
while exercising its discretionary power under Rule 11 of the
NCLAT Rules 2016.
Headnotes†
Insolvency and Bankruptcy Code, 2016 - s.62 - Appeal to
Supreme Court - "any person aggrieved" - Appellant claiming
to be a Financial Creditor, if falls within the ambit of the phrase
"any person aggrieved" and has the locus standi to institute
the present appeal:
Held: Yes - Under Section 62 governing statutory appeals to
the Supreme Court from the orders of the NCLAT, "any person"
aggrieved by the order of the NCLAT may file an appeal before
the Supreme Court - Section 61 which provides for appeals to
NCLAT from orders of the NCLT uses similar language - The
use of the phrase "any person aggrieved" indicates that there is
no rigid locus requirement to institute an appeal challenging an
order of the NCLT, before the NCLAT or an order of the NCLAT,
before this Court - Any person who is aggrieved by the order may
* Author
[2024] 10 S.C.R.
1803
GLAS Trust Company LLC v. BYJU Raveendran & Ors.
institute an appeal, and nothing in the provision restricts the phrase
to only the applicant creditor and the corporate debtor - Once the
CIRP is initiated, the proceedings are no longer restricted to the
individual applicant creditor and the corporate debtor but rather
become collective proceedings (in rem), where all creditors, such
as the appellant, are necessary stakeholders - Appellant is not
an unrelated party to the CIRP, but is an entity whose claims had
been verified by the IRP. [Paras 75, 76]
Insolvency and Bankruptcy Code, 2016 - s.12A - National
Company Law Appellate Tribunal Rules, 2016 - r.11 - CIRP
Regulations 2016 - Regulation 30A - Second respondent-BCCI
(an Operational Creditor had executed the 'Team Sponsor
Agreement' with the Corporate Debtor-third respondent) filed
application under Section 9 of the IBC, w.r.t an operational
debt of approx. Rs.158 crore payable by the third respondent
under the aforesaid Agreement - Petition admitted by NCLT,
CIRP initiated against third respondent - Invoking inherent
powers under Rule 11, NCLAT approved a settlement between
the parties and set aside the order of NCLT - When the
settlement was sought by the first respondent (former director
of the Corporate Debtor) before NCLAT, the Section 9 petition
had already been admitted and the Section 7 petition had also
been disposed of on that basis - However, admittedly, the
CoC had not been constituted - NCLAT stayed the formation
of the CoC:
Held: In such cases, the legal framework mandates that an
(i) application for withdrawal be moved; (ii) the application has to
be moved through the IRP; and (iii) it be placed before the NCLT
for approval - None of these requirements were met - Despite
grave deviations, NCLAT still proceeded with approving the
settlement and setting aside the CIRP by invoking its inherent
power under Rule 11 - Recourse to Rule 11 was not warranted -
'Inherent powers' cannot be used to subvert legal provisions, which
exhaustively provide for a procedure - To permit the NCLAT to
circumvent this detailed procedure by invoking its inherent powers
under Rule 11 would be contrary to the carefully crafted procedure
for withdrawal - NCLAT provided no reasons for deviating from
this procedure or the urgency to approve the settlement without
following the procedure - The correct course of action by the
NCLAT would have been to stay the constitution of the CoC and
1804
[2024] 10 S.C.R.
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direct the parties to follow the course of action in Section 12A read
with Regulation 30A of the CIRP Regulations 2016 - Even if the
procedural infirmity is kept aside, once the CIRP was admitted, the
proceedings became collective, and all creditors of the Corporate
Debtor became stakeholders - NCLT must hear all the concerned
parties and consider all relevant factors on the facts of each case
even while invoking Rule 11 to allow withdrawal - Appellant raised
detailed objections before the NCLAT to the source of the funds
for the settlement and a reasonable apprehension that there was
round tripping of funds, in violation of the order passed by the
Delaware Court - These objections were summarily dismissed by
the NCLAT, relying solely on the undertaking filed by one of the
former directors of the Corporate Debtor - NCLAT did not adequately
address the alleged facts such as the fraudulent transfer of USD
533 million to a hedge fund in the United States; the orders of the
US Court restraining the brothers from transferring or dissipating
the amount; the contempt proceedings against one of the former
directors of the Corporate Debtor; the ongoing investigation by ED
against the first respondent and the Corporate Debtor; and other
attempts by the Corporate Debtor to dissipate assets - Impugned
judgment of the NCLAT approving the settlement between the
parties and setting aside the order of the NCLT admitting the
Section 9 petition, set aside - However, appellant's objections to
the settlement agreement on merits not adjudicated as the issues
raised are subject matter of several litigations in different fora,
including the United States Bankruptcy Court, District of Delaware
and investigation by various authorities, including the ED, which
are pending - CoC constituted, parties may invoke their remedies,
to seek a withdrawal or settlement of claims - CoC to maintain
amount of Rs.158 crores, along with accrued interest, if any, in
an escrow account until further developments and to abide by the
further directions of NCLT. [Paras 79-81, 86-88]
Insolvency and Bankruptcy Code, 2016 - ss.7, 9, 10,
12A - Insolvency and Bankruptcy (Second Amendment)
Act, 2018 - National Company Law Tribunal Rules, 2016 -
r.8 - CIRP Regulations 2016 - Regulation 30A - IBBI (CIRP)
(Third Amendment) Regulations, 2018 - 2019 Amendment to
Regulation 30A of the CIRP Regulations w.e.f. 25-07-2019 -
Procedure for the withdrawal of CIRP or settlement of claims -
Four stages:
[2024] 10 S.C.R.
