NCLAT rejects GLAS Trust plea to stay Aakash EGM and rights issue

NCLAT rejects GLAS Trust plea to stay Aakash EGM and rights issue

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, has dismissed an interim application filed by GLAS Trust Company LLC, the principal member of the Committee of Creditors (CoC) of Think & Learn Pvt Ltd (Byju’s), seeking to restrain Aakash Educational Services Ltd (Aakash) from proceeding with its proposed rights issue and Extraordinary General Meeting (EGM) on October 29.

The tribunal held that Aakash’s Board is entitled to raise capital to meet its business requirements and cannot be prevented from doing so merely because one of its shareholders is undergoing Corporate Insolvency Resolution Process (CIRP).

What did GLAS Trust want to stop?

GLAS Trust, supported by Think & Learn’s Resolution Professional (RP) Shailendra Ajmera of EY, argued that allowing the rights issue to proceed could affect Think & Learn’s equity position in Aakash. The plea requested interim relief to stop the EGM pending final adjudication of disputes related to control and governance.

However, the two-member Bench of Justice N. Seshasayee (Judicial) and Jatindranath Swain (Technical) held that GLAS and the RP failed to establish a prima facie case warranting injunction.

What did the tribunal say about Aakash’s autonomy?

The tribunal noted that Aakash is a separate juristic entity and retains autonomy over its commercial decisions, irrespective of the financial situation of its shareholders.

“Jurisprudentially a company and its controlling entities are not the same… the fact that some among those who held controlling power is exposed to CIRP cannot be stretched to the extent of enabling interference in the company’s right to protect its commercial existence,” the Bench stated.

Does the rights issue dilute Think & Learn’s stake?

The Bench further observed that the proposed rights issue is proportionate to existing shareholding and does not automatically dilute Think & Learn’s equity. The decision to subscribe or renounce rests with the CoC and the RP.

“Indeed, the value of TLPL’s shares in Aakash can never be preserved if Aakash is commercially killed. Therefore, the spirit of IBC is best served when the companies in which CD has some shares are allowed to prosper, irrespective of who has the controlling power,” the tribunal added.

Where should disputes over control be raised?

The tribunal clarified that questions of shareholding control or alleged dilution fall within the scope of oppression and mismanagement proceedings under the Companies Act, not under the Insolvency and Bankruptcy Code.

Aakash was represented by Senior Advocates Gopal Subramanium, Dr. U.K. Chaudhary, Arun Kathpalia, and R. Chandrachud.

With the order, Aakash is free to go ahead with the EGM and capital-raising plans. The underlying appeals (C.A. 50 of 2025 and C.A. 139 of 2025) will continue to be heard on merits.