Byju's seeks arbitration in dispute with investors; NCLT adjourns hearing to April 23

Troubled edtech firm’s Byju’s is seeking arbitration to resolve a dispute with investors over a $200-million rights issue.

A senior counsel for Byju's informed the National Company Law Tribunal (NCLT) on Thursday that the company has filed a separate plea with the tribunal to shift the case to arbitration.

If the matter moves to arbitration, it will move away from NCLT’s jurisdiction, and a court appointed arbitrator will take over proceedings on the matter.


NCLT Bengaluru, which was hearing the latest arguments in the dispute between Byju’s and its investors, adjourned the matter to April 23. A group of Byju’s investors led by Dutch investor Prosus is seeking to block the rights issue and the removal of founder Byju Raveendran as CEO.

During Thursday's proceedings, NCLT noted that it would be “blatant violation” of its interim orders dated February 27 if Byju’s had issued shares to investors for the rights issue before completing increasing its authorised share capital. The judge was reacting to the investors’ counsel’s allegation that the embattled edtech firm had done so.

On March 28, NCLT Bengaluru declined to grant a stay on investor pleas seeking to stop Byju’s extraordinary general meeting (EGM) to increase the startup’s authorised share capital to account for the rights issue. Final results for the EGM resolution are expected to be filed on April 6.

Spokespersons for Byju’s and Prosus did not immediately respond to ET’s requests for comment.

The tribunal directed the investor counsel to file a fresh affidavit in writing to inform of the allegations, and also for Byju’s senior counsel to follow it up with its objections on the same.

On March 28, the previous date of hearing, the tribunal had also directed Byju’s to share its captable registry sought by investors, which the company had said will be made available immediately. The judge also asked to put into writing the investor counsel’s contention that this direction had not been met by Byju’s.

Byju’s had previously given an undertaking to NCLT that there will not be any allotment of shares before increasing the authorised share capital as required by the Companies Act, 2013.

Earlier on Wednesday, NCLT president was notified by the Bengaluru bench to allocate the case to a third member of the tribunal following a split verdict on the matter.

Byju's had told shareholders on March 29 that it had secured over 50% votes to increase share capital, in an email reviewed by ET.

The company previously said the rights issue – at a 99% discount to its peak valuation of $22 billion – has been fully subscribed.

On Tuesday, the Bengaluru-based startup laid off about 500 staffers, largely across sales and marketing functions. Byju’s had termed the layoffs as unfortunate, in a statement, saying that the company will put this situation behind it with majority investor support for the rights issue soon.