SC allows Aakash Educational Services to go ahead with rights issue

Synopsis

The Supreme Court has allowed Aakash Educational Services to proceed with its rights issue. This fundraising move was challenged by Byju's bankrupt parent company, Think & Learn. The court asked Think & Learn to subscribe to the shares by next Monday. Aakash Educational Services assured the court that Think & Learn's shareholding would be protected.

New Delhi: The Supreme Court on Tuesday refused to restrain Aakash Educational Services (AES) from proceeding with its ₹140 crore rights issue - the second tranche of its planned ₹240 crore fundraising.

Edtech platform Byju's bankrupt parent, Think & Learn (TLPL), which owns a minority stake in AES, had challenged the National Company Law Appellate Tribunal's February 3 order that allowed the coaching centre operator to issue the second tranche of right shares. The appellate tribunal had also granted TLPL the liberty to apply for shares not exceeding the number proportionate to its original shareholding of 25.75%.

Ranjan Pai's Manipal Group is the largest shareholder of AES.

The tribunal had barred AES from taking up any issue that might require a special resolution until the final disposal of the dispute related to the allotment of shares to Think & Learn in both tranches of the rights issue.

A top court bench led by Justice PS Narsimha noted AES' assurance that TLPL's 25.75% shareholding in Aakash would be secured until the appellate tribunal decided the plea on the rights issue.

The court also asked TLPL to subscribe to the rights issue by next Monday.

TLPL told the SC that the appellate tribunal, despite recognising the futility of its participation in the upcoming rights issue, had not granted a meaningful interim protection to it and instead permitted continuation of a "disputed and dilutive rights issue", thereby exposing it to irreversible prejudice during the pendency of the substantive proceedings.

Senior counsel Dhruv Mehta, appearing for TLPL, claimed that his client was systematically excluded from the management and participation in the decision-making processes of AES against the provisions of the Companies Act. However, Byju Raveendran, the TLPL founder who has been suspended from the bankrupt company's board, continued to participate in the affairs of AES as a nominee director for TLPL, he argued.

AES has allegedly withheld the actual allotment of shares due to Think & Learn on the grounds that it suspected violations of foreign exchange laws by the edtech firm in raising funds.

Last year, the Supreme Court rejected appeals by US-based Glas Trust Co and Ajmera against AES' move to conduct a rights issue. Glas Trust, which represents TLPL's US lenders, holds a 99.41% voting share in the company's committee of creditors.

...moreless

...moreless