Investors Vs Byju's: NCLAT junks plea by investors over non-compliance with order

NCLAT junks plea against Byju's

The Chennai bench of National Company Law Appellate Tribunal (NCLAT) on June 3 dismissed a plea by a bunch of four investors of embattled ed tech firm Byju's against the company.

The investors filed an appeal against the order of the National Company Law Tribunal (NCLT) from April 23, refusing to pass an effective/immediate order against Byju's over alleged violation of directives.

The NCLAT noted that since the investors have already filed a contempt petition against Byju's over violations, the NCLT will pass an order in the same. It was thus not inclined to interfere in the case.

Byju's was represented in the NCLAT by lawyers Manmeet Singh and Sairam Subramanian , senior partner and partner at law firm Saraf and Partners. The investors were represented by law firm Trilegal.

What is the dispute?

On April 23, four investors of Byju's alleged that the company had been using some of the funds raised during the recently concluded rights issue in violation of an National Company Law Tribunal order, a charge denied by the embattled edtech company.

The Bengaluru bench of the tribunal on April 23 deferred to June 6 the hearing of the “oppression and mismanagement plea” filed against the company by investors Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative and Prosus.

Byju's had not deposited the money it received from rights issue prior to February 27 in the escrow account, the investors alleged during the hearing.

Byju's  also allotted shares to those who participated in the rights issue, overlooking the tribunal’s order to maintain status quo as far as the share holding was concerned.

The company vehemently denied the claims and said everything had be done in accordance with law.

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. The company was also asked to keep the proceeds of the rights issue in an escrow account to protect investors’ right.

While the tribunal initially showed inclination to direct Byju's to file an affidavit, it did not do so since the investors had not filed any application. The investors were directed to file either an application or an affidavit to put their claims on record in a week's time. Byju's lawyers said they would file a response in two weeks from then.