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Supreme Court on Byju's Insolvency Case: The Supreme Court criticized the BCCI agreement of debt-ridden edutech company Byjus and said, 'A fine of Rs 200 crore has been imposed on the company. Why is it paying only BCCI's dues despite having a debt of Rs 15 thousand crore?' Apart from this, the Supreme Court also criticized NCLAT and said, 'Even the Insolvency Appellate Tribunal has no brain, why did it stop the bankruptcy proceedings against this company?'
Permission to pay BCCI dues
Notably, NCLATA had closed the deal allowing the business to enter into a settlement to pay BCCI's dues of Rs 158.9 crore. Solicitor General Tushar Mehta, who was arguing on behalf of BCCI, made strong arguments before Chief Justice Chandrachud to not stop the approval of the settlement with BCCI. But the Supreme Court has kept the case pending, terming the NCLT's decision as invalid.
What was the matter?
On August 2, NCLAT asked Byjus to pay BCCI Rs. 158.9 crore dues and allowed the issue to be settled and bankruptcy proceedings were closed. Also, the rights of the company were handed back to its founder Byju Ravindran. When other creditors Glass Trust Company opposed this, the Supreme Court again stayed the matter on August 14. And directed BCCI to deposit the settlement amount in a separate bank account. The Supreme Court started hearing the case on Wednesday. Which is still going on today.
What did the Chief Justice say?
The total debt is Rs. 15 thousand crores. Even though the amount of outstanding debt is so huge, the bankruptcy proceedings cannot be stopped by any creditor of the company (BCCI) paying a nominal amount to the promoter. Justice JB Pardiwala and Justice Manoj Mishra, who were part of the Chief Justice's bench, indicated to send the case back to the appellate tribunal. The bench said, why do you want to pay the dues to BCCI only from your personal property… and NCLAT also allowed it without using its mind.
It is worth noting that BCCI is a profit making organization. It has an income of Rs. 6500 crores and a profit of about Rs. 1200 crores but for the purpose of income tax it is exempted from paying taxes as it is not for profit.