NCLT Allows Aakash EGM to Proceed, Rejects Byju’s Plea for Interim Stay

NCLT Allows Aakash EGM to Proceed, Rejects Byju’s Plea for Interim Stay

Introduction

This matter concerns an interim relief application filed by the Petitioner, Byju’s (Think & Learn Pvt. Ltd.), in an oppression and mismanagement case, seeking to restrain the Respondent, AESL, from proceeding with a proposed rights issue. The National Company Law Tribunal, Bengaluru, declined to grant the interim relief, allowing AESL to hold its Extraordinary General Meeting (EGM) as scheduled on October 29, 2025. The order addresses the Petitioner’s allegations of potential shareholder dilution and prejudice arising from the rights issue.

Factual Background

The Petitioner, Byju’s, filed the present petition through its Resolution Professional, asserting that AESL’s rights issue was intended to dilute its 25.5% shareholding to below 5%. Byju’s argued that it could not participate in the issue due to financial constraints arising from its ongoing Corporate Insolvency Resolution Process (CIRP). The Petitioner alleged violations of AESL’s Articles of Association and claimed that its shareholder and veto rights were being ignored, contrary to a prior NCLT direction in November 2024. Byju’s sought an immediate order to stay the EGM to prevent irreparable prejudice to its stake, which it considered its major asset.

Procedural Background

The petition was filed as a claim of oppression and mismanagement before the NCLT, Bengaluru. The Tribunal, on considering the interim relief application, noted that AESL had opposed the petition, arguing that the rights issue was a legitimate move to raise funds due to the unwillingness of banks to lend amid ongoing shareholder disputes. AESL contended that the offer was open to all shareholders and that Byju’s inability to subscribe due to insolvency could not render the issue unfair. The Tribunal observed that a similar petition involving overlapping issues was already pending, and that granting interim relief at this stage could prejudice the pending matter.

Issues

1. Whether the Tribunal should grant interim relief restraining AESL from proceeding with the proposed rights issue.

2. Whether the Petitioner’s inability to participate due to insolvency can be considered a ground to challenge the efficacy of the board resolution.

3. Whether the rights issue constitutes an act of oppression or mismanagement under the Companies Act, given the ongoing CIRP and pending similar proceedings.

Contentions of the Parties

The Petitioner contended that AESL’s rights issue was designed to dilute its significant shareholding and circumvent its shareholder and veto rights, seeking urgent intervention from the Tribunal. The Petitioner argued that the rights issue, if allowed to proceed, would cause irreparable prejudice.

The Respondent AESL argued that the rights issue was a bona fide corporate decision to raise funds, that it was open to all shareholders, and that Byju’s financial inability to participate did not render the resolution inequitable. AESL also contended that the petition was procedurally improper as a parallel petition on similar issues was pending before the Tribunal.

Reasoning and Analysis

The bench of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada observed that AESL’s proposed rights issue could not be termed unequitable and that the Petitioner’s inability to participate could not form the basis to assess the efficacy of the board resolution. The Tribunal noted that while shareholders are entitled to request financial information to assess the health of the company, such rights do not extend to obstructing legitimate business decisions. The Tribunal further observed that interference at this stage was unwarranted, given a pending similar petition involving the same parties. The Tribunal emphasized that accepting the Petitioner’s plea could undermine the independent rights of the company and lead to incoherent propositions. Consequently, the Tribunal refused to grant interim relief, allowing AESL to proceed with its rights issue.

Implications

This order underscores the principle that interim relief in oppression and mismanagement matters will not be granted where the corporate decision appears bona fide and lawful, and where interference could prejudice pending proceedings. It clarifies that insolvency-driven inability to participate in corporate actions does not automatically render such actions inequitable. The case highlights the Tribunal’s cautious approach to balancing shareholder rights against legitimate corporate autonomy.

Order

The Tribunal refused to grant interim relief restraining AESL from proceeding with the proposed rights issue. AESL is permitted to hold its Extraordinary General Meeting on October 29, 2025, as scheduled. Notice was issued to AESL and other respondents, and the matter is posted for further hearing on November 12, 2025.

In this case the petitioner was represented by Shri Abhinav Vasisht, Sr. Counsel with Ms. Pooja Mahajan, Ms. Arveena Sharma, Ms. Ichchha Kalash, Shri Hari Krishna Pramod, Ms. Aishwarya V. Ravindranath, Ms. Samridhi Shrimali, Ms. Akshita Sachdeva Jaitly and Shri Sparsh J, Advocates.