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28 Oct 2025, 01:16 PM
Observing that the value of Byju's stake in Aakash cannot be preserved if the subsidiary is commercially “killed”, the National Company Law Appellate Tribunal (NCLAT), Chennai Bench, refused to stay Aakash Educational Services Ltd.'s extraordinary general meeting (EGM) for a proposed rights issue scheduled on October 29.
The tribunal dismissed a plea by GLAS Trust Company LLC, a US-based lender to Byju's (Think and Learn pvt Ltd) , which sought to block the EGM.
It observed “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 CD has some shares are allowed to prosper, irrespective of who has the controlling power.”, ruling that insolvency proceedings against Byju's cannot be used to stifle a solvent subsidiary's commercial freedom.
The bench comprising Justice N Seshasayee and Technical Member Jatindranath Swain found that Aakash's decision to issue additional shares through a rights issue was rooted in its Debenture Trust Deed (DTD) dated 25 April 2023, executed more than a year before Byju's entered insolvency.
Under that DTD, Aakash had raised funds through debentures and was required to amend its Articles of Association (AoA) to safeguard the interests of debenture holders. These obligations, the tribunal said, naturally led to the company's later decision to restructure its capital.
“Accordingly, Akash amending its Articles of Association and its decision to go for right 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 further noted that the rights issue would not automatically dilute Byju's holding. Instead, it offered Byju's the option to subscribe to additional shares, adding that “the decision to alter the shareholding of TLPL in Akash rests with it and not with Akash.”
The dispute arises from a decision of the board of Aakash to vote on a resolution to raise further funds through a rights issue. Byju's holds about 25.41 per cent of Aakash's shares. GLAS Trust, holding 99.41 per cent voting share in Byju's Committee of Creditors, approached the NCLAT to restrain Aakash from convening its EGM scheduled for 29 October 2025, alleging that the proposed rights issue would dilute Byju's shareholding in violation of the status quo order passed by the NCLT on 27 March 2025 which prevents Aakash from diluting the shares of the company without to the disadvantage of Byju's
GLAS Trust argued that the fundraise was designed to let the value of Byju's bleed and violated earlier directions of the Adjudicating Authority which had restrained Aakash's Board from giving effect to certain resolutions.
It claimed that Aakash's management was acting in collusion with Byju's promoters to strip value from the insolvent parent's holdings.
Aakash rejected these claims, stating that the rights issue was an “existential compulsion” arising from the DTD and not a move to undermine Byju's. Citing clauses of DTD, Aakash submitted that debenture holders had the right to take over management and convert obligations into equity in case of default, and these terms “would be rendered ineffective if TLPL were to continue to pull the strings of Aakash from behind.”
The NCLAT, however, found no merit in Glas Trust's arguments. It held that none of the three criteria for an interim injunction that is prima facie case, irreparable injury, and balance of convenience had been satisfied.
The insolvency court said that while the Insolvency and Bankruptcy Code aims to maximise the value of a corporate debtor's assets, it does not mean that every company in which the debtor holds shares must compromise its own commercial interests for the debtor's benefit
“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 further added that stopping Aakash's fundraising efforts would harm not only its own business but also, ironically, the value of Byju's shareholding,
Ultimately, holding that Glas Trust had not shown any valid ground for intervention, the court dismissed its plea
Case Title: GLAS Trust Company LLC Vs Shailendra Ajmera, RP of Think & Learn Pvt Ltd & 3 Ors
Case Number: I.A. No.1514 of 2025 in Company Appeal (AT) (CH) (Ins) No.139 of 2025
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)