As an eductech goliath Byju’s is not escaping the trouble as it is believed that the organization is ignoring the previous court rulings. The deferrer of the case of investor from NCLT which was scheduled on April 23 till June 6 to June 6, resulted into the postponement of the investigation.
According to the same issue which was also filed in NCLT against the same company on February 27, 2023 , Byju’s has violated that order. The investors represented in this complaint include Peak XV Partners, General Atlantic, and Chan-Zuckerberg Initiative. Noticeably, the court had requested the deposit of funds obtained via rights issue into an escrow account by that sequence.
A joint escrow account provides security for the funds of a deal, and protects them from either party until all the conditions are met to release those funds. The NCLT asked Byju’s to retain the acquirer’s major shareholding until the case is solved.
However, the investors have alleged that Byju’s did not deposit the rights issue funds in an escrow account as directed. They also claim that the company has already allotted shares to those who participated in the rights issue, without increasing its authorized share capital limit.
Byju’s has denied these allegations, stating that it has complied with all legal requirements. The company said the funds are being used as per rules and the share allotment process was also carried out following due process.
This is not the first time Byju’s has faced accusations of financial irregularities. It is already embroiled in an ongoing legal battle with its former associates Blackstone and Aakash Educational Services.
The edtech major is also said to be facing a cash crunch, with reports that it paid only half salaries to some employees for March. Founder Byju Raveendran even took personal loans to pay staff salaries in February.
By postponing the hearing to June, the NCLT may want more time to examine the facts of the case and allegations levelled by both parties. The investors are clearly not satisfied with Byju’s response so far on the non-compliance issue.
If found guilty, Byju’s could face severe penalties. This will further damage its reputation amid the ongoing financial troubles. The company needs to urgently resolve such legal tangles to regain investors’ confidence.
It remains to be seen how Byju’s responds over the next few months and whether it is able to convince the NCLT of following due process. The future of thousands of employees and the edtech industry’s image is at stake with this high-profile case.
