NCLAT Quashes BYJU’S Appeal In Aakash Shareholding Dispute

The National Company Law Appellate Tribunal (NCLAT) has dismissed a plea filed by BYJU’S challenging an interim order which asked to maintain a status quo on the insolvency-ridden edtech platform’s shareholding in Aakash. 

In an order dated June 6, the NCLAT said that the interim NCLT order was “interlocutory in nature” and “consensual”, making it unfit for appellate review. 

For context, an interlocutory order is a temporary directive issued during the hearing that does not decide the final outcome of the case. It rather addresses specific procedural issues that arise during the legal process, until a full hearing. 

The Appellate Tribunal added that the interim directions were passed with the consent of both sides and did not address the dispute on its merits. It was simply a temporary arrangement to maintain the status quo during ongoing proceedings, it said.. 

“… Since the impugned order (dated April 30) takes the shape of an interlocutory order, which is not deciding any of the rights of the parties, coupled with the fact that the order takes the shape of a consenting order, no interference is called for by this tribunal in the exercise of its appellate jurisdiction at this stage. Thus, the instant company appeal… lack merits and the same is accordingly dismissed,” the NCLAT order said. 

With this, the NCLAT has effectively upheld the NCLT order that maintained the current shareholding structure of Aakash and put a hold on any new fundraise by the coaching chain.

The issue traces its origins to 2021, when BYJU’S acquired Aakash, a prominent test preparation company. Subsequently, as the edtech platform faced insolvency proceedings and Ranjan Pai’s Manipal Group acquired 40% stake in Aakash, the coaching chain proposed amendments to its articles of association (AoA) to raise INR 500 Cr in new capital. 

Aakash has maintained that this fundraise is crucial for its survival and is needed to cover operational costs across its network of offline coaching centres.

BYJU’S, acting through its resolution professional (RP) Shailendra Ajmera, opposed the proposed changes, warning that they could result in further dilution of the insolvency-prone edtech platform’s ownership in Aakash. As a result, the NCLT’s interim order blocked any such amendments until the case is thoroughly examined.

The Legal Saga Over Status Quo

This isn’t the first time that the courts have intervened to preserve Aakash’s shareholding structure. The case stems from a plea filed by BYJU’S, via RP Ajmera, under Sections 241 and 242 of the Companies Act, alleging oppression and mismanagement in Aakash.

On March 27, the NCLT issued an interim order halting changes to Aakash’s shareholding. However, the Karnataka High Court later set aside that order (which mandated status quo) in April and directed the NCLT to conduct a fresh review, while instructing all parties to maintain the status quo until a proper hearing could be held.

The next NCLT hearing took place on April 30, ending with the Tribunal again reaffirming the freeze on shareholding changes. The Bengaluru bench of the NCLT is expected to continue hearing the matter, with a full examination of the shareholding dispute and management control issues scheduled for a later date.

The matter took a sharp turn earlier this month after Aakash filed a plea, seeking dismissal of BYJU’S petition as vexatious. It also requested to implead consultancy firm EY and its partner Ajay Shah, alleging they played a central role in key decisions.

Mounting Legal Cases Pertaining To BYJU’S

The NCLAT order comes at a time when BYJU’S is facing corporate insolvency proceedings and increasing legal troubles. The edtech firm is already entangled in disputes involving shareholders, lenders, and its international subsidiaries.

The past week has been especially turbulent. Aakash filed a case before NCLT, accusing EY India of a conflict of interest. The coaching chain claimed that the consultancy major, which once advised Aakash, is now working against its interests through Ajmera, an EY partner who is currently overseeing BYJU’S insolvency resolution. 

Aakash has urged the NCLT to formally include EY in the proceedings and has threatened to escalate the matter to government regulators.

Meanwhile, BYJU’S cofounder and former promoter Riju Ravindran also entered the legal fray on June 5 with a petition challenging the role of GLAS Trust in the insolvency process. Ravindran alleged that GLAS Trust has no legitimate claim and accused it of distorting the process by overplaying its voting power within the committee of creditors. He urged the Tribunal to remove GLAS Trust and nullify any decisions it influenced.