SC allows Akash Educational Services to proceed with rights issue

New Delhi: The Supreme Court on Tuesday refused to restrain Akash Educational Services (AES) from going ahead with its ₹140 crore rights issue – the second phase of its planned ₹240 crore fundraising.

Edtech platform Byju’s insolvent parent, Think & Learn (TLPL), which holds a minority stake in AES, challenged the National Company Law Appellate Tribunal’s February 3 order that allowed the coaching center operator to issue another tranche of rights shares. The Appellate Tribunal also gave TLPL liberty to apply for shares not exceeding a proportionate number of its original shareholding of 25.75%.

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

The Tribunal restrained AES from raising any issue requiring special resolution pending final disposal of the dispute regarding allotment of shares to Think & Learn in both phases of the rights issue.

A Supreme Court bench headed by Justice PS Narasimha took note of AES’s assurance that TLPL’s 25.75% shareholding in Akash would be protected until the Appellate Tribunal decides the petition on the issue of rights.

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

TLPL told the SC that the appellate tribunal, while recognizing the futility of its participation in the ensuing rights issue, did not grant it meaningful interim protection and instead allowed the “disputed and thin rights issue” to continue, exposing it to irreversible prejudice during the pendency of pendency.

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

AES has reportedly halted the actual allotment of shares to Think & Learn because it suspects the edtech firm of violating foreign exchange laws in raising funds.

Last year, the Supreme Court had dismissed an appeal by US-based Glass Trust Company and AJmera against AES’s move to conduct the rights issue. Glass Trust, which represents TLPL’s US creditors, holds a 99.41% voting stake in the company’s creditors’ committee.