Karnataka High Court grants Byju’s founder interim relief, blocking potential ouster in the upcoming EGM. The court deems proposed resolutions invalid until the final hearing, securing Byju Raveendran’s position.
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BENGALURU: On 22nd February, the Karnataka High Court has issued an order in response to a petition filed by Think & Learn Pvt Ltd, the parent company of Byju’s, disrupting the scheduled extraordinary general meeting (EGM) on February 23 called by key investors and shareholders, including General Atlantic, Chan Zuckerberg Initiative, MIH EdTech Investments, Own Ventures, Peak XV Partners, SCI Investments, SCHF PV Mauritius, Sands Capital Global Innovation Fund, Sofina, and T. Rowe Price Associates. The court order deems any resolutions proposed during the EGM as “invalid until the final hearing and disposition of this petition.” However, the court has permitted the EGM to proceed as planned.
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Byju’s invoked Section 9 of The Arbitration and Conciliation Act, 1996, in their petition, asserting that the investors, through the EGM, violated the Articles of Association (AoA), the Shareholders’ Agreement (SHA), and the Companies Act, 2013.
“In its petition, Byju’s highlighted that the purported reasons for the EGM, including the removal of Byju Raveendran as CEO and Chairman, as well as Divya Gokulnath and Riju Raveendran as Directors, were merely a smokescreen designed to disrupt the management, control, and functioning of the company,”
-stated Byju’s in an official statement.
Founder Byju Raveendran received interim relief from the Karnataka High Court, staying the effect of decisions that could be taken during the upcoming EGM. This relief shields Raveendran from potential removal as the EGM was called by key investors and shareholders to discuss a change in the company’s leadership, targeting the removal of the present leadership, including Raveendran, and restructuring the board to address financial management issues.
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“The conditions for convening an EGM are not complied and no notice is issued as contemplated under Section 100(3) of the Companies Act. Considering the submissions made and perusal of the records, this Court is of the view that the interim order is required to be passed. The decision, if any taken by the shareholders of Byju’s in EGM scheduled on February 23 shall not be given effect till the next date of hearing,”
-commented Single-judge Justice Anant Ramanath Hegde.
Byju’s argued that the EGM was scheduled without following the proper procedure under the Companies Act, emphasizing that the conditions for convening the EGM, including the issuance of notice, were not complied with. The court concurred with these submissions, leading to the grant of interim relief. The case is set to be heard next on March 13.
Legal representation for Think and Learn Private Limited, the parent company of Byju’s, was provided by advocates KG Raghavan, Dhyan Chinappa, and Dr. Rishab Gupta, briefed by Manmeet Singh and Sairam Subramanian from Saraf and Partners.
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Meanwhile, the corporate turmoil facing Byju’s extends beyond the courtroom. Lenders of the company have filed applications before the National Company Law Tribunal (NCLT) seeking the initiation of insolvency proceedings.
The first petition was by digital marketing vendor Surfer Technologies, heard on February 6 by NCLT Bengaluru. The second, filed by international lender Glas Trust Company LLC, and the third by a business process outsourcing (BPO) entity called Teleperformance Business Services, was heard on February 8. These developments pose additional challenges for Byju’s amidst the ongoing leadership conflict.