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GLAS Trust Company LLC v. BYJU Raveendran & Ors.
Held: (i) Before the application under Sections 7, 9 or 10 is admitted
by the NCLT; (ii) After an application under Sections 7, 9, or 10
is admitted, but before the CoC has been constituted; (iii) After
an application under Section 7, 9 or 10 is admitted, the CoC has
been constituted and the invitation for expression of interest has
not been issued; (iv) After an application under Section 7, 9 or
10 is admitted, the CoC has been formed and the invitation for
expression of interest has been issued - Explained - In view of
the detailed procedure to deal with withdrawal or settlement at both
stages post admission- before and after the CoC is constituted,
the requirement to invoke discretionary power such as Rule 11
of the NCLT Rules, or Rule 11 of the NCLAT Rules or even the
power of this Court under Article 142 of the Constitution of India
no longer arises. [Para 63, 64]
National Company Law Appellate Tribunal Rules, 2016 -
r.11 - Scope of powers under - Stated - National Company
Law Tribunal Rules, 2016 - r.8 - Code of Civil Procedure,
1908 - s.151.
CIRP Regulations 2016 - Regulation 30A - IBBI (CIRP)
(Third Amendment) Regulations, 2018 - 2019 Amendment
to Regulation 30A w.e.f. 25-07-2019 - Requirement under
Regulation 30A (1) to move an application before the NCLT
through the IRP, in cases where the CoC is not constituted,
whether a mere technicality which can be dispensed with:
Held: No - The fact that the application is to be submitted by the
IRP rather than the parties themselves is not a distinction without
difference - Once the application is admitted and CIRP is initiated,
it is the IRP who takes charge of the affairs of the corporate
debtor - The proceedings become collective proceedings and the
interests of the former management of the corporate debtor, become
disjunct from the interest of the corporate debtor - Therefore, the
parties (such as the former management of the corporate debtor)
must submit their application for withdrawal through the IRP who
is now the person in control of the insolvency proceedings -
NCLT conducts an adjudicatory exercise when the application for
withdrawal is placed before it and the procedure is not a mere
technicality. [Para 66]
Insolvency and Bankruptcy Code, 2016 - Chapter II - ss.7, 9,
10 - Insolvency and Bankruptcy (Second Amendment) Act,
1806
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2018 - s.12A - CIRP Regulations 2016 - Regulation 30A -
Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 - r.8 - Withdrawal and settlement of
claims - Evolution of law - Discussed.
Case Law Cited
Kamal K. Singh v. Dinesh Gupta (2022) 8 SCC 33; Ashok G.
Rajani v. Beacon Trusteeship Ltd [2022] 18 SCR 133 : 2022 SCC
OnLine SC 1275 - held per incuriam.
Abhishek Singh v. Huhtamaki PPL Limited [2023] 4 SCR 596 :
2023 SCC Online SC 349 - distinguished.
Swiss Ribbons (P) Ltd. v. Union of India [2019] 3 SCR 535 : (2019)
4 SCC 17 - relied on.
Arun Kumar Jagatramka v Jindal Steel & Power Ltd [2021] 3 SCR
114 : (2021) 7 SCC 474; Indus Biotech (P) Ltd. v. Kotak India
Venture (Offshore) Fund [2021] 7 SCR 112 : (2021) 6 SCC 436;
Lokhandwala Kataria Construction (P) Ltd. v. Nisus Finance and
Investment Managers LLP (2018) 15 SCC 589; Mothers Pride
Dairy India Private Limited v. Portrait Advertising and Marketing
Private Limited 2017 SCC OnLine SC 1789; Uttara Foods & Feeds
(P) Ltd. v. Mona Pharmachem (2018) 15 SCC 587; Brilliant Alloy
Private Limited v. S Rajagopal and Ors (2022) 2 SCC 544; Ram
Chand and Sons Sugar Mills (P) Ltd. v. Kanhayalal Bhargava
[1966] 3 SCR 856 : 1966 SCC OnLine SC 215; Ebix Singapore
(P) Ltd. v. Educomp Solutions Ltd. (CoC) [2021] 14 SCR 321 :
(2022) 2 SCC 401 - referred to.
