Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice N. Seshasayee (Judicial Member) and Mr. Jatindranath Swain (Technical Member) has refused to stay the Extraordinary General Meeting (EGM) of Aakash Educational Services Limited (Aakash) scheduled for October 29, 2025, which was convened to approve a proposed rights issue. The Tribunal held that the value of Byju’s stake in Aakash cannot be preserved if the subsidiary is commercially “killed”, emphasizing that insolvency proceedings against Think & Learn Pvt. Ltd. (TLPL/Byju’s) cannot be used to stifle the commercial freedom of its solvent subsidiary.

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Background

The plea was filed by GLAS Trust Company LLC, a U.S.-based lender and security trustee of Byju’s, which holds 99.41% voting share in the Committee of Creditors (CoC) of TLPL, the corporate debtor. The petitioner sought to restrain Aakash from convening or holding its EGM, alleging that the proposed rights issue would dilute Byju’s shareholding in Aakash in violation of a status quo order dated March 27, 2025, passed by the National Company Law Tribunal (NCLT), Bengaluru Bench, in the ongoing insolvency proceedings against Byju’s. The applicant argued that the rights issue was a collusive attempt by Aakash’s management and Byju’s promoters to strip value from the parent company’s holdings, undermining the interests of the creditors. It was contended that Aakash’s move violated directions of the Adjudicating Authority which had earlier restrained the subsidiary from implementing resolutions adverse to Byju’s interest.

Submissions

GLAS Trust Company submitted that Aakash’s rights issue was not driven by genuine business necessity but was instead an orchestrated effort to bleed Byju’s value and circumvent the status quo order. It urged the appellate tribunal to issue an interim injunction restraining Aakash from proceeding with the EGM.

On the other hand, Aakash Educational Services Ltd. contended that the proposed capital raise was an “existential compulsion”, mandated under the Debenture Trust Deed (DTD) executed on April 25, 2023, well before the initiation of Byju’s insolvency proceedings. The DTD required Aakash to amend its Articles of Association (AoA) and take measures necessary to protect the interests of its debenture holders. Aakash argued that these obligations naturally led to its present decision to restructure its capital and issue additional shares through a rights issue. It was also pointed out that the rights issue would not automatically dilute Byju’s shareholding, as TLPL retained the right to subscribe to its proportional entitlement. The company stressed that the decision to maintain or alter the shareholding rested entirely with Byju’s, not Aakash.

Tribunal’s Observations

The NCLAT examined whether the proposed rights issue of Aakash was in violation of the NCLT’s status quo order and whether there existed a prima facie case warranting stay of the EGM.

Referring to the DTD of April 2023, the Bench noted that Aakash’s decision to amend its Articles of Association and proceed with the rights issue “appears more as a direct sequel to the Debenture Trust Deed and does not appear to be an independent decision aimed solely to affect the value of the shares that TLPL has in it.” The Tribunal found that the insolvency of Byju’s could not be used as a basis to paralyze the functioning of a solvent subsidiary, observing that: “The value of TLPL’s shares in Aakash can never be preserved if Aakash is commercially killed. Therefore, the spirit of IBC is best served when the companies in which the corporate debtor has some shares are allowed to prosper, irrespective of who has the controlling power.”  The Bench further held that the proposed rights issue did not necessarily result in dilution of TLPL’s stake, as participation was optional and the choice lay entirely with Byju’s. The order clarified:  “The decision to alter the shareholding of TLPL in Aakash rests with it and not with Aakash.”

The NCLAT also examined whether GLAS Trust satisfied the three prerequisites for grant of interim injunction—prima facie case, irreparable injury, and balance of convenience—and found none were met. It emphasized that while the Insolvency and Bankruptcy Code (IBC) seeks to maximize the value of the corporate debtor’s assets, it does not compel solvent subsidiaries to jeopardize their commercial autonomy for the debtor’s benefit. The Bench observed:  “While it is true that IBC aims to maximise the asset value of the corporate debtor, it has not sanctioned the idea that every company in which the CD has a shareholding should sacrifice its own interest to stay, grow, and sustain itself commercially for the benefit of the CD.”  It added that halting Aakash’s fund-raising efforts would cause greater harm not only to Aakash but also, paradoxically, to the value of Byju’s shareholding in the company.

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In conclusion, the NCLAT declined to interfere with Aakash’s decision to convene its EGM and proceed with the rights issue, holding that the action stemmed from pre-existing financial obligations under the DTD and not from mala fide intent to dilute Byju’s stake. The Tribunal found that GLAS Trust had failed to demonstrate a prima facie case or irreparable injury, and that the balance of convenience lay with allowing Aakash to pursue its commercial decisions. Accordingly, the appellate tribunal dismissed the plea filed by GLAS Trust Company LLC, thereby permitting Aakash Educational Services Ltd. to proceed with its scheduled EGM on October 29, 2025.

Appearance

For Appellants: Senior Advocates C. Aryama Sundaram, Krishnendu Datta with Advocates Prateek Kumar, Raveena Rai, Siddhant Grover, Moha Paranjpe, Abhi Udai Singh Gautam, Abhishek P., Niharika Sharma, and Kevin Joseph.

For Respondents: Senior Advocate Abhinav Vashisht For Adocates Pooja Mahajan, Arveena Sharma, Savar Mahajan, Ichchha Kalash, Samridhi Shrimali, Akshita Sachdeva Jaitly, Sparsh Jain, Advocate for R1 (Shailendra Ajmera, RP of Think and Learn Private Limited) Senior Advocates Gopal Subramanium , UK Chaudhary, Arun Kathpalia, with Advocate R Chandrachud, Vishnu Mohan, for R-2 (Aakash Educational Services Limited)

Cause Title: GLAS Trust Company LLC Vs Shailendra Ajmera, RP of Think & Learn Pvt Ltd & 3 Ors

Case No: I.A. No.1514 of 2025 in Company Appeal (AT) (CH) (Ins) No.139 of 2025

Coram: Justice N. Seshasayee (Judicial Member), Mr. Jatindranath Swain (Technical Member)