Embattled edtech firm Byju’s on Thursday filed a plea with the National Company Law Tribunal (NCLT) seeking arbitration in its dispute with some of its key investors.
Dhyan Chinappa, representing Byju’s, argued that an application under section 8 of the Arbitration and Conciliation Act ought to take precedence over ongoing NCLT proceedings.
An NCLT bench, comprising Justices K Biswal and Manoj Kumar Dubey, was hearing a plea challenging Byju’s rights issue.
A clutch of investors including General Atlantic, Prosus and Peak XV have alleged that the edtech firm violated the tribunal’s 27 February order, which had directed debt-laden Byju’s to not allot shares to investors participating in the rights issue without increasing its authorized share capital.
Byju’s went against the NCLT’s directive by distributing shares without augmenting the company’s authorized share capital, the investors said in their plea.
Byju’s has denied the allegations.
The NCLT has given Byju’s 10 days to file its response in the matter. The case will be next heard on 23 April.
A group of four investors – Prosus NV, General Atlantic, Sofina, and Peak XV Partners, with support from Tiger Global and Owl Ventures – had moved the the NCLT against Byju’s $200-million rights issue fearing a near wipe-out of their investments last month.
The NCLT refused to stay the extraordinary general meeting (EGM) to augment the authorized share capital of the beleaguered edtech company, giving effect to its $200-million rights issue.
Investors have also argued that they were not permitted to inspect documents to decide on their voting stance at the EGM and alleged that not all shareholders received the notice as required by law.
Currently, Byju’s authorized share capital is ₹6.5 crore, whereas the rights issue’s face value is ₹40 crore, in conflict with provisions of the Companies Act. This led the company to call for an EGM for increasing the authorized share capital of the company.
The bench held that the NCLT orders should be scrupulously followed by the parties.
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Published: 04 Apr 2024, 06:50 PM IST