Aakash Institute’s Minority Shareholders Deny Manipal’s Claims Before NCLT

Aakash Institute’s Minority Shareholders Deny Manipal’s Claims Before NCLT

Earlier, it requested the tribunal to lift a stay on a previous order that barred the company from amending its AoA

Aakash Institute's minority shareholders including private equity major Blackstone have denied claims of the ed-tech and Manipal Education & Medical Group before the National Company Law Tribunal (NCLT).

Manipal had alleged that the reserved rights were transitory, and the company struggled to operate due to the stay on amending its Articles of Association (AoA).

Representing the minority shareholders, senior advocate Darius Khambata said that the articles were legally binding and would take precedence over any agreement between the shareholders.

Khambata added, "The secure protections I am given are being sought to be wiped out by the actions of the majority against whose actions I was granted these minority protection rights. This reduces the situation to a complete mockery.”

Aakash Institute had sought to remove the rights of minority shareholders and confer special rights on Ranjan Pai's Manipal, which holds a 40 percent stake in the company.

Earlier, Aakash Institute, citing the need for funds, requested the tribunal to lift a stay on a previous order that barred the company from amending its AoA during an extraordinary general meeting.

The move followed a petition by minority shareholders who accused the current board of mismanagement and oppressing their interests.

The counsel argued, "My exit is being prevented because Think & Learn, the other major shareholder with whom the merger was supposed to take place, obtained an injunction against me in an emergency arbitration proceeding. It stated that I will not transfer my shares to any other party. So, on one hand, I’m locked in, and on the other, I’m being told that our rights are being completely taken away. This is classic oppression.”

Meanwhile, Dhyan Chinnappa, the senior counsel representing Manipal argued that the minority shareholders had received rights on the shares as part of an agreement to merge Think & Learn and Aakash. The merger did not go through amid financial and regulatory issues at Think & Learn. Hence, these rights cease to exist.

However, Khambata stressed that the reserved rights were effective until the minority shareholders ceased to be shareholders.

He added that the ed-tech company failed to provide evidence proving that minority shareholders were hindering the company's operations.