Supreme Court Backs NCLAT: Aakash Educational Services' Rights Issue EGM to Proceed
The Supreme Court dismissed a plea challenging NCLAT's order allowing Aakash Educational Services Ltd to hold an Extraordinary General Meeting for a rights issue. This decision comes amid insolvency proceedings involving Think & Learn Pvt Ltd (Byju's parent company), which holds a stake in Aakash. The court's ruling permits Aakash to proceed with its planned rights issue despite concerns raised by Glas Trust, the largest creditor of Think & Learn. This may result in the dilution of Think & Learn's approximately 25% stake in Aakash.
*this image is generated using AI for illustrative purposes only.
In a significant development for the education sector and corporate governance, the Supreme Court has dismissed a plea challenging the National Company Law Appellate Tribunal's (NCLAT) order that allowed Aakash Educational Services Ltd to hold an Extraordinary General Meeting (EGM) for a rights issue. This decision comes amidst ongoing insolvency proceedings involving Think & Learn Pvt Ltd, the parent company of Byju's, which holds a stake in Aakash.
Key Points of the Supreme Court's Decision
- The Supreme Court upheld the NCLAT's order permitting Aakash Educational Services to proceed with its EGM for a rights issue.
- The plea was filed by Glas Trust, the largest creditor of Think & Learn Pvt Ltd (Byju's parent company).
- The NCLAT had previously rejected Glas Trust's petition, stating that the Insolvency & Bankruptcy Code does not require companies with shareholdings in corporate debtors to sacrifice their own commercial interests.
Implications for Stakeholders
This ruling has significant implications for various stakeholders:
| Stakeholder | Impact |
|---|---|
| Aakash Educational Services | Can proceed with the planned rights issue |
| Think & Learn Pvt Ltd (Byju's) | Approximately 25% stake in Aakash may be diluted |
| Glas Trust | Concerns about reduced asset valuation not addressed |
Background of the Dispute
Glas Trust, which owns over 90% voting rights in Byju's committee of creditors, had argued that the rights issue would dilute Think & Learn's stake in Aakash and consequently reduce asset valuation. However, the Supreme Court's decision allows Aakash to move forward with its planned rights issue despite these concerns and the ongoing insolvency proceedings involving its stakeholder.
Broader Implications
This case highlights the complex interplay between corporate governance, shareholder rights, and insolvency proceedings in India's evolving business landscape. The Supreme Court's decision underscores the principle that companies with shareholdings in entities undergoing insolvency proceedings retain the right to pursue their commercial interests.
As the education technology sector continues to evolve and face financial challenges, this ruling may set a precedent for how similar cases are handled in the future, particularly when it comes to balancing the interests of various stakeholders in complex corporate structures.
18