List of Acts
Insolvency and Bankruptcy Code, 2016; National Company Law
Tribunal Rules, 2016; National Company Law Appellate Tribunal
Rules, 2016; CIRP Regulations 2016; Insolvency and Bankruptcy
(Second Amendment) Act, 2018; IBBI (CIRP) (Third Amendment)
Regulations, 2018.
List of Keywords
Byju; Online educational services; Ed-tech services business;
Corporate Debtor, Financial Creditor; Operational Creditor; 'Team
Sponsor Agreement'; Board of Control for Cricket in India (BCCI);
Sponsorship of the Indian National Cricket Team; Administrative
[2024] 10 S.C.R.
1807
GLAS Trust Company LLC v. BYJU Raveendran & Ors.
Agent' of the lenders; Corporate Insolvency Resolution Process
(CIRP); Interim Resolution Professional (IRP); Operational debt;
Locus/Locus standi; Inherent powers under Rule 11 of the NCLAT
Rules 2016; Discretionary powers; Not unrelated party to CIRP,
Claims verified by IRP; Prescribed procedure for withdrawal of CIRP;
Withdrawal or settlement at both stages post admission- before
and after the CoC is constituted; Settlement of claims between
parties; Settlement agreement; Appeal to Supreme Court; "any
person aggrieved"; Applicant creditor; Collective proceedings; in
rem; All creditors stakeholders; Application for withdrawal; NCLAT
approved the settlement; Section 9 petition; Section 7 petition;
CIRP set aside; Constitution of the CoC; CIRP admitted, Objections
before the NCLAT; Source of the funds for the settlement; Round
tripping of funds, Fraudulent transfer; Hedge fund; United States
Bankruptcy Court, District of Delaware; Proceedings before the
Delaware Court; Interim stay; Interim order staying the constitution
of the CoC; Debt enforcement; Preferential payment; Oppression;
Mismanagement; Ongoing investigation; Enforcement Directorate
(ED); Objections summarily dismissed.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9986 of 2024
From the Judgment and Order dated 02.08.2024 of the National
Company Law appellate Tribunal, Chennai in CAAT (CH) (I) No.
262 of 2024
With
Special Leave Petition (C) No. 21023 of 2024
Appearances for Parties
Kapil Sibal, Shyam Divan, Sr. Adv., Prateek Kumar, Ms. Raveena
Rai, Ms. Smriti Nair, Nishant Sharma, Ms. Anshula Laroiya,
Ms. Manisha Singh, M/S. Khaitan & Co., Advs. for the Appellant.
Tushar Mehta, SG/Sr. Adv., Dr. Abhishek Manu Singhvi, Neeraj
Kishan Kaul, Ramji Srinivasan, Gopal Sankaranarayanan,
S. Niranjan Reddy, Sr. Advs., Zulfiquar Memon, Rishabh Gupta,
Waseem Pangarkar, Mrinal Bharti, Kunal Vajani, Avishkar Singhvi,
Amit Bhandari, Vivek Jain, Mrs. Nadiya Sarguroh, Swapnil
Srivastava, Mrs. Kanika Goenka, Mrs. Swagata Ghosh, Jayesh
Srivastava, Ms. Kashika Gera, Yashowardhan Dixit, Ms. Gargi Patil,
1808
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Ms. Aditi Tiwari, Allan David, Ms. Yashita Bharadwaj, Deepak Joshi,
M/s. Mzm Legal Delhi Llp, R. Sudhinder, Ms. Adity Chaudhury, Ms.
Bhavya Mohan, Rahul Dev, Ms. Aastha Trivedi, Ms. Ann Pereira,
Kanu Agrawal, Ms. Mili Baxi, Arjun Amin, A. Karthik, I/b Argus
Partners, Poornachandra B Pattar, Sahil Bhalaik, Tushar Giri, Ms.
Bhavna Arul, Siddharth Anil Khanna, Ritik Arora, Shivam Mishra,
Ms. Namrata Saraogi, Arjun Bhatia, Ms. Gulshan Jahan, Ms. Shivani
Vij, Ms. Trisha Chandran, Syed Jafar Alam, Shankh Sengupta, Ms.
