Holding

The Supreme Court held that the appellant has locus standi, the NCLAT improperly exercised its inherent power under Rule 11 in violation of the detailed withdrawal procedure under Section 12A and Regulation 30A, and therefore set aside the NCLAT judgment.

Summary

The appellant, GLAS Trust Company LLC, a financial creditor of Think & Learn Pvt Ltd (the corporate debtor), challenged the National Company Law Appellate Tribunal's (NCLAT) approval of a settlement between the corporate debtor and the Board of Control for Cricket in India (BCCI) and the setting aside of the NCLT order admitting a Section 9 petition. The Supreme Court examined whether the appellant had locus standi, whether the NCLAT could invoke its inherent power under Rule 11 of the NCLAT Rules despite the detailed withdrawal procedure under Section 12A of the IBC and Regulation 30A of the CIRP Regulations, and whether the NCLAT had properly considered the appellant’s objections about the source of settlement funds. The Court held that the appellant is an aggrieved party with locus standi, that the NCLAT erred in bypassing the prescribed statutory procedure, and that its dismissal of the appellant’s objections was unsatisfactory. Consequently, the Supreme Court set aside the NCLAT judgment and allowed the appeal. The matter was remitted for the parties to pursue withdrawal or settlement in accordance with the statutory framework, with the disputed amount to be kept in escrow.

Issues considered

Whether the appellant, not a party to the settlement, has locus standi to challenge the NCLAT order.
Whether the NCLAT erred in invoking its inherent powers under Rule 11 of the NCLAT Rules despite the existence of a prescribed procedure for withdrawal of CIRP under Section 12A of the IBC and Regulation 30A of the CIRP Regulations.
Whether the NCLAT adequately addressed the appellant’s objections concerning the source of funds and alleged round‑tripping while exercising its discretionary power under Rule 11.

Legislation cited

CIRP Regulations, 2016s. 30A
Code of Civil Procedure, 1908s. 151
IBBI (CIRP) (Third Amendment) Regulations, 2018s. 30A
Insolvency and Bankruptcy Code, 2016s. 10, s. 12A, s. 61, s. 62, s. 7, s. 9
Insolvency and Bankruptcy (Second Amendment) Act, 2018s. 12A
National Company Law Appellate Tribunal Rules, 2016s. 11
National Company Law Tribunal Rules, 2016s. 11, s. 8

Headnote

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 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

Subjects

ByjuOnline educational servicesEd‑tech servicesCorporate debtorFinancial creditorOperational creditorTeam Sponsor AgreementBCCICorporate Insolvency Resolution Process (CIRP)Interim Resolution Professional (IRP)Inherent powersRule 11Withdrawal of CIRPSettlement of claimsLocus standiCollective proceedingsSection 12ARegulation 30AEscrow account

Judgment

[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. 1805

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 [2024] 10 S.C.R.

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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 [2024] 10 S.C.R.

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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 9
the NCLAT ............................................................................
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 27
application ....................................................................

* Ed. Note: Pagination as per the original Judgment.
[2024] 10 S.C.R. 1809

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

ii. Legal framework for withdrawal and settlement of 31
claims ..................................................................................
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 57
Judgement .........................................................................
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”
1810 [2024] 10 S.C.R.

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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. 1811

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 [2024] 10 S.C.R.

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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. 1813

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.⁠ W
⁠ e 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.⁠ I⁠ n 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 [2024] 10 S.C.R.

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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’. The IRP stated that the reclassification of the claim as
‘contingent’ was on account of purported disqualification notices
issued by the Corporate Debtor to certain lenders of the loan, which
allegedly disqualified more than sixty percent of the lenders and
therefore, the appellant no longer had the requisite authorization.
From the record and submissions before us, it appears that the first
meeting of the CoC took place on 3 September 2024.
28. On 26 September 2024, this Court reserved its judgment and directed
that the IRP maintain the status quo and not hold any meeting of
the CoC until the judgment is pronounced.

B. Issues
29. In view of the above background, the following issues arise for our
consideration:
a. Whether the appellant, who is not a party to the settlement
between the second respondent and the Corporate Debtor,
has locus in the proceedings before this Court;
b. 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 CIRP and settlement of
claims between parties; and
c. Without prejudice to the above, whether the NCLAT adequately
addressed the objections raised by the appellant, while
[2024] 10 S.C.R. 1821

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

exercising its discretionary power under Rule 11 of the NCLAT
Rules 2016.

C. Submissions
30. Mr Kapil Sibal and Mr Shyam Divan, Senior Counsel appearing for
the appellant broadly advanced the following submissions:
a. NCLAT should have refrained from exercising its discretionary
power under Rule 11 of the NCLAT Rules to sanction the
settlement when there is a prescribed procedure for withdrawal
and settlement under Section 12A of the IBC read with
Regulation 30A of the CIRP Regulations 2016;
b. The powers conferred on the NCLAT under Rule 11 of the
NCLAT Rules are discretionary and should not be exercised
mechanically in cases where the withdrawal of the application
would prejudice other stakeholders and may result in numerous
other creditors filing insolvency actions against the Corporate
Debtors on account of their unpaid dues;
c. NCLAT failed to deal with the objections raised by the appellant
about the source of the funds and the conduct of the first
respondent and his brother, Mr Riju Raveendran. Facts such
as – the purported 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 Mr Riju Raveendran;
the ongoing investigation by the Enforcement Directorate against
the first respondent and the Corporate Debtor; attempts by the
Corporate Debtor to dissipate assets – were not adequately
dealt with in the Impugned Judgement;
d. There are clear indications that the Corporate Debtor cannot
service its outstanding debts to its financial creditors. There
has been a 99% drop in the valuation of the Corporate Debtor,
defaults in paying employees’ salaries, the exit of key managerial
persons, failure to file financial statements, and oppression
and mismanagement petitions by the shareholders against the
promoters, all of which indicate that insolvency proceedings
are inevitable;
e. Setting aside the CIRP merely because one of the creditors
has recovered its dues by way of a settlement agreement, runs
1822 [2024] 10 S.C.R.

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contrary to the settled position that the IBC cannot be used as
a recovery mechanism. Upon initiation of insolvency, third-party
rights are created in all creditors of the corporate debtor; and
f. Riju Raveendran failed to provide the details of the source of
funds by way of an affidavit. His undertaking was accompanied
by an affidavit of a third party who claims to be a power of attorney
holder of Riju Raveendran. The declaration in the undertaking
is ambiguous and the figures mentioned do not add up so as to
enable him to make payments under the settlement agreement.
31. Dr Abhishek Manu Singhvi and Mr Neeraj Kishan Kaul, Senior
Counsel for the first respondent advanced the following submissions:
a. The inherent powers of the NCLAT, under Rule 11 of the
NCLAT Rules, include the power to pass orders permitting the
withdrawal of the CIRP. In several judgements, after Section
12A was inserted in the IBC, the NCLAT has invoked Rule 11
to permit the withdrawal of CIRP;
b. The appellant has no locus to maintain the present proceedings
before this Court. In a case of settlement between a corporate
debtor and an individual creditor, there is no scope for hearing
any third-party creditor, as such a creditor is free to adopt other
remedies for its claims;
c. Despite liberty being granted to the appellant to revive its Section
7 petition, the appellant has failed to do so, because a revival
would lead to scrutiny of the maintainability of the Section 7
petition. As the appellant has a weak case on maintainability,
it is seeking to piggyback on the Section 9 NCLT Order and is
opposing the settlement;
d. The appellant is indulging in forum shopping. Despite specific
liberty to revive its Section 7 petition, the appellant chose to
move an appeal against the order of disposal and intervened
in the proceedings before the NCLAT instituted by the second
respondent. In parallel, the appellant also initiated proceedings
before the Delaware Bankruptcy Court to stall the settlement;
e. The Corporate Debtor is an ed-tech services business,
whose revenue is generated from its intellectual property and
subscriptions from students. Revenues are likely to be hit with
[2024] 10 S.C.R. 1823

