On February 27, the National Company Law Tribunal (NCLT) deferred judgment on interim orders regarding an oppression and mismanagement plea lodged by four investors against the edtech firm Byju’s.
These investors sought a halt to a $200 million rights issue set to conclude on February 29, claiming coercion to participate to avoid share dilution.
The NCLT instructed both parties to submit written contentions within three days and notified the Ministry of Corporate Affairs and Registrar of Companies.
The investors, in their plea, urged the NCLT to freeze the rights issue, restrain asset transfers by Byju’s and its subsidiary, and maintain the current shareholding status quo while demanding full disclosure of information by the company.
During a nearly five-hour hearing, tensions flared between the investors and Byju’s board, with the former alleging illegality in the rights issue and the latter accusing the investors of obstructing operations.
The investors’ lawyers argued that the board bypassed a general body meeting knowing it wouldn’t favor their decisions, while the company’s counsel contended that investors prioritized their own interests over those of millions of students and thousands of employees.
The investors’ plea targets 12 entities and individuals, including Byju’s founder Byju Ravindran, his wife Divya Gokulnath, and his brother Riju Raveendran. Their ultimate goal is to challenge the founders’ fitness to lead, install a new board, invalidate the rights issue, conduct a forensic audit, among other measures.
This legal battle coincided with an extraordinary general meeting on February 23, where major investors like Prosus, General Atlantic, and Peak XV voted to remove Raveendran from his position.
While shareholder sources claimed approximately 60% stake voted in favor, company sources disputed this, arguing that those backing the resolutions held only around 47% of shares.
Additionally, other entities like the Board of Control for Cricket in India (BCCI), Teleperformance Business Services, Surfer Technologies, and Glas Trust Company have filed separate insolvency petitions against Byju’s, signaling broader legal challenges for the edtech giant.
Facing financial strains exacerbated by layoffs and investor departures, Byju’s has attempted to stabilize its operations by securing new investments, forming advisory councils, and considering asset divestitures like Great Learning and Epic.