Tine Abraham, Yogesh Singh, Ms.Manasa Sundarraman, Rangam
Sharma, Sujoy Sur, Ms. Prarthna Bathija, Rohan Kohli, Shreyash
Sharma, Shivam Singhania, Ms. Neha Dhavalikar, Shubh Arora,
Sahil Raveen, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
Dr Dhananjaya Y Chandrachud, CJI
Table of Contents*
A.
Background ...............................................................................
5
i.
Parties before this Court ..................................................
5
ii.
Proceedings before the US Courts .................................
6
iii.
Insolvency proceedings against the first respondent ....
8
iv.
Settlement between the parties and proceedings before
the NCLAT ............................................................................
9
v.
Impugned Judgement ....................................................... 14
vi.
Proceedings before this Court and the Delaware Court ... 16
B.
Issues ........................................................................................ 18
C.
Submissions ............................................................................ 18
D.
Legal Background .................................................................... 23
i.
Legal context and fundamental principles .................... 23
a.
General principles underlying the IBC ........................ 23
b.
Nature of the proceedings after admission of the
application ....................................................................
27
* Ed. Note: Pagination as per the original Judgment.
[2024] 10 S.C.R.
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GLAS Trust Company LLC v. BYJU Raveendran & Ors.
ii.
Legal framework for withdrawal and settlement of
claims ..................................................................................
31
a.
Evolution of the legal framework ...............................
31
b.
Insights from the evolution of the legal framework ...... 44
iii.
Scope of 'Inherent Powers' under Rule 11 ........................ 49
E.
Application to the instant case ................................................ 51
i.
Locus of the appellant before this Court ......................... 52
ii.
Approach of the NCLAT in the Impugned Judgement ..... 54
iii.
Decisions of this Court cited in the Impugned
Judgement .........................................................................
57
F.
Conclusion ................................................................................ 60
1.
This appeal arises from a judgment of the National Company Law
Appellate Tribunal, Chennai1 dated 2 August 2024.2 The National
Company Law Tribunal, Bengaluru,3 admitted the application instituted
by the second respondent under Section 9 of the Insolvency and
Bankruptcy Code4 and initiated the corporate insolvency resolution
process5 against the third respondent. In the exercise of its powers
under Rule 11 of the National Company Law Appellate Tribunal
Rules, 2016,6 the NCLAT approved a settlement in relation to the
dues payable to the third respondent by the second respondent and
set aside the order of the NCLT.
2.
The appellant, who claims to be a Financial Creditor, had moved
an application before the NCLAT objecting to the approval of the
settlement and questioned the source of the funds for the settlement.
The objections of the appellant were rejected by the NCLAT in
the Impugned Judgement. The present appeal raises substantial
questions about the legal framework governing the withdrawal of a
CIRP; the settlement of claims after the admission of an application
1
"NCLAT"
2
"Impugned Judgement"
3
"NCLT"
4
"IBC"
5
"CIRP"
6
"NCLAT Rules"
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instituted by a debtor; and the scope of the inherent powers vested
in the NCLAT under Rule 11 of the NCLAT Rules.
A.
Background
i.
Parties before this Court
3.
The third respondent, Think and Learn Pvt Ltd, a company engaged in
the business of providing online educational services, is the Corporate
Debtor.7 The first respondent, Byju Raveendran and his brother, Riju
Raveendran are former directors of the Corporate Debtor.
4.
The second respondent, the Board of Control for Cricket in India
(BCCI) is an Operational Creditor who executed a 'Team Sponsor
Agreement' dated 25 July 2019 with the Corporate Debtor, which
relates to the sponsorship of the Indian National Cricket Team.
5.
The Corporate Debtor has a 100% owned subsidiary, Byju's Alpha
Inc. - a company incorporated in the United States of America. Byju's
Alpha Inc. availed a loan facility aggregating to approximately USD
1,200,000,000 under a credit and guarantee agreement dated 24
November 2021.8 The Appellant, GLAS Trust Company LLC, is the
'Administrative Agent' of all the lenders under this agreement and
the 'Collateral Agent' for the secured parties. Under the terms of
the Credit Agreement, the Corporate Debtor acted as a guarantor
and issued a guarantee deed dated 24 November 2021 in favour
of the appellant.
ii.
Proceedings before the Delaware Court
6.
On account of an alleged default under the Credit Agreement, the
appellant enforced the security in respect of the loan and took a series
of steps that resulted in the removal of all pre-existing directors of
Byju's Alpha Inc., including Riju Raveendran and the appointment
of a new sole director. The appellant contends that despite these
measures, defaults persisted in payment of the principal outstanding
amount and the interest accrued under the Credit Agreement.