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

each day that the Corporate Debtor continues into insolvency,
which could lead to classes shutting down, disruption of services,
teachers resigning, and students dropping out; and
f. The Corporate Debtor is a solvent company with a running
business of 27,000 employees and 150 million students. A
viable company capable of repaying its debts must not be
admitted into CIRP.
32. Mr Tushar Mehta, the learned Solicitor General appearing for the
second respondent, supported the arguments of the first respondent
in support of the Impugned Judgement and also advanced the
following submissions:
a. The IBC aims to prevent the economic death of entities, which
involves encouraging settlement between the parties. NCLAT
passed the Impugned Judgement after hearing all concerned
parties. Thus, there was no infirmity in invoking inherent powers
under Rule 11 of the NCLAT Rules 2016;
b. Regulation 30A was a statutory response to the decision of this
Court in Swiss Ribbons (P) Ltd. v. Union of India22 and the
intent is to encourage settlement. The provision is directory as
no consequence of non-compliance is stipulated. It does not
contemplate adjudication about the factum of settlement, the
mode/method of settlement or any specific legal ground by
the NCLT;
c. Regulation 30A, even if applicable can have no application
when the settlement is made using personal funds and not the
funds of the corporate debtor; and
d. The payment to BCCI does not prejudice other creditors or
stakeholders of the Corporate Debtor as it is not made from
the possible insolvency estate that would be created if the
Corporate Debtor goes through CIRP.
33. We also had an opportunity to hear the learned Senior Counsel who
appeared for the intervenors. Mr Gopal Sankarnarayan appeared
for an entity that claims to be another Operational Creditor. Another
intervention application was moved by several shareholders of the

22 [2019] 3 SCR 535 : (2019) 4 SCC 17.
1824 [2024] 10 S.C.R.

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Corporate Debtor, who purportedly hold 16.75% of its issued and
the paid-up share capital. These shareholders have also instituted
proceedings under Sections 241, 242 and 244 of the Companies
Act 2013 for oppression and mismanagement against the erstwhile
management of the Corporate Debtor, including the first respondent
and Riju Raveendran. The counsel for the intervenors advanced
submissions broadly on the same lines as the appellant. They
assailed the acceptance of the settlement agreement by the NCLAT
and contended that insolvency proceedings against the Corporate
Debtor are inevitable.

D. Legal Background

i. Legal context and fundamental principles

a. General principles underlying the IBC
34. Before delving into the provisions which constitute the legal framework
for the withdrawal of CIRP, it is crucial to delineate some of the
underlying aims and objectives which guide the IBC. These principles
will assume relevance while analyzing the locus of the appellant
and the course of action adopted by the NCLAT in the Impugned
Judgement.
35. The Statement of Objects and Reasons for the IBC reads as follows:
“Statement of Objects and Reasons.—There is no single
law in India that deals with insolvency and bankruptcy.
Provisions relating to insolvency and bankruptcy for
companies can be found in the Sick Industrial Companies
(Special Provisions) Act, 1985, the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993, the
Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 and the
Companies Act, 2013. These statutes provide for creation
of multiple fora such as Board of Industrial and Financial
Reconstruction (BIFR), Debts Recovery Tribunal (DRT)
and National Company Law Tribunal (NCLT) and their
respective Appellate Tribunals. Liquidation of companies
is handled by the High Courts. Individual bankruptcy
and insolvency is dealt with under the Presidency Towns
Insolvency Act, 1909, and the Provincial Insolvency
[2024] 10 S.C.R. 1825

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

Act, 1920 and is dealt with by the courts. The existing
framework for insolvency and bankruptcy is inadequate,
ineffective and results in undue delays in resolution,
therefore, the proposed legislation.
2.The objective of the Insolvency and Bankruptcy Code,
2015 is to consolidate and amend the laws relating to
reorganisation and insolvency resolution of corporate
persons, partnership firms and individuals in a time-
bound manner for maximisation of value of assets of such
persons, to promote entrepreneurship, availability of credit
and balance the interests of all the stakeholders including
alteration in the priority of payment of government dues
and to establish an Insolvency and Bankruptcy Fund,
and matters connected therewith or incidental thereto.
An effective legal framework for timely resolution of
insolvency and bankruptcy would support development
of credit markets and encourage entrepreneurship. It
would also improve Ease of Doing Business, and facilitate
more investments leading to higher economic growth and
development.
[…]
5. The Code seeks to achieve the above objectives.’”
36. The long title of the IBC provides that it is “an Act to consolidate and
amend the laws relating to reorganisation and insolvency resolution
of corporate persons, partnership firms and individuals in a time
bound manner for maximisation of value of assets of such persons,
to promote entrepreneurship, availability of credit and balance the
interests of all the stakeholders including alteration in the order of
priority of payment of Government dues and to establish an Insolvency
and Bankruptcy Board of India, and for matters connected therewith
or incidental thereto.”
37. The objectives discernible from the long title and the Statement
of Objects and Reasons of the IBC were discussed in a decision
of a two-judge bench of this Court in Swiss Ribbons (P) Ltd. v.
Union of India.23 This Court observed that the IBC is a beneficial

23 [2019] 3 SCR 535 : (2019) 4 SCC 17
1826 [2024] 10 S.C.R.

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legislation which attempts to put the Corporate Debtor back on its
feet. According to this Court, this would involve considering the
interests of all concerned stakeholders rather than viewing the IBC
as a mere recovery legislation for individual creditors. This Court,
speaking through Justice RF Nariman, observed as follows:
“28. It can thus be seen that the primary focus of the
legislation is to ensure revival and continuation of the
corporate debtor by protecting the corporate debtor from
its own management and from a corporate death by
liquidation. The Code is thus a beneficial legislation
which puts the corporate debtor back on its feet, not
being a mere recovery legislation for creditors. The
interests of the corporate debtor have, therefore, been
bifurcated and separated from that of its promoters/
those who are in management. Thus, the resolution
process is not adversarial to the corporate debtor but, in
fact, protective of its interests. The moratorium imposed
by Section 14 is in the interest of the corporate debtor
itself, thereby preserving the assets of the corporate debtor
during the resolution process. The timelines within which
the resolution process is to take place again protects the
corporate debtor’s assets from further dilution, and also
protects all its creditors and workers by seeing that the
resolution process goes through as fast as possible so that
another management can, through its entrepreneurial skills,
resuscitate the corporate debtor to achieve all these ends.”
(emphasis supplied)

38. A two-judge Bench of this Court, speaking through one of us (DY
Chandrachud, J), in Arun Kumar Jagatramka v Jindal Steel &
Power Ltd24 also had occasion to observe the quantum change in
corporate governance and the rule of law brought in by the enactment
of the IBC. This Court observed as follows:
“41. … First and foremost, the IBC perceives good
corporate governance, respect for and adherence to
the rule of law as central to the resolution of corporate

24 [2021] 3 SCR 114 : (2021) 7 SCC 474
[2024] 10 S.C.R. 1827

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

insolvencies. Second, the IBC perceives corporate
insolvency not as an isolated problem faced by
individual business entities but places it in the context
of a framework which is founded on public interest
in facilitating economic growth by balancing diverse
stakeholder interests. Third, the IBC attributes a
primacy to the business decisions taken by creditors
acting as a collective body, on the premise that the
timely resolution of corporate insolvency is necessary
to ensure the growth of credit markets and encourage
investment. Fourth, in its diverse provisions, the IBC
ensures that the interests of corporate enterprises are
not conflated with the interests of their promoters;
the economic value of corporate structures is
broader in content than the partisan interests of their
managements. These salutary objectives of the IBC can
be achieved if the integrity of the resolution process is
placed at the forefront. Primarily, the IBC is a legislation
aimed at reorganisation and resolution of insolvencies.
Liquidation is a matter of last resort. These objectives can
be achieved only through a purposive interpretation which
requires courts, while infusing meaning and content to its
provisions, to ensure that the problems which beset the
earlier regime do not enter through the backdoor through
disingenuous stratagems.”
(emphasis supplied)
39. From the above, the following guiding principles emerge, which
we must keep in mind while determining the issues raised in the
present appeal:
a. A significant change brought about by the IBC was the
consolidation of the pre-existing fragmented insolvency
framework, The aim was to eliminate parallel proceedings by
various creditors before different fora, given that all creditors
would be a part of a single insolvency process under the IBC;
b. The above consolidation also sought to implement the
principle of ‘collective distribution’, where the interests of all
stakeholders were considered. The CIRP envisaged by the
IBC is premised on the principle that each creditor of the
1828 [2024] 10 S.C.R.

