NCLAT Refuses To Set Aside Order Halting Amendment To Aakash’s AoA

SUMMARY

NCLAT has refused to set aside the NCLT halting Aakash Educational Services from amending its Articles of Association (AoA)

Aakash’s counsel argued today that the company was looking to amend its AoA not to raise a debt but raise fresh capital through equity sale

The counsel further contended that the fund raise bid of Aakash is to stay afloat and not go down the route of BYJU’S

In a fresh bout of troubles for the falling edtech titan BYJU’S, the National Law Company Appellate Tribunal (NCLAT) has refused to set aside the National Company Law Tribunal’s (NCLT) order halting Aakash Educational Services from amending its Articles of Association (AoA).

According to a report by Bar and Bench, Aakash’s counsel Srinath Sridevan argued today (December 6) that the company was looking to amend its AoA not to raise a debt but raise a fresh capital through equity sale.

The counsel further contended that the fundraise bid of Aakash is to stay afloat. “We don’t want to go down the path of Think and Learn (BYJU’S). We want to stay afloat,” the publication quotes him saying.

The appellate tribunal has now sent the case back to NCLT and permitted the company to move an application for vacation of stay within one week from December 6. Further, it has directed the NCLT to give its judgement on the issue within three weeks from the date of filing.

This follows a long trail of twists and turns that have happened since the startup decided to take the equity sale route to bag fresh funds. The proposed extraordinary general meeting (EGM) to pass the AoA amendment was contested by Blackstone-backed Singapore Topco.

The Aakash investor moved the National Company Law Tribunal (NCLT) in November, claiming oppression and mismanagement as the move would dilute their 6.8% shareholding in the company.

On November 20, the NCLT blocked Aakash from passing a resolution to amend its AoA. The tribunal had passed an interim order preventing Aakash from making any changes to its governing structure until a final verdict is issued.

Five days later, the Karnataka High Court had stayed the NCLT order, observing that the Tribunal had issued its interim order without assigning any reason for directing the investors to not give effect to the resolution.

The relief that came with Karnataka HC order was short lived as the disgruntled investors subsequently moved the Supreme Court (SC), challenging the HC order. On November 29, the SC ruled in favour of Blackstone and directed Aakash to refrain from passing the resolution proposed at its EGM to amend its AoA.

However, the SC ordered stay on the resolution was only effective till the first hearing at the NCLAT, which was today. Now, the ball is in the NCLT’s hand.