Aakash Education has been asked by the Supreme Court to approach the National Company Law Appellate Tribunal (NCLAT) within seven days
The trouble doesn’t seem to end for ed-tech firm Byju’s. In a recent turn of events, the Supreme Court has prevented its subsidiary Aakash Institute from amending its Articles of Association (AoA). The AoA was passed by the company in its extraordinary general meeting.
As per the minority shareholders of the company, the proposed amendment to the company's structure or rules aims to reduce or weaken the rights of minority shareholders. One of the arguments has been by Blackstone, which owns around 6.97 per cent of Aakash. Blackstone, the lender of Byju's, has argued that the intent of the dilution was to benefit Manipal Education, which has emerged as the largest shareholder in the company.
Meanwhile, Aakash Education has been asked by a bench of Chief Justice of India Sanjiv Khanna and Justice PV Sanjay Kumar to approach the National Company Law Appellate Tribunal (NCLAT) within seven days as per the Bar&Bench. Further, the resolution’s implementation would stay until the first hearing of the NCLT order.
Just to give some context, an order was issued by the NCLT that prevents Aakash from implementing a resolution that would amend its AoA. In its interm order, the NCLT mentioned, "In the interests of justice, this Tribunal directs the Respondents No. 1 to 11 (Aakash Educational Services and others) not to give effect to the resolutions, if passed, in relation to Agenda Item No. 8 in the Extra Ordinary General Meeting to be held today, i.e., 20.11.2024, till the disposal of the main petition.”
Following this, the case went to the Karnataka High Court. The court, on November 25, stayed the NCLT order. Karnataka High Court’s Justice Hemant Chandangoudar said, “It is settled law that reasons are an objective expression of an opinion, and the Tribunal [must] substantiate their orders in the interest of legality, propriety, and adherence to principles of natural justice.”
This comes at a time when the ed tech firm is already facing several legal battles with many of its investors. During an interaction with reporters in October last year, Byju’s founder, Byju Raveendran, told reporters the company was now valued at zero. “We overestimated potential growth and entered a lot of markets together. It was a little too much, too soon,” he reportedly said.