The Karnataka High Court on Monday reserved its judgment on troubled edtech firm Byju’s petition challenging the National Company Law Tribunal’s (NCLT) interim order that restrained the company from proceeding with its second rights issue. The court is expected to pronounce its verdict on Tuesday.
The NCLT had previously directed Byju’s to maintain the status quo regarding existing shareholders and their shareholding, effectively halting the second rights issue, which, according to investors, commenced on May 13 and was to end on June 13.
The tribunal, in its interim order, had also instructed Byju’s not to utilise any funds collected from the second rights issue, mandating that these funds be deposited in a separate account.
A key point of contention in the case is the allotment of over 800,000 shares to Riju Raveendran before the crucial vote to increase the authorised share capital for the first rights issue. Investors’ counsel argued that this share allotment was not in compliance with the law and should be set aside.
The first rights issue of $200 million, valued at $225 million, has been strongly opposed by a group of investors, including Prosus, Peak XV Partners, Sofina and General Atlantic, who have alleged oppression and mismanagement by Byju’s. Byju’s has not received any relief yet on the utilisation of funds collected from the first rights issue either.
