NCLAT dismisses appeal by investors against Byju’s over non-compliance with orders

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) today refused to grant relief to investors who approached the tribunal against Think & Learn Pvt Ltd owned Byju’s claiming the company failed to comply with the National Company Law Tribunal (NCLT) orders in the ongoing proceedings over oppression and mismanagement within the company [MIH Edtech Investments and Ors. v. Think and Learn Pvt Ltd].A coram of judicial member Justice Sharad Kumar Sharma and technical member Jatindranath Swain dismissed an appeal filed by the four investors – MIH EdTech Investments, a subsidiary of Prosus NV, General Atlantic Singapore, Peak XV Partners Operations LLC and Sofina.“As an appellate court, we cannot intervene in matters that are yet to mature in NCLT. We cannot issues orders on matter that is yet to be decided by NCLT. We cannot substitute the actions of NCLT," the appellate tribunal held..The investors filed an appeal challenging an order of April 23 of NCLT Bengaluru. Their petition before the NCLT alleged oppression and mismanagement by the company. The group of investors sought a declaration that founder and Chief Executive Officer (CEO) Byju Raveendran and the present company management was unfit to run the company and should be ousted from the management.The NCLT order of April 23 directed the investors to file appropriate proceedings in the event there is violation of orders. Accordingly, the investors filed a contempt of court petition..Senior advocates Sudipto Sarkar and Satish Parasaran appearing for the investors argued that Byju’s had breached an undertaking given to the court and in view of this, NCLT ought to have protected its order and initiate contempt proceedings without any proceedings. The lawyers also asked the appellate tribunal to consider ordering Byju’s to maintain status quo regarding the allotment of shares as it had purportedly floated another ‘rights issue’. This would affect the investor rights, the petitioners claimed..Senior advocate Dhyan Chinappa and Srinath Sridevan, appearing for Byju’s, opposed the prayer arguing that no rights had been determined in the April 23 order and hence, it was not appealable.The lawyers also argued that the investors never moved NCLT seeking urgent hearing on the contempt petition, which had only been registered..NCLAT ruled that since a contempt petition was already filed, the same could be considered by NCLT in accordance with law. In view of this, NCLAT refused to interfere with the order and dismissed the appeal by the investors..Senior lawyers representing the investors were briefed by Shankh Sengupta and Tine Abraham from Trilegal.Senior lawyers representing Byjus were briefed by Manmeet Singh and Sairam Subramanian from Saraf and Partners.