{"id":324483,"date":"2024-06-15T17:00:10","date_gmt":"2024-06-15T11:30:10","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=324483"},"modified":"2024-06-28T09:49:04","modified_gmt":"2024-06-28T04:19:04","slug":"nclt-restrains-byjus-from-utilising-funds-collected-on-second-rights-issue-until-disposal-of-mis-management-petition-scc-times","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/06\/15\/nclt-restrains-byjus-from-utilising-funds-collected-on-second-rights-issue-until-disposal-of-mis-management-petition-scc-times\/","title":{"rendered":"NCLT restrains Byju\u2019s from utilising funds collected on second rights issue until disposal of mismanagement petition"},"content":{"rendered":"
\n

National Company Law Tribunal, Bengaluru:<\/span> In applications seeking injunction the against respondents’ actions which are in violation of the NCLT’s order dated 27-02-2024 which prohibited allotment of shares without increasing the Authorized Share Capital and required funds from the rights issue to be kept in a separate Escrow account, a division bench comprising of M. S. S. Sundaram, J., (Judicial Member) and Mr. Manoj Kumar Dubey (Technical Member), restrained the respondents from proceeding with the second rights issue and ordered the preservation of the current shareholding status quo until the main petition is adjudicated.<\/p>\n

In the instant matter, a petition was filed under Sections 241<\/a> and 242<\/a> of the Companies Act, 2013<\/a>, alleging oppression and mismanagement. The NCLT, vide order dated 27-02-2024, passed an interim order to prevent the allotment of shares without increasing the Authorized Share Capital and to keep funds from the rights issue in a separate Escrow account until the disposal of the matter. The applicant filed an application (C.A. No. 71\/2024) under Section 242(4) of the Companies Act, seeking injunction against offer letters dated 11-05-2024 and 13-05-2024 and suspension of corporate actions based on the revised shareholding pattern post-hearing on 27-02-2024. Later, an application (C.A. No. 72\/2024) was filed under the same provisions, seeking to set aside actions violating the NCLT’s order dated 27-02-2024, including share allotment on 02-03-2024 and nullify corporate actions based on the revised shareholding pattern.<\/p>\n

The applicants contended that the share allotment violated Section 62(1)(a) and (c) of the Companies Act and was without a board resolution as required by Sections 175 and 179 of the Companies Act. The applicant argued that the revised shareholding pattern included preference shareholders is contrary to statutory requirements. However, the respondents asserted that there is no violation of NCLT’s order and that share allotment was within the authorized share capital limits. It was contended that no funds were withdrawn from the escrow account post-NCLT’s order. It was emphasized that the inclusion of preference shareholders in the rights issue was permissible under the Articles of Association.<\/p>\n

While acknowledging the complexity of the issue in hand, the NCLT noted that the matters raised in the second application overlap with the pending contempt petition regarding the alleged violation of the NCLT’s order dated 27-02-2024. The NCLT reviewed the respondents’ compliance with the interim order and noted discrepancies in the handling of the rights issue and share allotment.<\/p>\n

The NCLT restrained the respondents from proceeding with the second rights issue until the disposal of the main petition alleging oppression and mismanagement and ordered the respondents to maintain the status quo regarding existing shareholders and their shareholding. The NCLT directed the respondents to file detailed information on share allotment and escrow account transactions within ten days. The matter is scheduled for further consideration on 04-07-2024.<\/p>\n

[MIH Edtech Investments B.V.<\/span> v. Think & Learn (P) Ltd.<\/span>, 2024 SCC OnLine NCLT 2889<\/a>, order dated 12-06-2024<\/span>]<\/p>\n\n

Advocates who appeared in this case :<\/p>\n

Shri Sudipto Sarkar, Sr. Adv., Shri Satish Parasaran, Sr. Adv. With Shankh Sengupta, Sampath Kumar, Tine Abraham, Yogesh Singh, Akshaya R., Aubert Sebastian, Manasa S., Rangam Sharma, Lavanya B. Ananth, Sujoy Sur, Angelika Awasthi, Neha Dhavalikar, Aneeta Mathew, Prarthna Bathija, Subhang N, Counsel for the Petitioners<\/p>\n

Shri Dhyan Chinnappa, Sr. Adv. with Manmeet Singh, Dr. Rishab Gupta, Ishu Gupta, Nidhi, Sairam Subramanian, Siddharth Doshi, Saloni Shah, Ashika Jain i\/b Saraf & Partners, Counsel for the Respondent No. 1<\/p>\n

Shri K.G. Raghavan, Sr. Adv. with Manmeet Singh, Dr. Rishab Gupta, Sairam Subramanian, Siddharth Doshi, Saloni Shah, Ishu Gupta, Ashika Jain, Priyanka i\/b Saraf & Partners, Counsel for the Respondent No. 2 – 4<\/p>\n

Shri Akshay Manjunath and Ms. Jakhari, Counsel for the Respondent No. 5<\/p>\n

Shri Dhananjay Joshi Sr. Adv. with Shri Pavan Srinivas, Counsel for the Impleading Applicant in CAs 76 & 77\/2024<\/p>\n