7
"Corporate Debtor"
8
"Credit Agreement"
[2024] 10 S.C.R.
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GLAS Trust Company LLC v. BYJU Raveendran & Ors.
7.
Accordingly, the appellant, acting as the Administrative Agent of the
lenders, issued a notice of demand dated 6 December 2023 to the
Corporate Debtor, invoking the guarantee deed and demanding that
the Corporate Debtor pay the requisite amount. However, it is the
case of the appellant, that the Corporate Debtor too defaulted in its
capacity as the guarantor under the Credit Agreement.
8.
It is contended that a series of wire transfers were carried out in
April and July 2022 by Byju's Alpha Inc., allegedly at the behest of
the Corporate Debtor, fraudulently transferring approximately USD
533 million to a hedge fund based in the United States. A motion for
preliminary injunctive relief to protect this amount was moved before
the United States Bankruptcy Court, District of Delaware.9
9.
On 18 March 2024, the Delaware Court issued a preliminary
injunction inter alia restraining Riju Raveendran, another wholly
owned subsidiary of the Corporate Debtor, the concerned hedge fund,
and other similarly placed persons from taking any steps to spend,
transfer, exchange, convert, dissipate, liquidate, or otherwise move
or modify any rights related to the USD 533 million transferred from
Byju's Alpha Inc to the hedge fund. The operative directions of the
order passed by the Delaware Court read as follows:
"Defendants Riju Ravindran, Inspilearn LLC ("Inspilearn"),
Camshaft Capital Fund LP, Camshaft Capital Advisors,
LLC, Camshaft Capital Management, LLC; and any
of such parties' officers, agents, servants, employees,
and attorneys, and any other persons who are in active
concert or participation with the foregoing, including,
Byju Raveendran and Divya Gokulnath (collectively, the
"Enjoined Parties") are immediately enjoined, upon
entry of this Order, from taking any steps to spend,
transfer, exchange, convert, dissipate, liquidate, or
otherwise move or modify any rights related to: (i)
the funds that in the approximate amount of $533,000,
I00.00 transferred from the Debtor to Camshaft Capital
Fund, LP in April and July 2022, (ii) the funds (or other
assets) transferred to and/or redeemed by a non-U.S.
9
"Delaware Court"
1812
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trust on behalf of lnspilearn on or about February 1,
2024, and (iii) the funds (or other assets) that were
purportedly subsequently transferred to a "non-US
based 100% subsidiary of BYJU'S," along with any
associated accrued interest or proceeds, in each case
((i), (ii), and (iii) collectively, the "Alpha Funds")."
(emphasis supplied)
10. On 28 May 2024, the Delaware Court passed an order finding that
Riju Raveendran was in contempt of the above preliminary injunction
order dated 18 March 2024. The Delaware Court directed that "full
discovery shall immediately commence concerning Mr Ravindran's
financial situation, including, but not limited to, the location and
amounts of his assets wherever and however held, including
(i) how much money he has, including funds in his personal bank
account(s), and (ii) what other assets he holds" and posted the case
to a later date to determine the financial penalties to be imposed
on Riju Raveendran. Eventually, on 31 July 2024, the Delaware
Court imposed financial penalties of USD 10,000 per day on Riju
Raveendran, which is payable until the contempt is "purged by him".
iii.
Insolvency proceedings against the first respondent
11. On 23 September 2023, the second respondent moved a petition
under Section 9 of the IBC, in respect of an operational debt of
approximately Rs 158 crore payable by the Corporate Debtor under
the Team Sponsor Agreement.10 The NCLT admitted the petition on
16 July 2024 and initiated CIRP.11 A moratorium under Section 14
of IBC was imposed and an Interim Resolution Professional,12 was
appointed.
12. Separately, the appellant also filed a petition under Section 7 of the
IBC against the Corporate Debtor on 22 January 2024.13 On 16 July
2024, the NCLT disposed of the Section 7 petition, in view of the
order passed on the same day admitting the Section 9 petition filed
10
Company Petition (IB) No. 149/BB/2023 ("Section 9 Petition")
11
"Section 9 Order"
12
"IRP"
13
Company Petition (IB) No. 55/BB/2024 ("Section 7 Petition")
[2024] 10 S.C.R.
