Byju's on April 4 filed an application with the National Company Law Tribunal (NCLT) to refer its dispute with the investors for arbitration.
When there is an arbitration clause in its agreement with investors, the dispute should ideally be adjudicated through that process, the embattled ed-tech firm said.
The investors, including Peak XV Partners, General Atlantic, and Prosus, made fresh accusations against Byju’s during the hearing. It declared the outcome of the extraordinary general meeting (EGM) before the postal ballots could conclude on April 6, the dissenting investors said.
The company violated the tribunal’s orders by allotting shares to those who subscribed to the rights issue without first increasing the authorised capital, they claimed. They were also not allowed to inspect the documents properly despite an NCLT order, they alleged.
Byju's denied the claims and said it would file its response in an affidavit.
NCLT directed the ed-tech company to file a response to the main petition. The investors were also told to file their response to Byju's plea to refer the dispute to arbitration. The case will now be heard on April 23.
Arbitration is a mechanism to resolve disputes between parties without going to court. A neutral person is appointed to adjudicate the dispute and the judgment of an arbitrator is legally enforceable.
For parties to resolve their dispute through arbitration, they must have an agreement expressing their intention to arbitrate.
In its order on February 27, NCLT directed Byju's not to allot shares to investors participating in the rights issue without increasing its authorised share capital.
A month later, Byju's allowed the investors to inspect its documents.
The investors alleged that these two orders were violated.
On April 3, the NCLT placed a plea by the investors to halt the rights issue before the tribunal president due to a difference of opinion between the members of its Bengaluru bench.
Byju’s on March 29 concluded its EGM to increase the company's authorised share capital. According to sources, there were no objections to the resolutions during the meeting.
Hours before the EGM, CEO Byju Raveendran told dissenting investors, who stayed away from the $200 million rights issues, that they were welcome to participate in it over the next 72 hours. However, none of them participated.
The EGM was held a day after the NCLT refused to defer the meeting despite a plea by dissenting investors such as Peak XV Partners, General Atlantic, and Prosus seeking a stay.
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