The Supreme Court on Friday directed Aakash Educational Services not to give effect to the extraordinary general meeting (EGM) resolution to amend its Articles of Association (AoA).
A bench of chief justice of India Sanjiv Khanna and justice PV Sanjay Kumar directed the institute, which is a subsidiary of Think and Learn, which runs edtech platform Byju’s, to approach the National Company Law Appellate Tribunal (NCLAT) in seven days. The stay on implementation of the resolution will remain in place till the first date of hearing of the appeal before the NCLAT.
Aakash and Manipal Health Systems informed the apex court that they will not be pursuing the writ petition in the Karnataka High Court against the National Company Law Tribunal’s (NCLT’s) order.
The NCLAT has been directed to decide the case uninfluenced by the decision of the high court.
On November 25, the Karnataka High Court had stayed the NCLT’s order that restrained Aakash from implementing a resolution to amend its AoA. This resolution, proposed during an EGM, had the potential to dilute the shareholding rights of certain investors.
Aakash challenged the NCLT order in the Karnataka High Court, arguing that the tribunal had failed to provide sufficient reasons for halting the resolution.
The NCLT’s November 20 order was in response to an oppression and mismanagement petition filed by Singapore VII Topco I PTE, an entity owned by Blackstone, which holds a 6.97% stake in Aakash. The petition alleged that the amendment to the AoA violated shareholder rights granted under a previous merger framework agreement (MFA).
The investors have argued that the proposed amendments were designed to dilute their stake in Aakash, a profitable entity acquired by Byju’s in 2021 for $1 billion. They have also contended that Byju’s, struggling financially, depended heavily on Aakash for its valuation and operational stability. However, Aakash and its shareholders have countered this saying that the investors had obtained shares as a result of a merger framework agreement (MFA). The merger did not got through as planned, as a result of which they do not have any right in the company. They have also pointed out that Think and Learn had initiated arbitration against it in the Singapore International Arbitration Centre (SIAC) in this regard.
In its November 20 order, the NCLT directed Aakash to refrain from enforcing the EGM resolution until the main petition was resolved.