Ms. Khusboo Kapur, Counsel for the RBI<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The NCLT ordered the respondents to maintain the status quo regarding existing shareholders and their shareholding.<\/p>\n","protected":false},"author":67514,"featured_media":315346,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[50167,27634,69877,40944,2943,69876,3539,12521,69875],"class_list":["post-324483","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-byjus","tag-companies-act","tag-contempt-application","tag-fund-raising","tag-injunction","tag-mismanagement-petition","tag-National_Company_Law_Tribunal","tag-nclt","tag-second-right"],"yoast_head":"\nNCLT restrains Byju\u2019s from utilising funds collected on second rights issue until disposal of mis-management petition | SCC Times<\/title>\n<meta name=\"description\" content=\"NCLT restrained 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Issue] | Parties to maintain status quo; Byju\u2019s to not make share allotment till NCLT reaches a final decision during remand proceedings: Karnataka HC","author":"Sucheta","date":"July 6, 2024","format":false,"excerpt":"The Court further directed that the exercise of deciding as per the remand order by Single Judge must be completed expeditiously and before 31-07-2024.","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Karnataka High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/Karnataka-High-Court.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/Karnataka-High-Court.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/Karnataka-High-Court.webp?resize=525%2C300&ssl=1 1.5x, 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Mukhopadhaya, Chairperson and Justice Bansi Lal Bhat, Member (Judicial) dismissed an appeal filed against the order of National Company Law Tribunal, Bengaluru disposing of an application filed by the appellant. The appellant had filed an application under Sections 393,\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":350472,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/06\/12\/nclat-denies-relief-byjus-appeal-filed-against-nclt-status-quo-order-shareholding-in-akash\/","url_meta":{"origin":324483,"position":2},"title":"\u2018Interlocutory and Consensual Order\u2019; NCLAT denies relief to BYJU\u2019s in appeal filed against NCLT\u2019s status quo order on its shareholding in Aakash","author":"Sonali Ahuja","date":"June 12, 2025","format":false,"excerpt":"\u201cThe impugned order is exclusively interlocutory in nature which is yet to be considered on merits and yet to be given a final shape till the conduct of the final hearing when the interim reliefs prayed for, are heard and decided by the Tribunal.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"National Company Law Appellate Tribunal","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/resolution-plan.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/resolution-plan.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/resolution-plan.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/resolution-plan.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":331918,"url":"https:\/\/www.scconline.com\/blog\/post\/2024\/09\/26\/to-resolve-deadlock-in-equal-shareholding-companies-buy-out-of-one-group-by-other-is-preferred-remedy-nclt-scc-times\/","url_meta":{"origin":324483,"position":3},"title":"Buy-Out of one Group by other a preferred remedy to resolve deadlock in equal shareholding companies: NCLT","author":"Ritu","date":"September 26, 2024","format":false,"excerpt":"The instant matter revolved around a deadlock in management caused by alleged financial mismanagement and oppressive actions by the respondents.","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"National Company Law Tribunal","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/National-Company-Law-Tribunal.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/National-Company-Law-Tribunal.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/National-Company-Law-Tribunal.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/National-Company-Law-Tribunal.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":267315,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/24\/nclt-non-member-director-approach-oppression-mismanagement-bar-section-430-companies-act-supreme-court-judgments-india-legal-updates-research-news\/","url_meta":{"origin":324483,"position":4},"title":"SC to decide if a non-member director barred from approaching NCLT alleging oppression\/mismanagement under Section 430 of Companies Act","author":"Editor","date":"May 24, 2022","format":false,"excerpt":"Supreme Court: The Division Bench of Dinesh Maheshwari and Aniruddha Bose, JJ., issued notice to Topworth Urja & Metals Ltd. in a case alleging oppression and mismanagement in appointment of additional directors. The question of law before the Court was whether a non-member\/non-shareholder director is barred from raising a dispute\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/05\/Supreme-Court-to-decide-if-a-non-member-director-barred-from-approaching-NCLT-alleging-oppressionmismanagement-under-Section-430-of-Companies-Act.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/05\/Supreme-Court-to-decide-if-a-non-member-director-barred-from-approaching-NCLT-alleging-oppressionmismanagement-under-Section-430-of-Companies-Act.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/05\/Supreme-Court-to-decide-if-a-non-member-director-barred-from-approaching-NCLT-alleging-oppressionmismanagement-under-Section-430-of-Companies-Act.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/05\/Supreme-Court-to-decide-if-a-non-member-director-barred-from-approaching-NCLT-alleging-oppressionmismanagement-under-Section-430-of-Companies-Act.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/05\/Supreme-Court-to-decide-if-a-non-member-director-barred-from-approaching-NCLT-alleging-oppressionmismanagement-under-Section-430-of-Companies-Act.png?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":236094,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/09\/22\/del-hc-will-the-jurisdiction-to-address-issues-of-oppression-and-mismanagement-elections-to-board-of-directors-of-company-etc-vest-exclusively-with-nclt-hc-considers\/","url_meta":{"origin":324483,"position":5},"title":"Del HC | Will the jurisdiction to address issues of oppression and mismanagement, elections to board of directors of company, etc., vest exclusively with NCLT? 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