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same class should receive a share that is proportionate to
the debt owed to him;
c. IBC must not be used as a tool for coercion and debt recovery
by individual creditors. Improper use of the IBC mechanism by
a creditor includes using insolvency as a substitute for debt
enforcement or attempting to obtain preferential payments
by coercing the debtor using insolvency proceedings. That
the mechanism under the IBC must not be used as a money
recovery mechanism has been reiterated in a consistent line
of precedent by this Court;25 and
d. The interests of the corporate debtor must be detached from
those of its promoters/those who are in management. A
“recalcitrant management”26 must be prevented from taking
advantage of undue delays and preventing an inevitable
insolvency. In other words, as noted by this Court in Arun
Kumar Jagatramka (supra), the economic value of corporate
structures is broader than the partisan interests of their
management.

b. Nature of the proceedings after admission of the application
40. Chapter II of the IBC provides that CIRP can be invoked in three
ways: (i) by a financial creditor under Section 7; (ii) by an operational
creditor under Section 9; and (iii) by a corporate debtor itself under
Section 10.27 Section 5(11) of the IBC defines the “initiation date”
as the date on which the financial creditor, operational creditor or
corporate applicant makes an application to the NCLT for initiating
insolvency proceedings, including CIRP. This is distinct from the
“insolvency commencement date” which is defined in Section 5(12)
of the IBC as the date of admission of an application for initiating
CIRP by the NCLT under Sections 7, 9 or 10, as the case may be.
41. Once the application is admitted, the CIRP commences and the NCLT
inter alia declares a moratorium; issues a public pronouncement

25 Swiss Ribbons, para 28;
26 Mobilox, para 36.
27 Section 6, IBC reads: “6. Persons who may initiate corporate insolvency resolution process. –
Where any corporate debtor commits a default, a financial creditor, an operational creditor or the
corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate
debtor in the manner as provided under this Chapter.”
[2024] 10 S.C.R. 1829

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

of the initiation of CIRP and a call for submission of claims; and
appoints an IRP.28 Once an IRP is appointed, the affairs of the
corporate debtor are managed by the IRP,29 who inter alia receives
and collates all the claims submitted by the creditors pursuant to
the public announcement of the CIRP.30 After the collation of claims
received and the determination of the financial position of the
corporate debtor, the IRP shall constitute a CoC, which consists of
all the financial creditors of the corporate debtor.31 The CoC appoints
a Resolution Professional32 and the CIRP process continues, as
prescribed.
42. From this scheme of Chapter II of the IBC, it appears that the
admission of an application is a significant event that alters the
nature of the proceedings, and the stakeholders involved. Initially,
when the petition is filed by the financial creditor, operational creditor
or corporate applicant, as the case may be, the proceedings are in
personam and the only relevant stakeholders are the applicant creditor
and the corporate debtor. However, once the petition is admitted and
CIRP is initiated, several significant changes take place, including
the transfer of the management of the affairs of the corporate debtor

28 Sections 13, 14, 15, 16, IBC.
29 Section 17, IBC reads “17. Management of affairs of corporate debtor by interim resolution
professional. - (1) From the date of appointment of the interim resolution professional, -
(a) the management of the affairs of the corporate debtor shall vest in the interim resolution professional;
(b) the powers of the board of directors or the partners of the corporate debtor, as the case may be, shall
stand suspended and be exercised by the interim resolution professional;
(c) the officers and managers of the corporate debtor shall report to the interim resolution professional
and provide access to such documents and records of the corporate debtor as may be required by the
interim resolution professional;
(d) the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of
the interim resolution professional in relation to such accounts and furnish all information relating to the
corporate debtor available with them to the interim resolution professional.
(2) The interim resolution professional vested with the management of the corporate debtor, shall-
(a) act and execute in the name and on behalf of the corporate debtor all deeds, receipts, and other
documents, if any;
(b)take such actions, in the manner and subject to such restrictions, as may be specified by the Board;
(c)have the authority to access the electronic records of corporate debtor from information utility having
financial information of the corporate debtor;
(d)have the authority to access the books of account, records and other relevant documents of corporate
debtor available with government authorities, statutory auditors, accountants and such other persons as
may be specified; and
(e) be responsible for complying with the requirements under any law for the time being in force on behalf
of the corporate debtor.”
30 Section 18(b), IBC.
31 Section 21, IBC.
32 “RP”
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to the IRP, the declaration of the moratorium, and the collation of
the claims against the corporate debtor. Therefore, the proceedings
now change character – they become in rem and are no longer the
preserve of only the applicant creditor and the corporate debtor
and even creditors who were not the original applicants, become
necessary stakeholders.
43. A three-judge Bench of this Court in Indus Biotech (P) Ltd. v. Kotak
India Venture (Offshore) Fund33 adjudicated on the question of the
stage at which the proceedings under the IBC attain the status of in
rem and create third-party rights for all creditors. This Court held that
the trigger point is not the filing of the application, but the admission
of the application, and observed as follows:
“17. The procedure contemplated will indicate that before
the adjudicating authority is satisfied as to whether the
default has occurred or not, in addition to the material placed
by the financial creditor, the corporate debtor is entitled to
point out that the default has not occurred and that the debt
is not due, consequently to satisfy the adjudicating authority
that there is no default. In such exercise undertaken by the
adjudicating authority if it is found that there is default, the
process as contemplated under sub-section (5) of Section 7
of IB Code is to be followed as provided under sub-section
(5)(a); or if there is no default the adjudicating authority
shall reject the application as provided under sub-section
(5)(b) to Section 7 of IB Code. In that circumstance if the
finding of default is recorded and the adjudicating authority
proceeds to admit the application, the corporate insolvency
resolution process commences as provided under sub-
section (6) and is required to be processed further. In
such event, it becomes a proceeding in rem on the
date of admission and from that point onwards the
matter would not be arbitrable. The only course to be
followed thereafter is the resolution process under IB
Code. Therefore, the trigger point is not the filing of the
application under Section 7 of IB Code but admission
of the same on determining default.

33 [2021] 7 SCR 112 : (2021) 6 SCC 436
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26. […] On admission, third-party right is created in
all the creditors of the corporate debtors and will have
erga omnes effect. The mere filing of the petition and
its pendency before admission, therefore, cannot be
construed as the triggering of a proceeding in rem.
Hence, the admission of the petition for consideration
of the corporate insolvency resolution process is the
relevant stage which would decide the status and the
nature of the pendency of the proceedings and the mere
filing cannot be taken as the triggering of the insolvency
process.”
44. In summary, the scheme of the IBC under Chapter II gives rise to
two significant principles:
a. Once the petition is admitted, the proceedings are no longer
the preserve of the applicant creditor and the debtor. They now
become in rem and all creditors of the corporate debtor become
stakeholders in the process; and
b. Once the petition is admitted, the management of the affairs
of the corporate debtor is vested in the IRP and eventually, in
the RP. Thus, the corporate debtor no longer exists in the form
that it did, before the admission of the petition. Once CIRP
is initiated, the interests of the erstwhile management of the
corporate debtor must be distinguished from the interests of
the corporate debtor.

