Troubled Edtech Firm Byju's Seeks Arbitration Over Investor Dispute At NCLT

Byju's Arbitration: During the hearing at the NCLT Bengaluru bench, it was disclosed that the edtech firm attempted to divert attention by proposing arbitration

Byju's has formally requested that the ongoing conflict with disgruntled investors be resolved through arbitration. This move comes amid escalating tensions between Byju's and a group of investors. Quoting sources familiar with the matter, PTI said that Byju's contested allegations brought forth by the investor council before the National Company Law Tribunal (NCLT).

The accusations claim that the edtech firm breached tribunal orders by issuing shares to rights issue investors without completing the necessary process of increasing authorised share capital.

During the hearing at the NCLT Bengaluru bench, it was disclosed that Byju's attempted to divert attention by proposing arbitration. However, petitioners' counsel highlighted legal precedents and relevant sections indicating that such matters cannot be referred to arbitration in light of the alleged violations.

This hearing marked the first legal session following Byju's extraordinary general meeting (EGM) held on March 29. The primary agenda of the EGM was to bolster the company's authorised share capital to facilitate a $200 million rights issue. The influx of $200 million was intended to cover operational expenses, particularly employee salaries, essential for sustaining Byju's operations.

The legal battle ensued after a consortium of investors, including Prosus, General Atlantic, Sofina, and Peak XV, backed by additional shareholders such as Tiger and Owl Ventures, approached the NCLT opposing the EGM.

During the proceedings, petitioners' counsel underscored Byju's flagrant breach of commitments made to the courts, including refraining from allotting securities without prior augmentation of authorised share capital. The NCLT, expressing stern disapproval of any such violation, said the imperative of adhering to its directives rigorously, warning of serious repercussions for non-compliance.

In response to these allegations, sources within Byju's vehemently refuted the claims, dismissing them as baseless. They asserted that there had been no infringement of any interim court orders. Also, Byju's plans to counter the allegations with detailed responses and affidavits.

The NCLT Bengaluru bench adjourned the proceedings until April 23, awaiting further submissions from both parties.