Aakash Moves NCLT Against EY For Meddling In BYJU’s Case

SUMMARY

Aakash has asked the tribunal to either dismiss the petition filed against it by BYJU’S or make EY LLP and its partner Ajay Shah respondents

It said EY played a consistent role in advising and facilitating various parties whose interests were privileged and exclusive

BYJU’S moved the NCLT against Aakash in March to prevent a potential dilution of its stake in Aakash following a fundraiser

A week after accusing EY India of conflict of interest, Aakash Educational Services Limited (AESL) has now moved the National Company Law Tribunal (NCLT) against the consulting giant.

In its June 1 petition, Aakash urged the tribunal to either dismiss a petition filed by BYJU’S, alleging oppression and mismanagement, or make EY LLP and its partner, Ajay Shah, as respondents to the case.

This comes more than two months after BYJU’S parent company, Think & Learn Pvt Ltd (TLPL), filed a suit before the NCLT to prevent a potential dilution of its stake in Aakash. The petition, which was filed by BYJU’S interim resolution professional (IRP), Sanjay Ajmera, led to a status quo of the shareholding. The matter will next be heard on June 6.

In a statement, AESL also warned of raising the matter of EY India’s conflict of interest before regulators, including the Insolvency and Bankruptcy Board of India (IBBI) and the Ministry of Corporate Affairs.

“The matter is sub-judice, and therefore we cannot offer any further comment at this time. However, we refute the allegations and will defend any such legal action vigorously,” EY said in a statement.

Training guns at IRP Ajmera, Aakash’s plea claimed that his role as the new IRP of BYJU’S was “severely compromised”, as Ajmera is also a senior “EY India functionary”.

In its petition, AESL also alleged that EY India, which offered a range of advisory services to the company was now “acting against” the coaching chain through Ajmera.

“This is a classic case of conflict of interest and abuse of process… The very transactions now being challenged in the petition – such as the issuance and conversion of non-convertible debentures (NCDs), equity restructuring, and internal governance matters—were structured and overseen by EY,” AESL alleged.

EY India Caught In The Mix

Aakash’s central allegation is that EY colluded with BYJU’S in the NCLT proceedings between the two edtech platforms.

Both BYJU’S and Aakash have been involved in litigation over the former’s failed acquisition of the latter.

The edtech giant acquired the coaching chain in 2021 in a cash and stock deal. However, the acquisition was marred by governance issues and a fight over the control of AESL, as the troubled edtech faces insolvency proceedings. The control of the coaching chain now rests with Manipal Group’s Ranjan Pai.

According to Aakash, EY helped and played a material and consistent role in advising and facilitating various parties “whose interests were privileged and exclusive” in a material sense.

Elaborating on this, AESL alleged that EY India, through its “partner” Ajmera, aided the collapsed edtech giant in “financial forecasting, liquidity management, and decision-making processes” while also advising the coaching chain.

“It is reiterated that Ajay Shah from EY, along with the team of EY, has since at least 2021 played a critical role and was involved in the operations of the applicant (Aakash). EY was actively involved in advising the persons at the helm of affairs of the applicant at the relevant points in time. It is submitted that the present RP of TLPL (BYJU’S), also from EY, is personally aware of the involvement and the vital role played by Ajay Shah, also from EY, in the business operations of the applicant,” the petition read.

The matters escalated after the IRP of BYJU’S recently inquired about Aakash’s board of directors. In its reply, Aakash pointed out the perceived conflicts of interest with EY, stating, “Pending adjudication of the above, we choose not to communicate with you, as your authority to act as a resolution professional, in view of the emerging facts, stands severely undermined.”

The matter took a major turn last month after AESL reportedly accused EY India of conflict of interest and breach of professional conduct. In a letter sent to the consulting firm, Aakash accused EY India of acting in a dual capacity by advising both BYJU’S and Aakash, “despite being fully aware of the hostile and litigated nature of their relationship”.

The coaching chain also directed EY India to disclose all documents, information, or communication related to transactions involving AESL, and warned of “appropriate steps in law” for failure to comply with the directions.

However, EY India has denied all these allegations.

Editor’s note : The story has been updated to add a statement from the EY