GLAS Trust Moves Supreme Court Against NCLAT Order Allowing Aakash to Proceed wth Rights Issue

GLAS Trust Company LLC, a US-based lender to embattled ed-tech Byju's (Think & Learn Pvt. Ltd.), has moved the Supreme Court challenging the National Company Law Appellate Tribunal's (NCLAT) order that refused to stay Aakash Educational Services Ltd.'s Extra Ordinary Meeting to approve rights issue.

The lender, which represents Byju's largest creditors, has sought an immediate halt to the fundraising exercise, arguing that it could dilute Byju's 25.41% stake in the coaching subsidiary.

The appeal comes after the NCLAT's Chennai Bench, on October 28, dismissed GLAS Trust's plea to block Aakash's extraordinary general meeting (EGM) scheduled for October 29, where shareholders approved the rights issue.

Offer documents were circulated to all shareholders, including Byju's, on October 30, and the issue is slated to close on November 17.

Separately, a plea filed by Byju's resolution professional (RP) seeking to halt the rights issue in an oppression and mismanagement case remains pending before the NCLAT and is scheduled for hearing on November 6.

In its October 28 ruling, the NCLAT observed that the value of Byju's stake in Aakash “cannot be preserved if the subsidiary is commercially killed,” holding that insolvency proceedings against Byju's cannot be used to curtail the commercial freedom of its solvent subsidiary.

The bench, comprising Justice N. Seshasayee and Technical Member Jatindranath Swain said the spirit of the Insolvency and Bankruptcy Code (IBC) is best served when companies in which the corporate debtor has shareholdings are allowed to prosper, irrespective of who holds the controlling power.

The tribunal found that Aakash's decision to issue additional shares through a rights issue stemmed from its Debenture Trust Deed (DTD) dated April 25, 2023 executed over a year before Byju's entered insolvency.

The DTD required Aakash to amend its Articles of Association (AoA) to protect the interests of debenture holders, which the tribunal said naturally led to its later capital restructuring.

Accordingly, the NCLAT held that Aakash's move to amend its AoA and proceed with a rights 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 [Think & Learn Pvt Ltd] has in it.”

The tribunal also clarified that the rights issue would not automatically dilute Byju's shareholding, offering it the option to subscribe to additional shares. 

GLAS Trust, which holds 99.41% voting share in Byju's Committee of Creditors, had argued before the NCLAT that the fundraise violated a March 27 National Company Law Tribunal (NCLT) order maintaining status quo on Aakash's shareholding and alleged that Aakash's management was acting in collusion with Byju's promoters to erode the value of Byju's holdings.

Aakash refuted these claims, calling the rights issue a sequel of events arising from the DTD.

The tribunal rejected GLAS trust's plea noting that none of the three conditions required for an interim injunction that is prima facie case, irreparable injury, and balance of convenience had been satisfied.

Case Title: Glas Trust Company LLC v Shailendra Ajmera, RP, Think and Learn Pvt Ltd and Ors
 
Diary Number: 62509/2025