ii. Legal framework for withdrawal and settlement of claims

a. Evolution of the legal framework
45. Introduced less than a decade ago, the IBC and the various rules
and regulations promulgated under the Act constitute a relatively
nascent legal framework. On several occasions, the legislature
and the executive have responded to the lacunae in the framework
identified by this Court and sought to fill the gaps by legislating,
in the form of amendments to the IBC or promulgating rules or
regulations, if necessary. The evolution of the legal framework
in relation to the withdrawal of CIRP after the admission of an
application moved by a creditor is a classic example of this delicate
coordination.
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46. Under Rule 8 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016,34 the NCLT may permit the
withdrawal of applications made by a creditor (under Sections 7,
9 or 10) on a request by the applicant before the admission of the
application.35 When the IBC was originally enacted in 2016, it did not
contain any provisions, in the text of the Act or its allied rules and
regulations, for the withdrawal of CIRP after the application had been
admitted. Although there was no express provision in this regard, in
several instances, this Court invoked its powers under Article 142 of
the Constitution and permitted withdrawal of the CIRP on account
of a settlement between the creditor and the corporate debtor after
the application had been admitted by the NCLT.36
47. In one such decision of this Court, namely, Lokhandwala Kataria
Construction (P) Ltd. v. Nisus Finance and Investment Managers
LLP,37 a two-judge bench of this Court invoked its power under Article
142 to record the settlement of the parties and allow the compromise
between the creditor and the corporate debtor after the admission
of the concerned application. While doing so, this Court also prima
facie agreed with the proposition that in view of Rule 8 of the CIRP
Rules, the NCLAT cannot use its inherent powers under Rule 11 of
the NCALT Rules 2016 to allow a settlement or withdrawal after the
admission of the application.
48. The above position was followed by the same Bench of this Court
in Uttara Foods & Feeds (P) Ltd. v. Mona Pharmachem,38 while
allowing another settlement between the parties under Article 142.
However, on this occasion, the bench also observed that instead of
all such orders coming to this Court to utilize its powers under Article
142, the relevant rules may be amended to account for cases where
an agreement has been reached after admission of the application.
This Court observed as follows:
“2. … this Bench had observed that in view of Rule 8 of
the Insolvency and Bankruptcy (Application to Adjudicating

34 “CIRP Rules”
35 “8. Withdrawal of application. —The Adjudicating Authority may permit withdrawal of the application
made under rules 4, 6 or 7, as the case may be, on a request made by the applicant before its admission.”
36 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.
37 (2018) 15 SCC 589
38 (2018) 15 SCC 587
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Authority) Rules, 2016, the National Company Law
Appellate Tribunal prima facie could not avail of the inherent
powers recognised by Rule 11 of the National Company
Law Appellate Tribunal Rules, 2016 to allow a compromise
to take effect after admission of the insolvency petition.
We are of the view that instead of all such orders
coming to the Supreme Court as only the Supreme
Court may utilise its powers under Article 142 of the
Constitution of India, the relevant Rules be amended by
the competent authority so as to include such inherent
powers. This will obviate unnecessary appeals being
filed before this Court in matters where such agreement
has been reached. On the facts of the present case, we
take on record the settlement between the parties and set
aside the NCLT order …”
49. Against this backdrop, the Ministry of Corporate Affairs of the
Government of India set up the Insolvency Law Committee,39 to
address the early teething challenges arising from the implementation
of the IBC.40 The ILC Report, submitted on 26 March 2018, also dealt
with the issue of withdrawal of CIRP proceedings and discussed
the existing practice of this Court of granting “judicial permission”
for withdrawal of CIRP after the admission of the application of the
creditor. In this context, the report discussed the objectives of the IBC,
drawing from the report of the Bankruptcy Law Reforms Committee
which preceded the enactment of the IBC, and concluded that:
“29.1 …it was agreed that once the CIRP is initiated, it
is no longer a proceeding only between the applicant
creditor and the corporate debtor but is envisaged to be
a proceeding involving all creditors of the debtor. The
intent of the Code is to discourage individual actions
for enforcement and settlement to the exclusion of the
general benefit of all creditors.”
(emphasis supplied)
50. The ILC Report found that in several cases, a settlement may be
reached amongst “all creditors and the debtor” for withdrawal, and

39 “ILC”
40 “ILC Report”
1834 [2024] 10 S.C.R.

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not only between the individual applicant creditor and the debtor. In
light of this, the ILC unanimously agreed that the relevant rules may
be amended to provide for withdrawal post-admission if the CoC
approved of such an action by a voting share of ninety per cent.
Significantly, the report states that the ILC specifically discussed
and concluded that Rule 11 of the NCLAT Rules, 2016 may not be
adopted for withdrawal of CIRP, and instead Rule 8 of the CIRP
Rules may be appropriately amended. The observations in the ILC
Report on this aspect are as follows:
“29.2. On a review of the multiple NCLT and NCLAT
judgments in this regard, the consistent pattern that
emerged was that a settlement may be reached amongst
all creditors and the debtor, for the purpose of a withdrawal
to be granted, and not only the applicant creditor and the
debtor. On this basis read with the intent of the Code,
the Committee unanimously agreed that the relevant
rules may be amended to provide for withdrawal post
admission if the CoC approves of such action by a voting
share of ninety per cent. It was specifically discussed
that rule 11 of the National Company Law Tribunal Rules,
2016 may not be adopted for this aspect of CIRP at
this stage (as observed by the Hon’ble Supreme Court
in the case of Uttara Foods and Feeds Private Limited
v. Mona Pharmacem) and even otherwise, as the issue
can be specifically addressed by amending rule 8 of the
CIRP Rules.”
51. Accepting the recommendation of the ILC, the legislature introduced
Section 12A in the IBC by the Insolvency and Bankruptcy (Second
Amendment) Act, 2018 with effect from 6 June 2018.41 It reads as
follows:
“12A. Withdrawal of application admitted under
section 7, 9 or 10. –
The Adjudicating Authority may allow the withdrawal
of application admitted under section 7 or section 9 or
section 10, on an application made by the applicant with the

41 Act No. 26 of 2018.
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GLAS Trust Company LLC v. BYJU Raveendran & Ors.

approval of ninety per cent. voting share of the committee
of creditors, in such manner as may be specified.”
(emphasis supplied)
52. The provision provides for the withdrawal of an application under
Sections 7, 9 and 10 after it has been admitted, with the approval
of ninety-percent voting share of the CoC. Evidently, Section 12A
was made more stringent in comparison to Section 30(4) of the
IBC, which pertains to approval of the Resolution Plan by the CoC.
Whereas under Section 30(4) of the IBC, the voting share of the
CoC for approving the Resolution Plan is sixty-six percent, the
requirement under Section 12A of the IBC for withdrawal of CIRP
is ninety percent. The reason for this divergence and high threshold
appears to be rooted in the reasoning provided in the ILC report
that once an application is admitted it is no longer a proceeding
only between the applicant creditor and the corporate debtor but is
a proceeding involving all creditors of the debtor. Significantly, the
text of Section 12A only details the procedure for the withdrawal of
the application after the formation of the CoC (with ninety percent of
the voting share), but is silent about the withdrawal of an application
after the application is admitted, but before the CoC is formed.
53. With the introduction of Section 12A in the IBC, the CIRP Regulations
were also amended to include Regulation 30A which delineated the
detailed procedure to withdraw an application under Section 12A.42
At the time of its introduction, the regulation read as follows:
“30-A. Withdrawal of application.— (1) An application
for withdrawal under Section 12-A shall be submitted
to the interim resolution professional or the resolution
professional, as the case may be, in Form FA of the
Schedule before issue of invitation for expression of interest
under Regulation 36-A.
(2) The application in sub-regulation (1) shall be
accompanied by a bank guarantee towards estimated cost
incurred for purposes of clauses (c) and (d) of Regulation
31 till the date of application.

