The NCLT has ordered Byju's to pay salaries to its employees regardless of whether the edtech firm has access to the money obtained through its rights issue.
The National Company Law Tribunal (NCLT) has warned edtech platform Byju's with an audit if staff members aren't paid, as per a report by Moneycontro. The NCLT has ordered Byju's to pay salaries regardless of whether the edtech firm had access to the money obtained through its rights issue.
While hearing a plea by employees who are seeking payment of salaries, the Bengaluru bench of NCLT said, “You are a company that is functioning. Surely you should be having revenues.” If the edtech company is not able to pay its employees, the tribunal has reportedly warned the edtech platform of an audit by the Institute of Chartered Accountants of India (ICAI).
As of now, Byju’s has paid only the April and May salaries of the employees. It has yet to pay the February and March salaries.
While delaying the March salaries, the management of the edtech firm told its employees, “We are writing to you today with a heavy heart but with a message of hope and reassurance. We regret to inform you that there will again be a delay in the disbursement of salaries. A few misguided foreign investors in BYJU's have obtained an interim order in late February that has restricted usage of the funds raised through the successful rights issue.”
The edtech firm has attributed the salary delay to not having access to funds raised from the rights issue in February. These funds are currently held in an escrow account due to an NCLT order until the case is resolved.
Meanwhile, Byju’s is also facing insolvency proceedings from several of its lenders. The edtech firm has been grappling with several issues, including a cash crunch and a battle with its investors. Amidst all this, the company has laid off several employees. In April of this year, around 500 of its staff were fired, mostly from sales and marketing positions.