Karnataka HC Restrains Byju's From Allotting Shares Pending NCLT Proceedings On Rights Issue

The Karnataka High Court has restrained edutech company Byju's, its MD Byju Raveendran, and its parent company Think and Learn Private Limited from allotting shares until the pending proceedings against it before the National Company Law Tribunal are decided.

In that context, the Bench of Chief Justice NV Anjaria and Justice KV Aravind observed that, "During the proceedings of remand and till the decision which may be taken by the NCLT, the parties shall maintain status quo with regard to the subject matter dispute as obtained on today. The respondents shall not make allotment of shares in the interregnum, to be subject to the final order which may be passed by the NCLT."

Byju's investors approached the NCLT to stop the company from launching a second rights issue, fearing it would dilute their holdings. The Tribunal issued an interim order preventing the company from allotting the shares. This interim order was challenged before a Single Judge of the High Court, which overturned the NCLT order, calling it non-speaking and cryptic. The investors then filed an appeal against this decision.

The High Court ordered that the transactions which may have taken place of allotment of shares and other connected transactions between the period from the date of the order of learned Single Judge shall remain subject to the final order which may be passed by the NCLT and the rights in that regard shall be governed accordingly.

It was further directed that the e NCLT shall consider the case on remand independently. In that context, it was said that, "The NCLT shall consider the case on remand independently and on its own merits and without influenced by any of the observations in its earlier order, without influenced by the observations in the order of learned Single Judge and any other order which may have been passed previously to decide the issues involved, strictly on merits and in accordance with law."

Cause Title: General Atlantic Singapore TL PTE Ltd. vs BYJU Raveendran & Ors. (Neutral Citation: 2024:KHC:25489-DB)

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