42 IBBI (CIRP) (Third Amendment) Regulations, 2018 vide Notification No. IBBI/2018-19/GN/REG031,
dated 3rd July, 2018, w.e.f. 04.07.2018.
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(3) The committee shall consider the application made
under sub-regulation (1) within seven days of its constitution
or seven days of receipt of the application, whichever is
later.
(4) Where the application is approved by the committee
with ninety per cent voting share, the resolution professional
shall submit the application under sub-regulation (1) to the
adjudicating authority on behalf of the applicant, within
three days of such approval.
(5) The adjudicating authority may, by order, approve the
application submitted under sub-regulation (4).”
54. Regulation 30A(1), as it stood originally, required that an application for
withdrawal shall be submitted to the IRP or the RP in the prescribed
form, before the invitation for expression of interest under Regulation
30A. It did not provide the procedure for withdrawal after the invitation
of expression of interest had been issued. Regulation 30A(2) provided
that the application for withdrawal shall be accompanied by a bank
guarantee towards the specified estimated costs. Regulation 30A(3)
mandated that the CoC must consider the application within seven
days of its constitution or the receipt of the application, whichever is
later. Finally, Regulation 30A(4) provided that once the CoC approved
the application with ninety percent voting share, the RP shall submit
the application to the NCLT on behalf of the applicant, within three
days of the approval. Finally, under Regulation 30A(5), the NCLT
could approve the application submitted by an order.
55. Notably, akin to Section 12A, Regulation 30A in its original form,
was silent about withdrawal in cases where the application had been
admitted, but the CoC had not been formed. Similarly, Regulation
30A(1) only spoke of withdrawal before the invitation of expression
of interest had been issued and there was no provision which
provided for withdrawal after it had been issued. Both these gaps
were identified in subsequent judgements of this Court.
56. In Brilliant Alloy Private Limited vs S Rajagopal and Ors,43 a
two-judge bench of this Court observed that the requirement in
Regulation 30A, as it stood then, that the application must be made

43 (2022) 2 SCC 544
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before the issuance of an invitation for expression of interest was
only directory. The regulation, it was held, has to be read along with
Section 12A, which does not contain any bar on withdrawal after the
issuance of an invitation for expression of interest.
57. The constitutional validity of various provisions of the IBC, including
Section 12A was challenged before this Court. In Swiss Ribbons
(supra), a two-judge bench of this Court, speaking through Justice
Rohinton Fali Nariman, inter alia upheld the constitutionality of
Section 12A. One of the questions that arose before this Court, in this
context, was what happens if withdrawal is sought after admission of
the application, but before the CoC is constituted. This Court observed:
“82. It is clear that once the Code gets triggered by
admission of a creditor’s petition under Sections 7 to 9, the
proceeding that is before the adjudicating authority,
being a collective proceeding, is a proceeding in rem.
Being a proceeding in rem, it is necessary that the
body which is to oversee the resolution process must
be consulted before any individual corporate debtor
is allowed to settle its claim. A question arises as to
what is to happen before a Committee of Creditors is
constituted (as per the timelines that are specified, a
Committee of Creditors can be appointed at any time
within 30 days from the date of appointment of the
interim resolution professional). We make it clear that
at any stage where the Committee of Creditors is not
yet constituted, a party can approach NCLT directly,
which Tribunal may, in exercise of its inherent powers
under Rule 11 of NCLT Rules, 2016, allow or disallow
an application for withdrawal or settlement. This will
be decided after hearing all the parties concerned and
considering all relevant factors on the facts of each case.
83. The main thrust against the provision of Section
12-A is the fact that ninety per cent of the Committee of
Creditors has to allow withdrawal. This high threshold
has been explained in the ILC Report as all financial
creditors have to put their heads together to allow
such withdrawal as, ordinarily, an omnibus settlement
involving all creditors ought, ideally, to be entered into.
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This explains why ninety per cent, which is substantially
all the financial creditors, have to grant their approval to
an individual withdrawal or settlement. In any case, the
figure of ninety per cent, in the absence of anything further
to show that it is arbitrary, must pertain to the domain of
legislative policy, which has been explained by the Report
(supra). Also, it is clear, that under Section 60 of the
Code, the Committee of Creditors do not have the last
word on the subject. If the Committee of Creditors
arbitrarily rejects a just settlement and/or withdrawal
claim, NCLT, and thereafter, NCLAT can always set
aside such decision under Section 60 of the Code. For
all these reasons, we are of the view that Section 12-A
also passes constitutional muster.”
(emphasis supplied)

58. From the above observations of this Court in Swiss Ribbons (supra),
the following positions of law may be deduced:
a. Once the petition instituted by a creditor is admitted, the
proceedings before the NCLT become a ‘collective proceeding’
or a proceeding in rem. Thus, the body which oversees the
resolution process, i.e. CoC must be consulted before allowing
the claim to be settled;
b. This Court recognized that there was a lacuna in relation to cases
where the CoC had not been formed. Accordingly, it was held
that, in such cases, the party can approach the NCLT directly,
and the NCLT may exercise its inherent powers under Rule 11
to allow or disallow the application for settlement/withdrawal.
However, given the in rem nature of the proceedings, such an
application must be decided only after hearing all the parties
concerned and considering the relevant factors in the case;
c. This high threshold of a ninety-percent voting share of the CoC
is not arbitrary. The idea is that the financial creditors have to
put their heads together to allow such withdrawal; and
d. Under Section 60 of the IBC, the decision of the CoC to reject
or accept the settlement claim can be challenged before the
NCLT and then, the NCLAT.
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59. In response to the lacunae identified by this Court in Swiss Ribbons
(supra) and Brilliant Alloy Private Limited (supra), an amendment
was made to Regulation 30A of the CIRP Regulations.44 This
amendment came into effect on 25 July 2019 and Regulation 30A
in its present form reads as follows:
“30A. Withdrawal of application.
(1) An application for withdrawal under section 12A may
be made to the Adjudicating Authority –
(a) before the constitution of the committee, by the applicant
through the interim resolution professional;
(b) after the constitution of the committee, by the applicant
through the interim resolution professional or the resolution
professional, as the case may be:
Provided that where the application is made under clause
(b) after the issue of invitation for expression of interest
under regulation 36A, the applicant shall state the reasons
justifying withdrawal after issue of such invitation.
(2) The application under sub-regulation (1) shall be made
in Form FA of the Schedule-I accompanied by a bank
guarantee-
(a) towards estimated expenses incurred on or by the
interim resolution professional for purposes of regulation
33, till the date of filing of the application under clause (a)
of sub- regulation (1); or
(b) towards estimated expenses incurred for purposes
of clauses (aa), (ab), (c) and (d) of regulation 31, till the
date of filing of the application under clause (b) of sub-
regulation (1).
(3) Where an application for withdrawal is under clause (a)
of sub-regulation (1), the interim resolution professional
shall submit the application to the Adjudicating Authority
on behalf of the applicant, within three days of its receipt.

44 Notification No. IBBI/2019-20/GN/REG048, dated 25th July, 2019 (w.e.f. 25-07-2019)
1840 [2024] 10 S.C.R.

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(4) Where an application for withdrawal is under clause
(b) of sub-regulation (1), the committee shall consider the
application, within seven days of its receipt.
(5) Where the application referred to in sub-regulation (4)
is approved by the committee with ninety percent voting
share, the resolution professional shall submit such
application along with the approval of the committee, to
the Adjudicating Authority on behalf of the applicant, within
three days of such approval.
(6) The Adjudicating Authority may, by order, approve the
application submitted under sub-regulation (3) or (5).
(7) Where the application is approved under sub-regulation (6),
the applicant shall deposit an amount, towards the actual
expenses incurred for the purposes referred to in clause (a)
or clause (b) of sub-regulation (2) till the date of approval
by the Adjudicating Authority, as determined by the interim
resolution professional or resolution professional, as the
case may be, within three days of such approval, in the
bank account of the corporate debtor, failing which the
bank guarantee received under sub-regulation (2) shall be
invoked, without prejudice to any other action permissible
against the applicant under the Code.”
60. Regulation 30A (1) now provides for the procedure to make an
application for withdrawal before the NCLT under Section 12A,
both before and after the constitution of the CoC. Sub-clause (a)
of Regulation 30A (1) states that in cases where the CoC has
not been constituted, the applicant may place an application for
withdrawal before the NCLT, through the IRP. Similarly, sub-clause
(b) of Regulation 30A (1) states that in cases where the CoC is
constituted, the applicant may place an application for withdrawal
before the NCLT, through the IRP or the RP, as the case may be.
In essence, at both stages – before and after the constitution of the
CoC – the application for withdrawal may only be made through
the person appointed to oversee the insolvency proceedings, i.e.
the IRP or the RP.
61. The proviso to Regulation 30A (1) provides that when the application
is made after the CoC has been constituted and after the invitation for
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expression of interest has been issued, the applicant shall state the
reasons for withdrawal at this stage. In essence, the regulation in its
amended form, deviates from its earlier form by also responding to
the decision of this Court in Brilliant Alloy Private Limited (supra).
Unlike the unamended regulation, the regulation acknowledges the
possibility of withdrawal even after the invitation for expression has
been issued. However, it mandates that an application for withdrawal
in such cases must be accompanied by reasons.
62. Regulation 30A (2) provides that the application must be made in
the manner prescribed in Form FA of Schedule-I,45 and must be
accompanied by a bank guarantee towards the specified expenses.
Regulation 30A(3) provides that in cases where the application for
withdrawal is moved before the constitution of the CoC, the IRP
shall submit the application to the NCLT on behalf of the applicant
within three days of receipt. Regulations 30A (4) and (5) deal with
the situation where the CoC has already been constituted. They
provide that the CoC shall consider the application within seven
days of receipt, and subsequently, if the application is approved by

