NCLAT rejects plea for interim injunction against Aakash EGM and rights issue

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) on Tuesday rejected the plea by Glas Trust (a financial creditor to Byju's) to temporarily stay the Extraordinary General Meeting (EGM) of Aakash Educational Services Ltd (AESL) slated to be held on October 29.[Glas Trust Vs Aakash Education Services Limited].

A Bench of Judicial Member Justice Seshasayee and Technical Member Jatindranath Swain passed the order. The Bench held that held that Byju’s ongoing corporate insolvency resolution process (CIRP) does not warrant interference in Aakash’s internal management or its decision to raise capital through a rights issue.

“The value of TLPL’s shares in Aakash can never be preserved if Aakash is commercially killed. The spirit of IBC is best served when the companies in which a corporate debtor has some shares are allowed to prosper, irrespective of who has the controlling power,” the Bench observed

The plea will now come up for final hearing on November 7.

On October 17, the National Company Law Tribunal (NCLT) at Bengaluru Bench too had declined to stay the EGM of AESL on a plea by Byju's.

The Bench of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada had rejected a plea by Think & Learn Pvt Ltd (Byju’s) seeking an interim injunction on the EGM.

Byju's is one of the shareholders in AESL.

It had argued before NCLT that AESL’s Board has been convening meetings in violation of Part B of the Articles of Association (AoA) and ignoring Byju’s participation and veto rights. Despite an NCLT order dated November 19, 2024 in a prior insolvency case, the AESL Board wa allegedly attempting to dilute Byju’s shareholding from 25.75% to below 5% through the rights issue, it was contended.

However, the NCLT rejected that plea and held that a rights issue cannot be deemed inequitable merely because one shareholder may be unable to participate, as such a view would erode the company’s autonomy in decision-making.

Glas Trust argued that

• The increase in share capital violated an earlier NCLT order of November 19, 2024, which directed that no consequential action be taken on Aakash’s October 2024 board resolutions.

• A status quo order of the NCLT dated March 27, 2025, in TLPL’s oppression and mismanagement petition barred dilution of its shareholding.

• Since TLPL is under CIRP, any action diminishing its asset value—including its stake in AESL, must be restrained under Section 60(5) of the IBC.

Aakash argued that

1. The capital increase stemmed from a Debenture Trust Deed (DTD) executed on April 25, 2023, under which Aakash was contractually obliged to amend its Articles of Association.

2. The DTD, executed prior to Byju’s insolvency, allowed debenture trustees to convert debt into equity in case of default.

3. It contended it was not a party to the November 2024 NCLT order and thus not bound by it. The company added that TLPL remained free to participate in the EGM and subscribe to its proportionate rights issue allotment.

The NCLAT rejected GLAS Trust’s plea on all three traditional injunction criteria—prima facie case, irreparable injury, and balance of convenience:

• On prima facie case: The Bench noted that Aakash was not a party to the NCLT’s earlier order and that its decision to amend its Articles stemmed from pre-CIRP contractual obligations under the 2023 DTD.

• On irreparable injury: It held that protecting the asset value of a corporate debtor under IBC cannot extend to “interfering with the internal affairs of a company in which the CD may hold some shares.”

• On balance of convenience: The Tribunal said Aakash’s right to survive and grow commercially outweighed TLPL’s apprehension of share dilution, since the latter could still choose to subscribe to its rights entitlement.

Dismissing the application, the Bench held that the insolvency of Byju’s cannot be stretched to control the independent operations of its subsidiary.

“IBC is not blood thirsty to authorise interference in the internal affairs of a company in which the corporate debtor may hold some shares,” the Tribunal concluded, adding that any future grievances could be addressed by the NCLT since reliefs could still be suitably moulded.

GLAS Trust Company LLC, was represented by Senior Advocates C. Aryama Sundaram and Krishnendu Datta, instructed by Advocates Prateek Kumar, Raveena Rai, Siddhant Grover, Moha Paranjpe, Abhi Udai Singh Gautam, Abhishek P., Niharika Sharma, and Kevin Joseph.

Shailendra Ajmera, Resolution Professional of Think & Learn Pvt Ltd, was represented by Senior Advocate Abhinav Vashisht, instructed by Advocates Pooja Mahajan, Arveena Sharma, Savar Mahajan, Ichchha Kalash, Samridhi Shrimali, Akshita Sachdeva Jaitly, and Sparsh Jain from Chandhiok and Mahajan.

Aakash Educational Services Ltd, was represented by Senior Advocates Gopal Subramanium, Dr. U.K. Chaudhary, and Arun Kathpalia, instructed by Advocates R. Chandrachud and Vishnu Mohan.