In a significant ruling, the Chennai bench of the National Company Law Appellate Tribunal (NCLAT) today dismissed an appeal filed by investors against Think & Learn Pvt Ltd, the parent company of Byju’s. The investors had accused Byju’s of failing to comply with orders from the National Company Law Tribunal (NCLT) amid ongoing proceedings concerning alleged oppression and mismanagement within the company.
Tribunal’s Decision
The bench, comprising judicial member Justice Sharad Kumar Sharma and technical member Jatindranath Swain, rejected the appeal by four investors – MIH EdTech Investments, General Atlantic Singapore, Peak XV Partners Operations LLC, and Sofina. The tribunal stated, “As an appellate court, we cannot intervene in matters that are yet to mature in NCLT. We cannot issue orders on matters that are yet to be decided by NCLT. We cannot substitute the actions of NCLT.”
Background of the Dispute
The investors had approached NCLT, alleging oppression and mismanagement by Byju’s management, seeking a declaration that CEO Byju Raveendran and the current management were unfit to run the company. The NCLT, in its order on April 23, directed the investors to file appropriate proceedings in the event of order violations, leading to a contempt of court petition by the investors.
Legal Arguments
Senior advocates Sudipto Sarkar and Satish Parasaran, representing the investors, argued that Byju’s had breached an undertaking given to the court and that NCLT should have initiated contempt proceedings. They also requested the appellate tribunal to order Byju’s to maintain the status quo regarding share allotment, claiming that a new ‘rights issue’ would affect investor rights.
On the other side, senior advocates Dhyan Chinappa and Srinath Sridevan, representing Byju’s, contended that the April 23 order had not determined any rights and thus was not appealable. They also pointed out that the investors had not sought an urgent hearing on the contempt petition before the NCLT.
Final Ruling
NCLAT ruled that the contempt petition could be addressed by the NCLT in accordance with the law, and therefore refused to interfere with the previous order, dismissing the appeal by the investors. This decision underscores the tribunal’s stance on allowing the NCLT to handle proceedings that are still under its consideration.