45
171
[FORM FA
APPLICATION FOR WITHDRAWAL OF CORPORATE INSOLVENCY RESOLUTION PROCESS
[Under Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution
Process for Corporate Persons) Regulations, 2016]
[Date]
To
The Adjudicating Authority

[Through the Interim Resolution Professional / Resolution Professional]
[name of corporate debtor]

Subject: Withdrawal of Application admitted for corporate insolvency resolution process of
[name of corporate debtor]

I, [Name of applicant], had filed an application bearing [particulars of application, i.e, diary number/ case
number] on [Date of filing] before the Adjudicating Authority under [Section 7 / Section 9/ Section 10]
of the Insolvency and Bankruptcy Code, 2016. The said application was admitted by the Adjudicating
Authority on [date] bearing [case number].

2. I hereby withdraw the application bearing [particulars of application, i.e, diary number/ case number]
filed by me before the Adjudicating Authority under [Section 7 / Section 9/Section 10] of the Insolvency
and Bankruptcy Code, 2016.’

3. I attach the required bank guarantee as per sub-regulation (2) of regulation 30A.
(Signature of the applicant)
Date:
Place:
[Note: In the case of company or limited liability partnership, the declaration and verification shall be
made by the director/manager/secretary/designated partner and in the case of other entities, an officer
authorised for the purpose by the entity]”.]
1842 [2024] 10 S.C.R.

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the CoC with a ninety-percent voting share, the RP must submit the
application with the approval to the NCLT within three days of the
approval. Finally, regulation 30A(6) provides that on the receipt of
the application under both mechanisms (before the CoC and after),
the NCLT may pass an order approving the application submitted
by the RP or IRP, as the case may be.

b. Insights from the evolution of the legal framework
63. In essence, after a series of deliberations by the legislature, the
executive and nudges by this Court, the framework created by Rule 8
of the NCLT Rules and Section 12A of the IBC read with Rule 30A
of the CIRP Regulations lays down an exhaustive procedure for the
withdrawal of an application filed by creditors under Sections 7, 9,
or 10 of the IBC. Withdrawal may be sought at four stages, all of
which have a procedure prescribed under the existing framework.
These may be summarized as follows:
i. Before the application under Sections 7, 9 or 10 is admitted
by the NCLT: Such cases are squarely covered by Rule 8 of
the NCLT Rules, which requires that the applicant approach the
NCLT directly. The NCLT may then pass an order permitting
the withdrawal of the application. At this stage, as the CIRP
process has not been initiated, the proceedings are still in
personam, as between the applicant creditor and the corporate
debtor. Therefore, while approving the withdrawal at this stage,
the NCLT may restrict its enquiry to only hear the applicant
creditor and corporate debtor, and other potential creditors are
not stakeholders at this stage.
ii. After an application under Sections 7, 9, or 10 is admitted,
but before the CoC has been constituted: Although Section
12A continues to be silent on this aspect, after the decision in
Swiss Ribbons (supra), Regulation 30A was amended to provide
for this eventuality. An application for withdrawal in such cases
may be made by the applicant through the IRP.46 The IRP will
then place the application before the NCLT, which may pass
an order either approving or rejecting the application. As noted
above, once the application has been admitted, the proceedings

46 Regulation 30A (1), CIRP Regulations, 2016.
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are no longer the sole preserve of the applicant creditor and
the corporate debtor. They are now in rem and at this stage,
the NCLT must hear the concerned parties and consider all
relevant factors before approving or rejecting the application
for withdrawal. The NCLT being a quasi-judicial body, must not
act as a mere post office, which stamps and approves every
settlement agreement, without application of judicial mind.
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: Section 12A read with
Regulation 30A provides exhaustively for this scenario. In such
cases, the application for withdrawal is to be placed before the
NCLT, through the IRP or the RP. The application is first placed
before the CoC and after ascertaining approval with a ninety
percent voting share, the RP shall submit the application to
the NCLT.
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: The procedure is the same as that
detailed in (iii) above, with the added requirement stemming from
the proviso to Regulation 30A (1). in such cases, the applicant
must state the reasons for withdrawal at this belated stage.
64. Not only is there an exhaustive framework to deal with withdrawal
and settlement, but the evolution of the law and the creation of an
comprehensive framework indicates an attempt to reduce reliance on
discretionary powers. As detailed above, the IBC and the allied rules
and regulations, in their original form did not provide any procedure for
the settlement/withdrawal of claims after admission of the application
by the creditor. This Court was compelled to invoke Article 142 in
decisions such as Lokhandwala Kataria Construction (supra)
and Uttara Foods & Feeds (P) Ltd. (supra). To reduce reliance
on Article 142, Section 12A and Regulation 30A were introduced to
provide a detailed procedure for such cases. In fact, the ILC report
which led to the inclusion of Section 12A specifically discussed and
rejected the proposition that Rule 11 can instead be used for this
purpose. Next, this Court in Swiss Ribbons (supra) held that since
there was no prescribed framework to allow settlement/withdrawal
of claims after admission of the application but before the CoC was
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constituted, Rule 11 of the NCLT Rules may be invoked. In response
to this, to reduce reliance on the inherent powers under Rule 11 and
provide certainty, necessary amendments were made to Regulation
30A. There is now a detailed procedure to deal with withdrawal or
settlement at both stages post admission – before and after the CoC
is constituted. In view of this detailed framework, 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 no longer arises.
65. Mr Tushar Mehta, Senior Counsel for the second respondent, has
sought to contend that the requirement under Regulation 30A (1)
to move an application before the NCLT through the IRP, in cases
where the CoC is not constituted, is a mere technicality which can
be dispensed with. The logic he advances is that the regulation
does not require adjudication by the NCLT about the factum of the
settlement, the mode of settlement or adjudication on any other
ground. His submission is that Regulation 30A (1) only requires that
the withdrawal application be submitted to the IRP in the prescribed
Form FA, which is then forwarded to the NCLT to mechanically
approve the settlement. At this stage, according to him, the NCLT
is not required to hear any other parties, but only approve the
application and thus, whether the application is submitted through
the IRP or whether it is before the NCLT or the NCLAT, is a mere
technicality.
66. We do not concur with the above understanding for two broad reasons.
a. Firstly, that the application is to be submitted by the IRP
rather than the parties themselves is not a distinction without
difference. As noted above, 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. To subvert
this requirement would run contrary to the scheme of the IBC
and the underlying principles discussed in this judgment; and
[2024] 10 S.C.R. 1845

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

b. Secondly, the NCLT cannot be considered a post office that
merely puts a stamp on the withdrawal application submitted
by the parties through the IRP. The ILC Report, in response to
which, the parent provision, i.e. Section 12A was introduced in
the IBC specifically discussed the possibility of the creditors,
apart from the applicant creditor agreeing to a settlement as
the underlying reason to permit withdrawal even after initiation
of the CIRP. It was never fathomed by the ILC that withdrawal
of claims would remain a unilateral process, even though the
application is admitted and CIRP has been initiated. Similarly,
this Court in Swiss Ribbons (supra), in response to which
Regulation 30A was amended, specifically observed that in
cases where withdrawal is sought after initiation of CIRP,
but before the CoC is constituted, the NCLT must decide on
the application after “hearing all the parties concerned and
considering all relevant factors on the facts of each case.”
Therefore, the NCLT does conduct an adjudicatory exercise
when the application for withdrawal is placed before it, and the
procedure is not a mere technicality.

iii. Scope of ‘Inherent Powers’ under Rule 11
67. Section 151 of the Code of Civil Procedure47 reads as follows:
“151. Saving of inherent powers of Court.—Nothing in
this Code shall be deemed to limit or otherwise affect the
inherent power of the Court to make such orders as may
be necessary for the ends of justice or to prevent abuse
of the process of the Court.”
68. Rule 11 of the NCLT Rules 2016 and Rule 11 of the NCLAT Rules
2016, which preserve the inherent powers of the NCLT and the
NCLAT respectively, mirror Section 151 of the CPC and read as
follows:
“11. Inherent powers.- Nothing in these rules shall be
deemed to limit or otherwise affect the inherent powers of
the Appellate Tribunal to make such orders or give such
directions as may be necessary for meeting the ends of

47 “CPC”
1846 [2024] 10 S.C.R.

