Karnataka High Court grants interim relief to Byju's founder, stays possible ouster in upcoming EGM

Byju Raveendran, the founder of Edtech company Byju's, got interim relief from Karnataka High Court on Wednesday as the Court stayed the effect of decisions that could be taken during the upcoming extraordinary general meeting (EGM) of the shareholders of the company slated for February 23 [Think and Learn Pvt Ltd v. Chan Zuckerberg Mauritius & Ors]..The order effectively protects Raveendran from possible ouster from the company since the EGM has been called by key investors/shareholders of Byju’s including Chan Zuckerberg Initiative, General Atlantic, Prosus Ventures and Peak XV to discuss change in the company’s leadership.The shareholders reportedly want to oust the present leadership including Raveendran and reconstitute the board while addressing the financial management.The investors called for an EGM for February 23 by issuing a notice under section 100(3) of the Companies Act prompting Byju's to approach the Court.Single-judge Justice Anant Ramanath Hegde observed prima facie that the conditions for convening the EGM had not been complied with. Given this, the Court passed the interim stay order. “The conditions for convening an EGM are not complied and no notice is issued as contemplated under Section 100(3) of the Companies Act. Considering the submissions made and perusal of the records, this Court is of the view that the interim order is required to be passed. The decision, if any taken by the shareholders of Byju’s in EGM scheduled on February 23 shall not be given effect till the next date of hearing,” the Court said..Byju’s argued that the EGM of the shareholders was scheduled at the instance of the shareholders without following the procedure under Companies Act.The company argued that conditions for convening the EGM including issuance of notice were not complied with. The Court agreed with the submissions and granted interim relief. The case will be heard next on March 13. Think and Learn Private Limited, which owns and runs Byju's, was represented by advocates KG Raghavan, Dhyan Chinappa and Dr Rishab Gupta who were briefed by Manmeet Singh and Sairam Subramanian from Saraf and Partners..Meanwhile, applications have also been filed by lenders of the company before the National Company Law Tribunal (NCLT) seeking initiation of insolvency proceedings against Byju's.The first is a petition by digital marketing vendor Surfer Technologies, which was heard by NCLT Bengaluru on February 6. The second is by international lender, Glas Trust Company LLC, and the third is by a business process outsourcing (BPO) entity called Teleperformance Business Services which was heard on February 8.