The Karnataka High Court overturned a June 12 interim order from the National Company Law Tribunal (NCLT), Bangalore, that had prevented Byju's from proceeding with a second rights issue. This is as per a report by Bar and Bench.
The decision was pronounced by Justice SR Krishna Kumar, and he mentioned that the order has been sent back to the NCLT for re-consideration. The lawyer representing some of the investors urged the court to stay the order so that the rights of the shareholders were not diluted in the meantime.
Investors such as Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus submitted a petition to the NCLT to stop Byju's second rights issue. The investors argued that it would further dilute their ownership in the company.
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Following this, an interim order was passed by the NCLT that restrained the ed-tech firm from going ahead with its second rights issue. The ed tech firm was also asked to maintain the status quo of the existing shareholders.
Interestingly, while NCLT petitions are challenged in the National Company Law Appellate Tribunal (NCLAT), the ed-tech firm filed a writ petition in the Karnataka High Court.
While the detailed judgment is not yet available, Justice Kumar said that he had given all sides involved a chance to reach a consensus so that an order could be issued on consent to return the case to the NCLT. But he added that, as no such agreement could be reached, the issue has now been decided based on merit, as per the report.
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Justice Kumar said, "I gave you a chance; the investors were not ready. Unless they agree, I won't be in a position to grant any orders. You are at the mercy of promoters. The promoters did not want to concede anything; therefore, I was forced to do this. I had no choice.”