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justice or to prevent abuse of the process of the Appellate
Tribunal.”
69. In a consistent line of precedent, this Court has held that ‘inherent
powers’ may be exercised in cases where there is no express
provision under the legal framework. However, such powers cannot be
exercised in contravention of, conflict with or in ignorance of express
provisions of law. We may helpfully refer to the observations of a
two-judge bench of this Court in one such case. In Ram Chand and
Sons Sugar Mills (P) Ltd. v. Kanhayalal Bhargava,48 a two-judge
bench of this Court, speaking through Justice K Subba Rao (as the
learned chief Justice then was), opined:
“5. … Having regard to the said decisions, the scope
of the inherent power of a court under Section 151 of
the Code may be defined thus: The inherent power of a
court is in addition to and complementary to the powers
expressly conferred under the Code. But that power will
not be exercised if its exercise is inconsistent with, or
comes into conflict with, any of the powers expressly or by
necessary implication conferred by the other provisions of
the Code. If there are express provisions exhaustively
covering a particular topic, they give rise to a necessary
implication that no power shall be exercised in
respect of the said topic otherwise than in the manner
prescribed by the said provisions. Whatever limitations
are imposed by construction on the provisions of Section
151 of the Code, they do not control the undoubted
power of the Court conferred under Section 151 of the
Code to make a suitable order to prevent the abuse
of the process of the Court.”
(emphasis supplied)

70. When a procedure has been prescribed for a particular purpose
exhaustively, no power shall be exercised otherwise than in the
manner prescribed by the said provisions. In such cases, the court
must be circumspect in invoking its ‘inherent powers’ to deviate from

48 [1966] 3 SCR 856 : 1966 SCC OnLine SC 215.
[2024] 10 S.C.R. 1847

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

the prescribed procedure. If such deviation is made, the court must
justify why this was necessary to “prevent the abuse of the process
of the Court”.
71. The need to be circumspect while invoking “inherent powers”, when
there is an exhaustive legal framework is amplified in the context of
a legislation like the IBC. In Ebix Singapore (P) Ltd. vs. Educomp
Solutions Ltd. (CoC),49 a two-judge bench of this Court, speaking
through one of us (DY Chandrachud, J), affirmed this position and
observed as follows:
“Any claim seeking an exercise of the adjudicating
authority’s residuary powers under Section 60(5)(c) IBC,
NCLT’s inherent powers under Rule 11 of the NCLT Rules
or even the powers of this Court under
Article 142 of the Constitution must be closely scrutinized
for broader compliance with the insolvency framework and
its underlying objective. The adjudicating mechanisms
which have been specifically created by the statute,
have a narrowly defined role in the process and must be
circumspect in granting reliefs that may run counter to
the timeliness and predictability that is central to the IBC.
Any judicial creation of a procedural or substantive
remedy that is not envisaged by the statute would not
only violate the principle of separation of powers, but
also run the risk of altering the delicate coordination
that is designed by the IBC framework and have grave
implications on the outcome of the CIRP, the economy
of the country and the lives of the workers and other
allied parties who are statutorily bound by the impact
of a resolution or liquidation of a Corporate Debtor.”
(emphasis supplied)

E. Application to the instant case
72. In the preceding section, we have analyzed the law with regard
to (i) the principles governing IBC relevant to contextualize the
consequences of withdrawing CIRP; (ii) the nature of the proceedings
after admission of an application by a creditor; (iii) the evolution of the

49 [2021] 14 SCR 321 : (2022) 2 SCC 401
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legal framework for the withdrawal of CIRP or settlement of claims;
and (iv) the scope of Rule 11 of the NCLAT Rules 2016. We will now
apply the above discussion to the specific issues before this Court
in the present factual context, namely, the locus of the appellant to
institute the present proceedings and the approach of the NCLAT
in the Impugned Judgment.

i. Locus of the appellant before this Court
73. The counsel for the respondents sought to argue that the appellant
does not have the locus to maintain the present proceedings before
this Court. They contend that in a case for settlement between the
Corporate Debtor and the second respondent, there is no scope for
hearing any other creditors, such as the appellant. We do not find
merit in this submission.
74. Section 62 of the IBC governs statutory appeals to the Supreme
Court from the orders of the NCLAT. The provision reads as follows:
“62. Appeal to Supreme Court – (1) Any person aggrieved
by an order of the National Company Law Appellate
Tribunal may file an appeal to the Supreme Court on a
question of law arising out of such order under this Code
within forty-five days from the date of receipt of such order.
(2) The Supreme Court may, if it is satisfied that a person
was prevented by sufficient cause from filing an appeal
within forty-five days, allow the appeal to be filed within a
further period not exceeding fifteen days.”
(emphasis supplied)

75. The provision stipulates that “any person” who is aggrieved by the
order of the NCLAT may file an appeal before the Supreme Court
within the prescribed limitation period. Similar language is used in
Section 61 of the IBC, which provides for appeals to NCLAT from
orders of the NCLT.50 The use of the phrase “any person aggrieved”

50 “61. Appeals and Appellate Authority.-
(1) Notwithstanding anything to the contrary contained under the Companies Act 2013 (18 of 2013), any
person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the
National Company Law Appellate Tribunal.
[…]”
[2024] 10 S.C.R. 1849

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

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 institute an appeal, and nothing in the provision
restricts the phrase to only the applicant creditor and the corporate
debtor. As noted above, 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. The appellant is not an unrelated party to the CIRP,
but is in fact, an entity whose claims had been verified by the
IRP vide letter 19 August 2024. The appellant who claims to be a
Financial Creditor, has expressed reasonable apprehensions about
the prejudice it would face if there were roundtripping of the funds,
and the prioritization of the debts of the second respondent, an
operational creditor.
76. In any event, the appellant had moved an application before the
NCLAT seeking impleadment as a respondent and the objections
of the appellant were specifically recorded and addressed in the
Impugned Judgement. Therefore, there is no doubt that the appellant
falls within the ambit of the phrase “any person aggrieved” and has
the locus standi to institute the present Civil Appeal before this Court.

