GLAS TRUST COMPANY LLC versus BYJU RAVEENDRAN & ORS.

GLAS TRUST COMPANY LLC versus BYJU RAVEENDRAN & ORS.

The appellant has locus to challenge the NCLAT order; NCLAT erred in invoking inherent powers under Rule 11 to approve and record the settlement after CIRP admission without following the procedure mandated by Section 12A of the IBC read with Regulation 30A (including submission through the IRP and placement before the NCLT); the NCLAT also failed to adequately address appellant's objections regarding source of funds; the NCLAT judgment is set aside and the CoC process and statutory procedure must be followed, with the realised settlement amount held in escrow and deposited with the CoC.

Parties
Appellant: GLAS Trust Company LLC; First Respondent (former Director): Byju Raveendran; Second Respondent (operational Creditor): Board of Control for Cricket in India; Third Respondent (corporate Debtor): Think and Learn Pvt Ltd
Jurisdiction
India
Judgment Date
23 October 2024
Procedural Posture
Civil Appeal / Appeal From Nclat; Judgment Delivered by Supreme Court on Appeal Against NCLAT Order
Outcome
Appeal allowed; impugned NCLAT judgment dated 2 August 2024 set aside
Legal Topics
Withdrawal of CIRP, Settlement of Claims, Locus Standi, Inherent Powers (rule 11 NCLAT Rules 2016), Section 12 a IBC, Regulation 30 a CIRP Regulations 2016, Collective Proceedings (in Rem), Escrow of Settlement Amount
Insolvency and Bankruptcy Company Law Appellate Practice Civil Procedure Withdrawal of CIRP Settlement of Claims Locus Standi Inherent Powers (rule 11 NCLAT Rules 2016) +4 more

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Parties

GLAS Trust Company LLC

Appellant

Byju Raveendran

First Respondent (former Director)

Board of Control for Cricket in India

Second Respondent (operational Creditor)

Think and Learn Pvt Ltd

Third Respondent (corporate Debtor)

Procedural Posture

Civil Appeal / Appeal From Nclat; Judgment Delivered by Supreme Court on Appeal Against NCLAT Order

Legal Issues

  1. 1 Whether the appellant, not party to the settlement, has locus to appeal before this Court
  2. 2 Whether NCLAT erred in invoking inherent powers under Rule 11 NCLAT Rules 2016 to approve settlement after CIRP admission instead of following Section 12A IBC and Regulation 30A CIRP Regulations 2016
  3. 3 Whether NCLAT adequately addressed objections raised by the appellant about source of funds and other allegations while exercising its discretionary power under Rule 11

Ratio Decidendi

The appellant has locus to challenge the NCLAT order; NCLAT erred in invoking inherent powers under Rule 11 to approve and record the settlement after CIRP admission without following the procedure mandated by Section 12A of the IBC read with Regulation 30A (including submission through the IRP and placement before the NCLT); the NCLAT also failed to adequately address appellant's objections regarding source of funds; the NCLAT judgment is set aside and the CoC process and statutory procedure must be followed, with the realised settlement amount held in escrow and deposited with the CoC.

Court Disposition

Appeal allowed; impugned NCLAT judgment dated 2 August 2024 set aside

Orders

  • Impugned judgment of the NCLAT dated 02.08.2024 set aside
  • Matter remitted to be dealt with in accordance with the legal framework under Section 12A IBC and Regulation 30A CIRP Regulations 2016