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GLAS Trust Company LLC v. BYJU Raveendran & Ors.
by the second respondent.14 The appellant was granted liberty to
file their claims before the IRP appointed pursuant to the Section 9
Order. Significantly, the NCLT also granted liberty to the appellant to
seek a revival of its Section 7 petition, "depending on the subsequent
developments at the appellate level, if any." The NCLT directed as
follows:
"3. In view of the order passed today i.e., 16.07.2024 by
this Adjudicating Authority in another Company petition
bearing C.P (IB) No.149/BB/2023 which is filed by The
Board and Control for Cricket in India under Section 9
of the I & B Code 2016 r/w Rule 6 of the Insolvency &
Bankruptcy (Application to Adjudicating Authority) Rules
2016, against the same Corporate Debtor herein i.e.,
Think & Learn Private Limited and since the Corporate
Insolvency Resolution Process (CIRP) has been initiated
in respect of the Corporate Debtor therein by appointing
the IRP, the instant C.P is disposed of by granting
liberty to the Petitioner herein to put-forth their claim
before the IRP appointed in C.P (IB) No. 149/BB/2023
in accordance with the provisions of the IBC 2016 and
the Regulation made thereunder.
4. However, at the request of the Learned Senior Counsel
for the Petitioner, we hereby grant liberty to the Petitioner
to seek restoration/revival of the said petition bearing
C.P (IB) No.55/BB/2024 depending on the subsequent
developments in the matter at the Appellate level; if
any."
(emphasis supplied)
13. The IRP made a public pronouncement on 17 July 2024 and the
appellant filed its claim in the prescribed format on 25 July 2024.
iv.
Settlement between the parties and proceedings before the
NCLAT
14. Both the appellant and the first respondent moved the NCLAT
in appeal against the respective orders of the NCLT. The first
14
"Section 7 Order"
1814
[2024] 10 S.C.R.
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respondent challenged the admission of the Section 9 petition by
the NCLT.15 On the other hand, the appellant challenged the order
disposing of the Section 7 petition.16 The appellant also moved an
application before the NCLAT for impleadment in the appeal filed
by the first respondent, seeking to be heard before any relief was
granted.17
15. The appeal instituted by the first respondent was placed before the
NCLAT for the first time on 30 July 2024 and adjourned on a request
made by the senior counsel for the second respondent. On the next
date of the hearing, i.e. 31 July 2024, it was recorded, based on the
submissions by the counsel for the first and second respondents, that
a sum of INR 50 crore had been transferred to the second respondent
as part of a settlement. The counsel for the first respondent further
submitted, before the NCLAT, that another sum of Rs 25 crore would
be paid by 2 August 2024, and the balance amount of Rs 83 crore
would be paid thereafter, on or before 9 September 2024.18
16. The payment was purportedly made pursuant to a settlement offer
extended by Riju Raveendran, in his personal capacity, to the second
respondent by an email dated July 30, 2024. He proposed to clear
the operational debt of Rs 158 crore in three tranches on 30 July
2024,19 2 August 2024 and 9 August 2024, respectively. The second
respondent agreed to take steps for withdrawal of the petition upon
receipt of full payment of the operational debt. Relevant excerpts of
the email are as follows:
"1.⁠ ⁠We undertake to pay INR. 50 crores upfront today i.e.
30 June 2024, by way of RTGS from the account of its
promoter, Mr. Riju Ravindran. We shall forward the UTR
details of the same shortly.
2.⁠ ⁠We further undertake to pay INR. 25 crores on 02 August
2024 through RTGS.
3.⁠ ⁠The total dues are approximately INR. 158 crores.
15
CA (AT) (CH) (Ins) No. 262 of 2024.
16
CA (AT) (CH) (Ins) No. 274 of 2024.
17
I.A. No. 727 of 2024.
18
Impugned Judgement, paras 9-11.
19
The settlement offer inadvertently stated "30 June 2024", which was clarified to be a typographical error
for 30 July 2024.
[2024] 10 S.C.R.
1815
GLAS Trust Company LLC v. BYJU Raveendran & Ors.
4.⁠ ⁠The balance amount of INR. 83 crores to complete the
figures of INR. 158 crores shall be paid on or before 09
August 2024.
5.⁠ ⁠We shall also hand over post-dated cheques to the tune
of INR. 83 crores drawn in favour of "Board of Control for
Cricket in India" payable on 09 August 2024.
6.⁠ ⁠In view of the aforesaid proposed settlement, the parties
shall jointly request the Hon'ble NCLAT on 31 July 2024
to suspend the order of admission of Think & Learn Pvt.
Ltd passed by the NCLT until 09 August 2024.
7.⁠ ⁠Further, once the payment of complete INR. 158 crores
to BCCI is made, BCCI shall make statement to withdraw
the Company Petition and take necessary steps towards
the same."
17. It is common ground that on 31 July 2024, when the parties sought
to place the settlement on record, although CIRP had been initiated
and an IRP had been appointed, the CoC had not been constituted.
