Inside Byju's Courtroom Showdown: Leadership Future Hangs in Limbo

The Karnataka High Court extended the interim protection granted to Byju's CEO Byju Raveendran until March 28. The extension comes in response to a potential ouster decision called by foreign investors.

Last month, a significant turning point unfolded for Byju's as majority shareholders convened an Extraordinary General Meeting (EGM) seeking the removal of CEO Byju Raveendran. Investors including Prosus, General Atlantic, and Peak XV voted on February 23 to oust Raveendran and his family from Byju's.

Simultaneously, four investors of the edtech giant filed a mismanagement suit in the National Company Law Tribunal (NCLT), aiming to remove Raveendran from the board of directors. Allegations of mismanagement and oppression were levied against Raveendran, underscoring the intensity of the boardroom struggle.

Legal Maneuvering: Think and Learn's Plea

Ahead of the EGM, Think and Learn filed a plea in the Karnataka High Court seeking relief. In an interim order, the High Court had earlier declared that decisions made during the EGM would be subject to the next hearing of the petition, scheduled for March 13.

The advocates for Think and Learn argued that the EGM of shareholders of the firm had not followed the procedure contemplated under Section 100(3) of Companies Act, 2013.

The Karnataka High Court in the interim order had said that any decision taken by the shareholders at the upcoming extraordinary general meeting (EGM) would not be given effect until the court passed final orders concerning BYJU’s petition challenging the shareholders meeting.

"The decision, if any taken by the shareholders of the petitioner company in the extraordinary general meeting scheduled on Friday, February 23, shall not be given effect until the next date of hearing," the High Court said.

What's Byju's Take on The Courtroom Drama?

Byju's spokesperson shared insights into the recent Karnataka High Court hearing with TICE. The spokesperson told TICE News, “In today's Karnataka High Court hearing, the court has granted time to Think and Learn to file a rejoinder to the response filed by some of the investors. The stay against the purported resolutions at the 'so-called' EGM that the investors attempted to pass on 23 Feb 2024 continues and, as such, none of those resolutions can be given effect to. They are unactionable. The matter will next be heard on 28th March.”

Inside sources from Byju’s, speaking anonymously to TICE News, revealed details about the court proceedings. “During the hearing, BYJU'S counsel identified serious discrepancies in the affidavits filed by the investors’ representatives, amounting potentially to “perjury”. The court has directed both sides to make submissions on that issue before the next hearing.

Byju's Vs BCCI Case

The Byju's Versus BCCI case has been scheduled for a hearing at the Bengaluru bench of the National Company Law Tribunal (NCLT) on March 20. A verdict on Board of Control for Cricket in India's (BCCI's) insolvency petition against Byju's is expected next week after the conclusion of arguments. The matter, initiated in September over nearly Rs160 crore in dues, centers around a dispute regarding sponsorship rights for the Indian cricket team's jerseys. The case was officially registered for further hearing on November 15, with ongoing discussions between Byju's and BCCI for a resolution as of November 28.

Meanwhile, regarding a hearing related to the BCCI, the source revealed that the key points raised during this hearing include issues such as the constitutionality of the legal action initiated by a legal manager, the nature of the debt claimed by BCCI, the status of the agreement between BCCI and BYJU'S, and the appropriateness of using the Insolvency and Bankruptcy Code (IBC) for recovery.

“BCCI is society constituted under the Societies Registration Act, and they have a Memorandum of Association, which needs to be strictly followed to be BCCI. As per MoA, legal action on behalf of BCCI can be initiated by Secretary, whereas in the present case, it is instituted by a legal manager who was authorized by the Secretary. When the MoA delegates the power on the Secretary, he cannot sub delegate the power, and therefore, the petition is liable to be dismissed at the threshold.

BCCI has not rendered any service, and therefore, the present debt cannot be considered as an operational debt. What has been granted under the Agreement is the right to display the logo of BYJU'S, but there is no form of service provided BCCI.

The Agreement between BCCI and BYJU'S ended on 31 March 2020 and therefore, question is whether the Contract/Agreement has been extended. Clause 18 of the Agreement prescribes the mode and manner in which the extension of the Agreement can be affected. There is no agreement for the extended period signed till date between the parties. All the invoices for the earlier contract have been paid, and the present claim is for the period post expiry of the Agreement. Therefore, all the questions pertaining to the extension, payment, and other related issues to decide by way of a dispute resolution mechanism cannot be adjudicated by this Tribunal. IBC cannot be used as a recovery mechanism, and the matter should be referred to arbitration for adjudication,” Byju's source told TICE News.

The matter has been adjourned to March 20, 2024, awaiting further legal deliberations.

In the midst of this intricate boardroom battle, the fate of Byju's leadership and the edtech giant's future direction remain uncertain, with the courtroom drama set to continue in the weeks ahead.

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