The National Company Law Tribunal, Bangalore, has deferred its decision on the plea filed by investors against Byju's, alleging investor oppression and mismanagement.
Investors emphasised their lawful entitlement to information, encompassing crucial details such as financial statements, business updates, and annual budgets. Despite repeated requests made until December 2023, Byju's did not provide any of the requested information to them.
Investors expressed deep concerns about Byju's apparent failure to fulfil its obligation to notify them of legal actions or investigations, a requirement outlined in the company's articles.
This lack of disclosure extended to ongoing litigation and insolvency proceedings, leaving investors in the dark about crucial developments.
The investors were particularly troubled by the revelation of a $1.2 billion guarantee to a subsidiary in the USA, a significant financial commitment that was not communicated to them.
Investors also contemplated the potential creation of mortgages or dealings with company assets without adequate disclosure, raising questions about the company's financial stability and decision-making transparency.
In response to these uncertainties, investors called for the immediate disclosure of essential information and a halt to the transfer of assets to any subsidiary without their explicit knowledge and consent.
Investors also drew attention to a substantial reduction in Byju's market value, prompting a collective demand for a change in management. They submitted that they are reluctant to put any more funds in the company without the assurance of tribunal protection.
Byju's, in its response, acknowledged the pressing need for funds, irrespective of the reasons behind it. However, investors' requests to halt potential funding sources added complexity to the ongoing legal dispute.
The company also highlighted that the subject matter of the NCLT proceedings is very similar to the case pending before the Karnataka High Court.
Karnataka High Court Proceedings
Last week, the Karnataka High Court responded to a petition filed by Think & Learn Pvt., the parent company of Byju's. The court issued a ruling, declaring any resolutions proposed during the extraordinary general meeting scheduled for Feb. 23 as ineffective until the subsequent hearing.
Byju's, in its petition, argued that the EGM's stated reasons, including the removal of Byju Raveendran as chief executive officer and chairman and Divya Gokulnath and Riju Raveendran as directors, were a mere "smokescreen" intended to disrupt the company's management, control, and functioning.
Byju's utilised Section 9 of the Arbitration and Conciliation Act, 1996, as the legal basis for the petition.
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