Before the NCLAT, the second respondent stated that in view of
the money being generated in India and coming through a banking
channel, it shall be accepted and was in favour of the withdrawal of
CIRP. The appellant, however, raised several objections, including
inter alia that the alleged payment made by Riju Raveendran
would constitute a preferential payment to an operational creditor.
Further, the appellant contended that the source of the funds is
not clear, and the amount being offered by Riju Raveendran to
settle the debt of the second respondent would constitute an act
of round-tripping. The appellant apprehended that the funds of
Byjus's Alpha Inc. were being offered to settle dues in India, in
contravention of the preliminary injunction issued by the Delaware
Court on 18 March 2024.
18. On 1 August 2024, an affidavit was filed along with an undertaking by
Riju Raveendran. The affidavit of Riju Raveendran could purportedly
not be filed in time as he was not in India and thus, the undertaking
was filed through an authorized representative. In the undertaking, Riju
Raveendran affirmed that (i) the money being offered for settlement
between the Corporate Debtor and the second respondent was being
paid from his personal funds, including the sale of shares held by
1816
[2024] 10 S.C.R.
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him in the Corporate Debtor; (ii) the money was generated in India
and is not linked to the money involved in the proceedings pending in
the Delaware Court; (iii) the first respondent (Byju Raveendran) has
not transferred any money or extended any security towards raising
the sums for payment of the settlement amount. The undertaking
reads as follows:
"...
3. I state and confirm that no part of the Settlement
Amount is being paid in violation of any order passed
by any court or tribunal, including orders passed by the
Delaware Bankruptcy Court.
4. I have not received any portion of the USD 533 million
that are the subject matter of the proceedings before the
Delaware Bankruptcy Court and, accordingly, no part of
those funds have been, or will be, used to pay the BCCI.
In fact, the funds forming part of the Settlement Amount
are being paid out of my personal funds, as explained in
paragraph 8 below.
5. To clarify, under the terms of the Credit Agreement dated
24 November 2021 (the "Credit Agreement"), a group of
lenders represented by GLAS Trust LLC (GLAS) disbursed
an amount of USD 1.2 billion to Byju's Alpha, Inc. (a
step-down subsidiary of Think & Learn Pvt. Ltd. (TLPL)).
Under the Credit Agreement, monies disbursed thereunder
could not be brought into India. Therefore, none of the
monies disbursed under the Credit Agreement (of which
the USD 533 million forms a part) has ever been brought
into India. Indeed, the allegation that I have received any
sum of monies disbursed under the Credit Agreement has
never been made by GI.AS in any proceeding whatsoever,
including the proceeding under Section 7 of the IBC filed
by it before the NCLT.
6. I specifically confirm that there has been no violation of
the Order dated 18 March 2024 passed by the Delaware
Bankruptcy Court, and I have not taken any steps in
contravention of the same. I also confirm that I have not
directly, indirectly or in any form or manner received any
[2024] 10 S.C.R.
1817
GLAS Trust Company LLC v. BYJU Raveendran & Ors.
sum of money from disbursements made under the Credit
Agreement. In fact, the foreign remittance received by
me since execution of the Credit Agreement is from two
secondary sales of my shareholding in TLPL in January
and November 2022 totalling approximately USD 109
million, as demonstrated by the SH-4 annexed hereto ...
7. I further confirm that Byju Raveendran has not transferred
any money or extended any security of his assets towards
raising the sums for payment of the Settlement Amount
to the BCCI.
8. I further state and confirm that the Settlement Amount
comprises funds raised by me personally:
a. from the sale and the gains/income on such sale of
shares held personally by me in TLPL between May
2015 and January 2022. By way of these sales, I had
accumulated approximately INR 3600 crores. The forms
SH-4 evidencing these sales are hereto annexed and
marked Exhibit A. Out of the aforementioned amount,
approximately INR 1050 crores was paid as income
tax. The IT returns filed by me over the relevant
period and which would reflect these amounts are
hereto annexed and marked Exhibit B. The remaining
amounts of approximately INR 2600 crores was infused
back into TLPL due to its operational needs and to
ensure that TLPL continues to carry on business
as a going concern, including paying salaries to its
27000 employees and sustaining the platform which
has over 150 million students worldwide (which is a
matter of record). The amounts that remained with me
were used to pay the first tranche of the Settlement
Amount (in the amount of INR 50 crores) to BCCI on
30 June 2024; and
b. from liquidation of personal assets in India, which will
be used to pay the balance amount of the Settlement
Amount."
19. In view of these developments, on 1 August 2024, the NCLAT passed
an interim order staying the constitution of the CoC.
1818
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v.
