Supreme Court Upholds NCLAT Order Reinstating Byju's Original Committee of Creditors in Insolvency Proceedings

On 4 May 2026, the Supreme Court of India declined to interfere with a National Company Law Appellate Tribunal (NCLAT) order that reinstated the original Committee of Creditors (CoC) in the insolvency proceedings of Think and Learn Private Limited (TLPL), the parent company of education technology platform Byju's. The Court dismissed the special leave petition filed by Byju Raveendran, the founder and former CEO of the company, who had challenged the reconstitution of the CoC. The ruling settles a protracted dispute over the composition of the creditor body that will determine the future of one of India's most high-profile insolvency cases, involving claims exceeding Rs 20,000 crore from multiple classes of creditors including lenders, operational creditors, and employees.

Background: The Byju's Insolvency and the CoC Dispute

Think and Learn Private Limited was admitted into the Corporate Insolvency Resolution Process (CIRP) in July 2024 following a petition filed by the Board of Control for Cricket in India (BCCI) under Section 9 of the Insolvency and Bankruptcy Code, 2016, for unpaid sponsorship dues. The CIRP revealed the scale of the company's financial difficulties, with total admitted claims running into thousands of crores. A Committee of Creditors was constituted comprising the admitted financial creditors, who together held the voting power to approve or reject any resolution plan for the company. However, disputes arose over the validity of certain creditor claims and the composition of the CoC. Byju Raveendran contested several claims admitted by the Resolution Professional, arguing that certain debts had been disputed or that the creditors did not qualify as financial creditors under the IBC. The NCLT passed orders modifying the CoC composition, which were subsequently challenged before the NCLAT. The NCLAT reviewed the evidence and reinstated the original CoC as constituted by the Resolution Professional, finding that the claims had been properly admitted and that the NCLT's modifications were not warranted by the evidence on record.

The Supreme Court's Refusal to Interfere

The Supreme Court dismissed Raveendran's special leave petition against the NCLAT order, declining to exercise its discretionary jurisdiction under Article 136 of the Constitution. While the Court's order was brief and did not elaborate on the reasoning, the refusal to grant leave effectively confirms the NCLAT's finding that the original CoC was properly constituted. The dismissal means that the CIRP will proceed with the original creditor body intact, and the Resolution Professional can move forward with inviting and evaluating resolution plans. For Raveendran, the dismissal closes the last judicial avenue for challenging the CoC composition and means that his participation in the resolution process will be limited to the role of a suspended director under Section 17 of the IBC. The time already consumed in litigation over the CoC composition has delayed the resolution process significantly. Under the IBC's timeline framework, the CIRP must be completed within 330 days from the insolvency commencement date, though exclusions for litigation-related delays are available under proviso to Section 12 as interpreted by the Supreme Court in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta.

Legal Principles: The Role of the Resolution Professional in Claim Admission

The case reinforces the principle that the Resolution Professional (RP) exercises quasi-judicial authority in the admission and verification of claims filed by creditors. Under Sections 18 and 21 of the IBC, the RP is responsible for collating claims, verifying them against the books of the corporate debtor and available evidence, and constituting the CoC based on admitted financial debt. The IBC framework grants the RP significant discretion in this process, subject to the regulatory framework prescribed by the Insolvency and Bankruptcy Board of India (IBBI) under the CIRP Regulations. The NCLAT's decision to restore the RP's original determination signals that appellate interference with the RP's claim admission process should be limited to cases where the RP has committed a manifest error of law or has acted in disregard of evidence. Mere disagreement with the RP's assessment of whether a claim qualifies as financial debt, or disputes about the quantum of admitted claims, do not warrant judicial modification of the CoC unless the error is clear and prejudicial to the interests of justice.

Implications for the Byju's Resolution Process

With the CoC composition now settled, the Byju's insolvency process can proceed to the critical phase of evaluating resolution plans. The CoC, comprising financial creditors with the restored voting power distribution, will assess any resolution plans submitted by prospective resolution applicants. The Section 29A eligibility criteria under the IBC will determine whether Raveendran himself, or any entity connected to him, is eligible to submit a resolution plan. Given the scale of the default and the nature of the proceedings, the eligibility bar under Section 29A is likely to exclude the former management from the resolution process. For the education technology sector and the broader startup ecosystem, the Byju's insolvency has become a landmark case demonstrating that even the most highly valued private companies are not immune from the IBC process when they default on their obligations. The case has also highlighted the importance of corporate governance, financial transparency, and the limitations of growth-at-all-costs business models that are unable to service their debt obligations.

Broader Takeaways for Insolvency Practice

The Supreme Court's refusal to interfere carries several broader implications for insolvency practice in India. First, it reinforces the principle of minimal judicial interference in the CIRP, which is designed to be a time-bound commercial process driven by creditor consensus rather than prolonged litigation. Second, it affirms the NCLAT's supervisory role over NCLT decisions in insolvency matters, confirming that the appellate tribunal's factual findings deserve deference from the Supreme Court in the absence of a substantial question of law. Third, it discourages the use of multiple rounds of litigation over CoC composition as a strategy to delay resolution proceedings, a tactic that has been criticised for undermining the time-bound nature of the IBC framework. For promoters and former directors of companies in CIRP, the case makes clear that challenges to the CoC composition must be raised promptly and must be supported by cogent evidence of error by the Resolution Professional. Mere assertions that claims are disputed or that creditors are not properly classified will not suffice to derail the resolution process.