Ruling in favour of the investors of Byju's parent Think and Learn Private Limited, the National Company Law Tribunal (NCLT) on Wednesday passed an order directing Aakash Institute to not give effect to the resolution to amend the Articles of Association (AoA) that could dilute the investors' shareholding in the company.
"In view of the above and in the interests of justice, this Tribunal directs the Respondents No.1 to 11 not to give effect to the resolutions, if passed, in relation to the Agenda Item No.8 in the Extra Ordinary General Meeting to be held on today i.e. 20.11.2024, till the disposal of the main Petition," the order passed by Judicial Member K Biswal and Technical Member Manoj Kumar Dubey said.
Agenda Item No.8 refers to the resolution to amend the AoA. The case is now expected to be heard on December 19.
The order was passed in an oppression and mismanagement petition filed by Singapore VII Topco I, an entity owned by Blackstone. The entity holds 6.97% shares in Aakash Institute and alleged that its rights and interests were being oppressed.
Byju's acquired Aakash Institute in 2021 at the peak of the pandemic. Aakash was the largest acquisition by Byju's, valued at $1 billion. It continued to make profits even after the pandemic owing to its physical outlets.
On Monday and Tuesday, Byju's lenders and investors such as Singapore VII Topco I contended that the former management of Byju's was trying to dilute their shareholding in Aakash by amending portions of AoA that protected their rights in the company.
It is their contention that Byju's would not be worth anything without Aakash institute.
During the course of the hearing, the lawyers for the petitioners contended that Manipal Education, which was the majority shareholder of Aakash, was colluding with the company to nullify their rights.
However, Aakash and its shareholders contended that the investors had obtained shares as a result of a Merger Framework Agreement (MFA). The merger did not got through as planned, as a result of which they do not have any right in the company. They further argued that Think and Learn had initiated arbitration against them in the Singapore International Arbitration Centre (SIAC) in this regard.
The petitioners, however, argued that they had rights in the company as shareholders irrespective of whether or not the MFA persists. It is also their contention that the MFA is a confidential document and the fact that the majority shareholders of Aakash are privy to its contents shows clear collusion.
On Monday, the lenders alleged that the former management of the company tried to amend the AoA to effect the dilution of shareholding.
The petitioners were represented by Senior Advocates Kapil Sibal and Darius Khambata along with Advocates Saji P John and Nandish Patel.
The respondents were represented by Senior Advocates Mukul Rohatgi, KG Raghavan, Dr. Abhishek Manu Singhvi and Dhyan Chinnappa with Advocates Shyam Sundar, A Murali, Vishak and Rishab Gupta.
[Read order]