NCLT reject Byju’s Plea to Halt Aakash’s Rights Issue EGM

The focus keyword Byju’s Aakash rights issue takes centre stage as India’s ed-tech saga enters another chapter. The NCLT’s decision to reject Byju’s plea to halt Aakash’s proposed rights issue and EGM highlights tensions around corporate governance, shareholder rights and insolvency proceedings.

Here’s a detailed breakdown of what happened, why it matters and what stakeholders should watch next.

What did the NCLT decide?

• The NCLT Bengaluru bench refused interim relief to Byju’s (via its resolution professional) that sought to stop Aakash’s EGM scheduled for October 29, 2025, which is called to approve a rights issue.
• The tribunal observed that halting the EGM would risk “undermining the independent rights of the company” (AESL), noting that the rights issue cannot be treated as “unequitable” merely because Byju’s may not be able to participate.
• The bench also flagged that another petition on the same issue is pending, and chose not to interfere at this stage. The matter is next listed for hearing on November 12, 2025.

Why is Byju’s opposing the rights issue?

• Byju’s (Think & Learn Pvt Ltd) holds around 25% shareholding in Aakash. It contends that the rights issue, which will expand equity base, will dilute its stake to less than 5%.
• Because Byju’s is under a Corporate Insolvency Resolution Process (CIRP), it claims it is unable to participate in the rights issue and therefore faces prejudice as a minority shareholder.
• Byju’s further argues the issue violates the Articles of Association of Aakash and an earlier NCLT order of November 2024 giving it certain veto or participatory rights.

Why did the NCLT allow Aakash to proceed?

• The tribunal noted that the purpose of the rights issue is to raise funds for Aakash in a situation where banks were unwilling to provide further loans because of shareholder disputes.
• It held that Byju’s inability to participate is not a valid basis to block a company-approved rights issue. The bench said “the fact that the petitioner may or may not be able to exercise rights cannot form the basis to assess the efficacy of the board resolution”. Live Law
• It emphasised that as a shareholder, Byju’s is entitled to seek financial documents and probe governance, but that does not justify halting strategic decisions of the company.

Key Takeaways

1. Governance vs Capital Needs – Aakash is prioritising raising fresh equity via rights issue; Byju’s is defending its minority shareholder rights amidst a dilution risk.
2. Insolvency Context – Byju’s position is complicated by its insolvency proceedings, which limits its ability to act as a “normal” investor.
3. Minority Protection Boundaries – The judgment clarifies that minority rights have limits when a company exercises capital-raising powers legitimately.
4. Precedent for Rights Issues – The decision may serve as precedent for how rights issues are approached when minority shareholders face dilution and can’t participate.
5. Impact on Ed-tech Sector – Both companies are major players in India’s education space; the outcome may influence investor confidence and corporate manoeuvres in this sector.
6. Future Appeal/Orders Pending – The tribunal did not decide the entire case; the main petition (oppression & mismanagement) is still pending hearing.
7. Timing for Stakeholders – The matter is listed for November 12, 2025, so interested parties (creditors, shareholders, investors) should monitor for further orders.

What this means for the parties

For Aakash Educational Services Ltd (AESL)

• AESL now has the green light to convene its EGM and proceed with the rights issue — potentially unlocking fresh funding and reducing dependence on debt.
• However, proceeding fast may intensify conflict with Byju’s and its creditors, so transparency, adherence to corporate governance norms will be critical.

For Byju’s / Think & Learn Pvt Ltd

• Byju’s remains exposed to dilution risk in Aakash, weakening its asset base at a critical time while under insolvency resolution.
• The rejection of the interim stay is a setback — yet the final petition is still open, offering a longer-term legal avenue.
• The firm must engage actively in the upcoming hearing and work closely with its resolution professional and committee of creditors.

For Shareholders & Creditors

• Minority shareholders of AESL will now need to evaluate whether the rights issue terms are fair, and whether they can participate (or whether they will be diluted).
• Creditors of Byju’s will be watching how this asset (the AESL shareholding) is treated under the insolvency process — dilution could affect recovery value.

What to watch next

• The hearing scheduled for November 12, 2025 — key issues: fairness of the rights issue, valuation of shares, corporate governance compliance.
• Whether Byju’s or other shareholders apply for stay of allotment of new shares post-EGM.
• How AESL executes the rights issue: pricing, allocation to existing shareholders, eligibility of Byju’s to participate.
• Whether the rights issue triggers any regulatory scrutiny under the Securities and Exchange Board of India (SEBI) rules for listed companies.
• Market reaction: how investors in the education services sector perceive the governance battle and funding strategy.

Conclusion

The NCLT’s decision marks a pivotal moment in the saga of Byju’s Aakash rights issue. The tribunal has allowed AESL to move ahead with its capital-raising plan despite strong opposition from a major shareholder undergoing insolvency. While the immediate relief sought by Byju’s has been denied, the broader legal battle remains alive. For both companies and their stakeholders, the upcoming hearings and execution of the rights issue will be critical.