ii. Approach of the NCLAT in the Impugned Judgement
77. The appellant contends that the NCLAT erred in invoking its inherent
powers under Rule 11 of the NCLAT Rules in the presence of a
prescribed procedure dealing with the withdrawal of CIRP. The
respondent, on the other hand, contends that at the time of executing
the settlement agreement, the CoC was not formed and in such
situations, Rule 11 of the NCLAT Rules may be invoked to allow
the settlement. In view of the detailed discussion in Part D of this
judgement, we find considerable force in the submissions of the
appellant on this point.
78. In paragraph 63 of this judgement, we identified the four stages
at which a procedure for the withdrawal of CIRP or settlement
of claims is contemplated in the existing legal framework. The
situation before the NCLAT in the present case fell within serial
number (ii), that is, when the application of a creditor has been
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admitted and CIRP has been initiated, however, the CoC has not
been formed. When settlement was sought by the first respondent
before the NCLAT, the Section 9 petition had been admitted and
the Section 7 petition had also been disposed of on that basis.
However, admittedly, on this date, i.e. 31 July 2024, the CoC had
not been constituted and the NCLAT subsequently stayed the
formation of the CoC.
79. 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 in the present case. First and foremost,
there was no formal application instituted to seek the withdrawal
of the CIRP. The settlement agreement was taken on record and
approved by the NCLAT based on the submissions and assurances
of the counsel before it and the affidavits/undertakings filed by the
parties. Further, the first respondent, who is a former director of
the Corporate Debtor, did not move the application through the IRP
and instead approached the NCLAT directly. Finally, the request
to approve the settlement was moved before the NCLAT during
appellate proceedings, instead of being placed before the NCLT.
Despite these grave deviations, the NCLAT still proceeded with
approving the settlement and setting aside the CIRP by invoking its
inherent power under Rule 11 of the NCLAT Rules.
80. We are of the view that recourse to Rule 11 of the NCLAT Rules was
not warranted in the present circumstances. As noted above, ‘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 run contrary to the carefully crafted procedure for withdrawal.
In the Impugned Judgement, the NCLAT does not provide any
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 direct the parties to follow the course of action in
Section 12A read with Regulation 30A of the CIRP Regulations 2016.
This legal framework for such withdrawal was formulated after giving
due consideration to the appropriate procedure for withdrawal and
balancing it with the objectives of the IBC.
[2024] 10 S.C.R. 1851

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

81. 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. As noted in Swiss Ribbons
(supra), even while invoking Rule 11 to allow withdrawal, the NCLT
must hear all the concerned parties and consider all relevant factors
on the facts of each case. The 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 on 18 March
2024. These objections were summarily dismissed by the NCLAT,
relying solely on the undertaking filed by Riju Raveendran. The only
finding in this regard is found in paragraph 44. The NCLAT relies
entirely on the undertaking filed by Riju Raveendran and states
that “although, the Applicant is not satisfied about the undertaking
but the Applicant has also not brought on record any evidence to
the contrary that the money which is being offered has actually
been brought by Riju Raveendran from the money disbursed to the
borrower in terms of credit agreement or has been taken out of the
coffers of the CD.” 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 Mr Riju Raveendran;
the ongoing investigation by the Enforcement Directorate against
the first respondent and the Corporate Debtor; and other attempts
by the Corporate Debtor to dissipate assets, were not adequately
addressed by the NCLAT.

iii. Decisions of this Court cited in the Impugned Judgement
82. The respondents relied on the decisions of this Court in Ashok G.
Rajani v. Beacon Trusteeship Ltd.,51 and Abhishek Kumar (supra)
to argue that before the CoC is formed, the proceedings are between
the applicant creditor and the debtor and thus, Rule 11 can be invoked
to allow the settlement. In the Impugned Judgement too, the NCLAT
relies on the decisions of this Court in Abhishek Kumar (supra) and
Kamal K Singh (supra), to justify the invocation of Rule 11 of the
NCLAT Rules and observe that there has been “a change in the law
on settlement”. The respondents are correct to contend that each of

51 2022 SCC OnLine SC 1275
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these decisions was rendered after Section 12A was inserted and
Regulation 30A was amended. However, it is important to understand
the context in which this Court upheld the invocation of Rule 11 of the
NCLAT Rules and whether these decisions considered the prescribed
procedure under Section 12A and the amended Regulation 30A. We
are of the considered view that these judgements do not advance
the case of the respondents.
83. In Kamal Singh (supra), a two-judge bench of this Court passed a
brief order setting aside an order of the NCLT, which dismissed an
application filed under Rule 11 of the NCLT Rules 2016 for withdrawal
of CIRP based on a settlement arrived at before the constitution of
the CoC. This Court relied on the observations in para 82 of Swiss
Ribbons (supra) referred to above, wherein this Court stated that
at the stage when the CoC has not been constituted, the NCLT may
exercise its inherent powers under Rule 11 to allow or disallow an
application for withdrawal or settlement. It may be noted that there
is no reference in this order to the prescribed procedure under
Section 12A read with Regulation 30A, although the proceedings
took place well after their insertion. As noted above, in response to
the decision of this Court in Swiss Ribbons (supra), there was a
change in the legal framework and Regulation 30A was amended to
specifically provide for a procedure for withdrawal before the CoC is
constituted. The intention was to account for the lacuna identified in
Swiss Ribbons (supra) and at the same time, reduce the reliance
on ‘inherent powers’ by prescribing a procedure for withdrawal at
this stage. In our view, as the order overlooks the relevant legal
provisions and fails to even refer to the existing legal framework
under Regulation 30A, it would be per incuriam and is not binding
on this Court.
84. The same infirmity is found in Ashok G. Rajani (supra), a judgement
rendered by a two-judge bench of this Court. In this case, too, the
petition filed by a creditor against a corporate debtor had been
admitted, but the CoC had not been constituted. The decision
refers to Section 12A of the IBC but fails to even acknowledge the
amendment to Regulation 30A, which specifically provided for such an
eventuality. Instead, this Court proceeded to hold while Section 12A
of the IBC permits withdrawal after admission of the application by
the creditor, it only provides for the procedure for withdrawal after the
CoC has been constituted, without laying down a bar on withdrawal
[2024] 10 S.C.R. 1853

GLAS Trust Company LLC v. BYJU Raveendran & Ors.

before the constitution of the CoC. According to the two-judge bench,
the question of approval of the CoC by the requisite percentage of
votes can only arise after the CoC is constituted and thus, Rule 11
must be invoked to allow withdrawal. This observation was made
without as much as a passing reference to Regulation 30A, which
specifically governs such a situation.
85. The decision of this Court in Abhishek Kumar (supra) rendered by a
two-judge bench of this Court speaking through Justice Vikram Nath,
correctly identifies the legal framework. However, it is distinguishable
from the present factual situation and the findings of this Court do
not support the case of the respondents. The facts are comparable
vis-à-vis the stage of the proceedings – the petition had been
admitted, but the CoC had not been constituted. However, in that
case, the IRP had moved an application under Regulation 30A of
the CIRP Regulations. Instead of adjudicating upon the application
under Regulation 30A, the NCLT took the view that Regulation 30A
is a mere directory provision and dismissed the application. The
NCLT vacated the stay on the constitution of the CoC and directed
that the application under 12A be decided directly (i.e. including for
compliance with the requirement of a ninety-percent voting share
of the CoC). This Court set aside the order of the NCLT on the
ground that Regulation 30A provides a complete mechanism for
dealing with the applications filed under such a provision, and it is
not necessary to get the approval of a ninety percent voting share
of the CoC if the application for withdrawal is moved before the
constitution of the CoC. On the other hand, in the present case,
there was no application filed through the IRP before the NCLT under
Regulation 30A at all. Therefore, this decision is not applicable to
the present case.

F. Conclusion
86. For the above reasons, we allow the present appeal and set aside
the impugned judgment of the NCLAT dated 2 August 2024 in the
above terms. At this stage, it would not be appropriate for this Court
to adjudicate on the objections of the appellant to the settlement
agreement on merits. The issues raised are the subject matter of
several litigations in different fora, including the Delaware Court
and investigation by various authorities, including the Enforcement
Directorate, which are pending.
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87. During the course of the proceedings before this Court, the CoC has
been constituted. The parties are at liberty to invoke their remedies,
to seek a withdrawal or settlement of claims, in compliance with
the legal framework governing the withdrawal of CIRP. Nothing in
this judgment should be construed as a finding on the conduct of
any of the parties or other stakeholders involved in the insolvency
proceedings.
88. The amount of Rs 158 crore, along with accrued interest, if any,
which has been maintained in a separate escrow account pursuant
to the Order of this Court dated 14 August 2024, is to be deposited
with the CoC. The CoC is directed to maintain this amount in an
escrow account until further developments and to abide by the further
directions of the NCLT.
89. The civil appeal and special leave petition shall stand disposed of
accordingly.
90. Pending applications, if any, stand disposed of.

Result of the case: Civil appeal and special leave petition
disposed of.

†
Headnotes prepared by: Divya Pandey