NCLAT Rejects Investor Appeal Against Byju's On Non-Compliance Claims
The National Company Law Appellate Tribunal (NCLAT) Chennai bench dismissed an appeal filed by four investors against
By: : Ajay Singh
Update: 2024-06-03 15:30 GMT
NCLAT Rejects Investor Appeal Against Byju's On Non-Compliance Claims
The National Company Law Appellate Tribunal (NCLAT) Chennai bench dismissed an appeal filed by four investors against Byju's (Think & Learn Pvt Ltd). The investors accused Byju's of failing to comply with orders issued by the National Company Law Tribunal (NCLT) Bangalore regarding an ongoing dispute over alleged oppression and mismanagement.
A coram of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain ruled that they cannot intervene in matters still under consideration by the NCLT. The tribunal emphasized that it cannot substitute the actions of the NCLT and can only issue orders on matters already decided.
The appeal stemmed from an April 23rd order by the NCLT Bangalore. The investors, which include MIH EdTech Investments (a subsidiary of Prosus NV), General Atlantic Singapore, Peak XV Partners Operations LLC, and Sofina, had filed a petition with the NCLT alleging mismanagement by Byju's Founder and CEO, Byju Raveendran, and the Current Management. They sought their removal from the company's leadership.
The NCLT's April 23rd order directed the investors to initiate appropriate proceedings if they believed Byju's was violating any orders. The investors subsequently filed a contempt petition against Byju's.
The investors' lawyers argued that Byju's had breached a court undertaking and that the NCLT should have initiated contempt proceedings without further action. They also requested the NCLAT to order Byju's to maintain the status quo regarding a potential "rights issue" (a share issuance), fearing it would affect their investor rights.
Byju's Lawyers, however, countered that the April 23rd order did not determine any rights and was therefore not appealable. They also argued that the investors hadn't requested an urgent hearing on their contempt petition with the NCLT.
The NCLAT ultimately sided with Byju's, acknowledging the existing contempt petition and allowing the NCLT to handle it according to legal procedures. With no grounds for intervention, NCLAT dismissed the investors' appeal.