A Division Bench of the Karnataka High Court on 5 July Friday directed Byju’s to maintain the status quo and cease its share allotment until a final decision is made by the National Company Law Tribunal (NCLT) at Bengaluru regarding whether the edutech firm’s proceedings should be restrained regarding the second rights issue.
Earlier, a rights issue worth $200 Million initiated by the edutech firm in January had been objected to by the four investors Prosus, General Atlantic, Peak XV Partners, and Sofina Ventures, who accused the edutech platform and its parent company, Think & Learn Private Limited, of oppression and mismanagement.
The Raveendran-led company had proposed a second right issue order, scheduled between May 13 and June 13, to raise funding at a 99% discounted valuation to resolve the liquidity issues it has been facing of late.
NCLT halted the second rights issue with an interim order passed on June 12 as the investors accused Byju’s of violation of not proceeding with any rights issue before increasing its authorized capital.
But on July 2, a Karnataka High Court single judge sent the case back to NCLT to revisit the matter in two weeks and declared the interim order unreasonable with a refusal to stay the operation of the order, after the EdTech company challenged the tribunal’s decision.
The investors made two appeals against the refusal to stay the order that was heard on the morning of July 5 by a Division Bench of the High Court having Chief Justice NV Anjaria and Justice KV Aravind.
The investors before the Court were represented by Senior Advocates including Udaya Holla and Gaurav Chopra, along with Shankh Sengupta, Manasa Sundarraman, Mohammed Shameer, Yogesh Singh, Tine Abraham, and Prarthna Bathija.
Udaya Holla insisted that Byju’s had allocated shares after the single judge order of July 2 and should not be allowed to claim equity on the shares allotted since then, until NCLT decides on the matter.
The Court ordered Byju’s to maintain the status quo from July 5, adding that NCLT should look into the matter independently without any influence of the observations made by the High Court.
The Division added that NCLT is to give the final verdict on the rights issue dispute by the given date of July 31 and the shares allotted after the order of July 2 shall also be subject to the NCLT’s final decision.
Byju’s defense was represented by Senior Advocates Dhyan Chinnappa, Rishab Gupta, Manmeet Singh, Vikram Unni Rajagopal, Sairam Subramanian, Saloni Shah, and Ashika Jain, and KG Raghavan—who argued that Byju’s has not violated any undertaking, and should be able to maintain the status quo. Raghavan also responded to the allegations and protested against how allegations were made and reported against Byju’s.
