Aakash vs EY: How Dual Advisory Role Ignited a Legal Crisis - Explained

Coaching chain Aakash Education Services Ltd (AESL) has issued a second legal notice to EY India, its multiple partners, and employees over alleged “conflict of interest” and “professional misconduct”. The latest notice is related to the consultancy firm acting as a “exclusive” financial advisor to AESL’s direct rival Allen.

The notice also accuses EY of engaging in an “unethical conflict of interest” by simultaneously advising Aakash and its direct competitor. The coaching institute also called for a formal investigation into EY’s actions. The notice has been filed via senior advocate CV Nagesh.

“… AESL has now come to know EY acted as an exclusive financial advisor and official result validator to a competitor, which is a matter of deep concern. AESL is examining (the) initiation of further civil and criminal proceedings against EY in this regard,” said Aakash’s legal head Sanjay Garg in the notice.

These allegations are not new to EY. Previously, Dinkar Venkatsubramanian, Leader & Partner, Debt and Special Situations, EY India, was also charged with professional misconduct and breaches under the Chartered Accountant’s Act and was faced with fine, criticism, and reprimand for his action.

“….it’s high time that the affairs of EY must be investigated at the highest level for its professional dishonesty and violation of statutory norms,” he added.

However, EY India spokesperson refuted all allegations, saying "...we treat matters of client confidentiality and conflict with utmost seriousness. Therefore, we cannot comment further on this matter".

How 'Aakash vs EY' Started?

Aakash alleges that since 2021, EY advised both Aakash and its rival, Allen Career Institute, while still handling Aakash’s strategic deals like attempted merger with Byju’s and restructuring of debentures into equity.

Such parallel assignments, if true, breach core ethics, confidentiality, and professional independence. However, no rule explicitly says that dual advisory is illegal in all cases. But the ethical and regulatory frameworks strongly discourage such arrangements.

For instance, according to ICAI Code of Ethics, a chartered accountant providing a professional service related to a particular matter for two or more clients whose business interests span the same sector or market would be seen as a case of conflict of interest.

"....the interests of a professional accountant with respect to a particular matter and the interests of the client for whom the accountant provides a professional service related to that matter are in conflict," the rule read.

Hence, advising Aakash and Allen on overlapping business issues falls squarely within this prohibition, unless effective ethical walls were in place.

This fight turned legal after EY India failed to provide documents and communications related to key transactions involving AESL despite “repeated” email requests on April 12, May 6, and May 17, 2025.

Last month, Aakash filed a plea with the National Company Law Tribunal (NCLT) seeking the dismissal of a petition filed by the edtech company Byju’s and the appointment of EY and its partner Ajay Shah.

It requested that the tribunal either dismiss the company petition filed by Byju’s under sections 241 and 242 of the Companies Act, alleging “oppression and mismanagement,” or name EY LLP and its partner Ajay Shah as respondents in the case.

Byju’s acquired Aakash in 2021 through a cash-and-stock transaction. It was once seen as a marquee deal but unraveled amid governance lapses and an ongoing battle for control of the coaching chain. With Byju’s now entangled in insolvency proceedings, the reins of AESL have effectively shifted to Ranjan Pai of the Manipal Group.

The turning point came in 2023, when Pai’s family office acquired $250 million worth of debt that Byju's had raised from Davidson Kempner. Over the same year, he committed a total of $300 million to the company.

Crucially, AESL’s board later approved a proposal to convert part of this investment into equity - translating into a 40% stake for Pai and tipping control of the coaching giant in his favour.

The NCLT had ordered a status quo on the shareholding of the AESL.