NCLAT refuses to set aside order halting amendment to Aakash Institute's Articles of Association

The National Company Law Appellate Tribunal (NCLAT) on Friday refused to set aside the order of the National Company Law Tribunal (NCLT) halting Aakash Educational Services from amending its Articles of Association (AoA) [Manipal Health Systems Pvt. Ltd. v. Singapore VII Topco I Pte Ltd & 12 Ors].A bench of Justice (retd) Sharad Kumar Sharma and technical member Jatindranath Swain, however remanded the case back to NCLT and permitted the company to move an application for vacation of stay within one week from today. The NCLT has been asked to decide the same within three weeks from the date of filing. .The dispute pertained to Aakash Institute's move to amend a section of its AoA pertaining to reserved rights. Blackstone-backed Singapore Topco moved the NCLT claiming oppression and mismanagement as the move would dilute their 6.8% shareholding in the company. Topco had obtained the shares by virtue of a Merger Framework Agreement (MFA) with Byju's.Meanwhile, Byju's lenders Glas Trust had alleged that this was an attempt by the former management of Byju's to dilute the company's shareholding in Aakash. According to them, Byju's would not be worth anything without its stake in Aakash. Aakash had argued that it was amending the AoA to infuse funds into the company. On November 20, the NCLT directed Aakash to refrain from enforcing the EGM resolution until the main petition was resolved.On November 25, the Karnataka High Court stayed the National Company Law Tribunal (NCLT) order that restrained Aakash from implementing a resolution to amend its AoA. This resolution, proposed during an Extraordinary General Meeting (EGM), had the potential to dilute the shareholding rights of certain investors.On November 29, the Supreme Court directed Aakash Institute not to give effect to the EGM resolution to amend its AoA and directed the education institute to approach the NCLAT. Singapore Topco had challenged this order, contending that only NCLAT could have entertained the plea and not the Karnataka High Court..Senior Advocates R.Murari, Srinath Sridevan and Dhyan Chinappa, who appeared for the petitioners contended that while the NCLT order while recording only their submissions while not assigning any reasons for staying the implementation of the EGM resolution. Sridevan, who appeared for Aakash noted that there are over 10,00 employees on its rolls and over 3 lakh students studying in its institute. He contended that Aakash had to raise funds to stay afloat and the NCLT's order was coming in the way of it raising funds. He said " “We don’t want to go down the path of think and learn (Byju's). We want to stay afloat.”Tamil Nadu's Advocate General P.S.Raman and Senior Advocate Shankaranarayanan appeared for Singapore Topco.