Karnataka HC Lifts NCLT Block On Aakash Stake Sale

SUMMARY

The Karnataka High Court today issued an interim stay on the NCLT order barring Aakash Educational Services from amending its AoA

The court ordered the interim stay observing that the Tribunal gave its order without assigning any reason for directing the investors to not give effect to the resolution

On November 20, the Tribunal blocked Aakash from passing a resolution to amend its AoA and asked it to maintain its governing structure until a final verdict is issued

In a fresh twist to the BYJU’S saga, the Karnataka High Court today issued an interim stay on the National Company Law Tribunal’s (NCLT) order barring Aakash Educational Services from amending its articles of association (AoA).

Aakash had moved the court challenging the NCLT’s order. Justice Hemant Chandangoudar observed that the Tribunal gave its order without assigning any reason for directing the investors to not give effect to the resolution, if passed.

“It is settled law that reasons are an objective expression of an opinion, and the Tribunal have to substantiate their orders in interest of legality, propriety, and in adherence to principles of natural justice,” the court said.

The next hearing in the matter is scheduled on December 2.

On November 20, the Tribunal blocked Aakash from passing a resolution to amend its AoA and asked it to maintain its governing structure until a final verdict is issued. The move to amend the AoA was said to have come as BYJU’S founder and CEO Byju Raveendran is looking to sell a portion of his stake in Aakash to other investors

The stake sale bid for Raveendran will likely see Aakash’s largest shareholder Manipal Education and Medical Group (MEMG) increase its stake in the coaching institute from the existing 40%. For BYJU’S, the development comes at a time when it is fighting on multiple fronts and is undergoing insolvency proceedings.

However, the stake sale was opposed by BYJU’S lenders – Singapore Topco, Blackstone, Glas Trust, among others. The lenders have also alleged that BYJU’S misused Aakash’s assets.

Meanwhile, the situation for BYJU’S continues to turn grave day by day. Earlier today, it was reported that the corporate affairs ministry has ordered a probe into its financial and accounting practices.

The Registrar of Companies in Hyderabad has been ordered to investigate the startup’s books over allegations that the Byju Raveendran-led company “misreported” financial statements and siphoned off funds.

Recently, it was alleged in a US court that BYJU’S founder Raveendran tried to regain control of the company’s US-based subsidiary Epic! using loan money that he allegedly hid from investors.

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