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On 23 October 2024, India’s Supreme Court set aside an appellate order that had stopped Byju’s insolvency process after a settlement with the Board of Control for Cricket in India (BCCI). The Court held that the settlement could not bypass the statutory procedure for withdrawing an insolvency case after it had been admitted. It directed that the settlement money, with any accrued interest, be deposited with the Committee of Creditors (CoC) and held in escrow pending further directions.
What the Supreme Court decided
The Supreme Court reversed the National Company Law Appellate Tribunal’s (NCLAT) 2 August 2024 order approving a settlement between Think & Learn Private Limited, Byju’s parent company, and BCCI. The NCLAT had also set aside the order admitting BCCI’s insolvency petition. By setting aside that appellate order, the Supreme Court removed the basis on which the admitted process had been stopped.
The ruling in GLAS Trust Company LLC v. Byju Raveendran & Ors. was about the legal process for withdrawing an admitted insolvency case and the role of creditors. It was not a final decision on every dispute involving Byju’s or a finding that the proposed settlement funds were illicit.
How the case reached the Supreme Court
- BCCI filed an insolvency petition. It brought a petition under Section 9 of India’s Insolvency and Bankruptcy Code, 2016 (IBC), claiming approximately ₹158 crore in operational dues under a team sponsorship agreement.
- The NCLT admitted the petition. On 16 July 2024, the National Company Law Tribunal (NCLT) in Bengaluru admitted BCCI’s petition, began a corporate insolvency resolution process (CIRP), imposed a moratorium and appointed an Interim Resolution Professional (IRP).
- The NCLAT approved a settlement. Riju Raveendran offered to settle the dues. On 2 August 2024, the NCLAT approved the settlement and set aside the NCLT’s admission order.
- GLAS Trust challenged that decision. The financial creditor appealed to the Supreme Court. On 14 August 2024, the Court stayed the NCLAT order and directed that the settlement money remain in a separate escrow account while it considered the case.
- The Supreme Court set aside the NCLAT order. On 23 October 2024, it directed that the amount, together with any accrued interest, be deposited with the CoC and held in escrow pending further developments and directions from the NCLT.
Why the settlement could not end the admitted case by itself
The Court focused on the route the parties used. Once an insolvency petition is admitted, withdrawal is governed by Section 12A of the IBC and Regulation 30A of the CIRP Regulations. The Court said no formal withdrawal application had been filed through the IRP and placed before the NCLT for approval. Instead, the NCLAT approved the settlement during the appeal by relying on its inherent power under Rule 11.
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The Supreme Court held that Rule 11 could not be used to bypass the prescribed withdrawal framework. It said, “Inherent powers cannot be used to subvert legal provisions, which exhaustively provide for a procedure.”
How the prescribed route differs from what happened
| Question | Route described by the Court | What happened in this case |
|---|---|---|
| Who starts withdrawal? | A withdrawal application must follow the IBC and CIRP Regulations process, involving the IRP. | No formal withdrawal application had been filed through the IRP. |
| Which authority considers it? | The application is to be placed before the NCLT for approval. | The NCLAT approved the settlement during appellate proceedings. |
| What role does the CoC have? | Section 12A makes withdrawal subject to the specified CoC approval threshold. Regulation 30A sets out the procedure for an application before the CoC has been constituted. | The NCLAT used its inherent power rather than directing the parties to follow that framework. |
The judgment did not treat settlement between the company and the petitioning creditor as enough, by itself, to end a process already admitted under the IBC.
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Why other creditors mattered
An admitted CIRP is a collective process, not just a private dispute between the company and the creditor that filed the petition. The Court said that “the proceedings became collective, and all creditors of the Corporate Debtor became stakeholders.” GLAS Trust had raised objections about the source of the proposed funds and possible effects on creditors; the Court found those concerns had not been adequately addressed by the NCLAT.
That concern explains why the Court directed the funds to be held in escrow with the CoC, rather than treating the settlement as a completed payment to BCCI. The order did not declare the money finally distributed to BCCI, nor did it finally resolve the objections to the funds.
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What the ruling does—and does not—establish
- It establishes: the NCLAT could not use Rule 11 to bypass the statutory withdrawal procedure after the insolvency case had been admitted.
- It establishes: creditor interests matter in an admitted CIRP, beyond the company and the creditor that initiated the case.
- It establishes: the settlement amount and any accrued interest were to be deposited with the CoC and held in escrow pending further directions.
- It does not establish: a final finding that the settlement funds were illicit, a final payment to BCCI, or a resolution of every dispute involving Byju’s.
This account describes the Supreme Court’s 23 October 2024 disposition. It does not establish the later status of the CIRP or any subsequent escrow directions.
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