K’taka HC Quashes Qatar Holding’s Plea Against Byju Raveendran

SUMMARY

The HC observed that Qatar Holding should approach SIAC for any interim measures rather than Indian courts as the tribunal is already hearing the matter

However, the HC ordered that interim orders, undertakings and status quo arrangements will continue to remain in place for three months to safeguard Qatar Holding’s interests

Qatar Holding had extended $150 Mn to BYJU’S Investments Pte Ltd in September 2022 to finance part-acquisition of Aakash but later claimed a default citing troubles at BYJU’S

The Karnataka High Court has reportedly dismissed Qatar Holding LLC’s petition, which sought to restrain troubled edtech startup BYJU’S’ cofounder Byju Raveendran and BYJU’S Investments from transferring of assets worth $235 Mn, including shares in coaching chain Aakash.

As per Bar and Bench, Justice Ashok S Kinagi observed that Qatar Holding should approach Singapore International Arbitration Centre (SIAC) for any interim measures rather than Indian courts under Section 9 of the Arbitration and Conciliation Act, 1996.

Citing his rationale, Justice Kinagi said that an arbitral tribunal has already been constituted by the SIAC in the matter.

“The petitions are rejected; however, liberty is reserved to the petitioner to make necessary application either before the Emergency Arbitrator seeking clarification or before the Arbitral Tribunal seeking interim relief,” the Court reportedly ordered.

However, in some interim relief, the HC ordered that interim orders, undertakings and status quo arrangements will continue to remain in place for three months to safeguard Qatar Holding’s interests.

During the hearing, the court also rejected Qatar Holding’s bid to seek additional protections. The HC observed, “By filing the present petitions under Section 9, the petitioner has sought reliefs over and above what was contemplated in the Emergency Arbitration Award. The petitioner is attempting to modify, supplement or better the scope of the Emergency Arbitration Award, which is legally untenable”.

The HC also ordered that any clarification or modification must be sought from the emergency arbitrator or the arbitral tribunal.

Meanwhile, Justice Kinagi also reportedly opined that Raveendran had taken inconsistent positions regarding the ownership of Aakash shares in affidavits filed before the arbitral forum.

“A litigant can take a different stand at different times, but cannot take a contradictory stand in the same case. A party cannot approbate and reprobate on the same facts. Taking inconsistent pleas by a party makes its conduct far from satisfactory,” the HC observed.

Hence, the HC invoked the doctrine of estoppel, observing that such conduct prolonged proceedings unnecessarily.

At the heart of the matter is Qatar Holding extending $150 Mn to BYJU’S Investments Pte Ltd in September 2022 under a Cash-Settled Option Transaction to finance the acquisition of 1.78 Cr shares of the coaching chain Aakash Educational Services Limited.

It is pertinent to note that BYJU’S acquired Aakash in 2021 at a valuation of $1 Bn in 2021.

Under the contours of the agreement, BYJU’S was required to repay $300 Mn to Qatar Holding by March 2025. However, amid growing troubles at the edtech platform, the subsidiary of Qatar’s sovereign wealth fund terminated the transaction in February 2024, claiming a default, and demanded early payment of $235 Mn.

In March last year, Qatar Holding initiated arbitration proceedings at the SIAC. A few weeks later, an emergency arbitrator reportedly restrained the respondents from disposing their assets up to the claimed amount.

Thereafter, Qatar Holding filed a petition in the Karnataka High Court last year seeking interim protection over the assets including the Aakash shares.

This comes at a time when BYJU’S is trying to douse fires on multiple fronts including insolvency proceedings, disputes with creditors, legal cases and a full-blown verbal duel between investors and founder Raveendran.