Impugned Judgement
20. Before the NCLAT, the appellant contended that (i) Section 12A of
the IBC and Regulation 30A of the CIRP Regulations 2016 deal
with the settlement of claims after CIRP is initiated, both before and
after the CoC is constituted. The first respondent should have, thus,
approached the NCLT as mandated by Rule 30A instead of invoking
the inherent powers of the NCLAT under Rule 11; (ii) NCLAT should
not exercise its discretionary power under Rule 11 of the NCLAT
Rules because the directors of the Corporate Debtor and its allied
entities are fugitives, living abroad; have defaulted on government
dues; Enforcement Directorate proceedings are pending, look out
notices have been issued; and there has been a significant drop in
the valuation of the Corporate Debtor; and (iii) the interests of all
creditors must be considered while accepting a settlement, including
the appellant who has a substantial interest with regard to the
Corporate Debtor.
21. On 2 August 2024, the NCLAT delivered the Impugned Judgement.
After recording the factual background and submissions of the parties
before it, the NCLAT outlined its reasoning and analysis in paras 44
to 50 of the Impugned Judgement. The NCLAT held the affidavit and
undertaking filed by Riju Raveendran made it clear that the money
was generated by Riju Raveendran from his own sources; income
tax had been paid on the sales of shares from which the amount
was generated; and there was no violation of the Order dated 18
March 2024 passed by the Delaware Court either directly or indirectly.
Therefore, NCLAT held that in the absence of any evidence to the
contrary, there was no reason to believe that the money that was
being offered by Riju Raveendran was linked to the money disbursed
to Byju's Alpha Inc. under the Credit Agreement or from the coffers
of the Corporate Debtor.
22. Further, it was held that the law regarding the settlement of disputes
between the parties is in the process of evolution, and this Court
has approved the invocation of Rule 11 of the NCLAT Rules to
allow such settlements. Reliance was placed on the decisions of
this Court in Abhishek Singh vs Huhtamaki PPL Limited20 and
20
[2023] 4 SCR 596 : 2023 SCC Online SC 349
[2024] 10 S.C.R.
1819
GLAS Trust Company LLC v. BYJU Raveendran & Ors.
Kamal K. Singh v. Dinesh Gupta,21 in addition to decisions of the
NCLAT on the point. Further, it was held that the NCLT had granted
the appellant the liberty to revive its Section 7 petition, in case of any
adverse developments in the appellate proceedings in the Section
9 petition and thus, the right of the applicant to enforce its claims
was well protected.
23. Accordingly, the settlement between the parties was approved and
the order of the NCLT admitting the Section 9 petition was set aside.
The NCLAT directed that in case of a breach of the undertaking and
affidavit, the Section 9 Order would automatically be revived. The
operative directions are extracted below:
"51. Thus, in view of the aforesaid facts and circumstances,
in view of the undertaking given and affidavit filed, the
settlement between the parties is hereby approved and
as a result thereof, the present appeal succeeds and the
impugned order is set aside, however, with a caveat that
in case there is a breach in the undertaking given and the
affidavit filed, the order dated 16.07.2024 passed against
the present Appellant, shall automatically revive."
vi.
Proceedings before this Court and the Delaware Court
24. On 1 August 2024, Byju's Alpha Inc. and the appellant instituted a
motion before the Delaware Court seeking a temporary restraining
order against Riju Raveendran, inter alia restraining him from using his
personal assets to satisfy the dues of the second respondent. Before
the Delaware Court, the appellant contended that fraudulent payments
were being made by Riju Raveendran to pay the operational debt
due to the second respondent and dismiss insolvency proceedings
against the Corporate Debtor, which is "his older brother's crumbling
business enterprise in India". On 8 August 2024, the Delaware Court
passed an order rejecting the motion.
25. The appellant instituted the present Civil Appeal before this Court,
challenging the Impugned Judgement of the NCLAT. By an Order
dated 14 August 2024, this Court issued notice on the appeal and
directed that there would be a stay on the operation of the Impugned
21
(2022) 8 SCC 330.
1820
[2024] 10 S.C.R.
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Judgment. The second respondent was directed to maintain the
amount of Rs 158 crores, which has been realized in pursuance of
the settlement, in a separate escrow account, to abide by further
directions of this Court.
26. In view of the above directions of this Court granting an interim stay
on the Impugned Judgement, the CIRP proceedings resumed. On 19
August 2024, the IRP addressed a letter to the appellant noting that
the CIRP had revived, verified the claim submitted by the appellant
and admitted the appellant as a financial creditor. Accordingly, the
IRP constituted the CoC, which consisted of four financial creditors,
including the appellant.
27. Subsequently, by a letter dated 1 September 2024, the IRP sought
to reconstitute the CoC and reclassify the claim of the appellant as
'contingent'.