The Supreme Court of India has issued a directive to Aakash Institute, instructing the educational giant to pause any changes to its Articles of Association (AoA) following a resolution passed during an Extraordinary General Meeting (EGM). The bench, led by Chief Justice Sanjiv Khanna and Justice PV Sanjay Kumar, mandated that Aakash Education seek recourse at the National Company Law Appellate Tribunal (NCLAT) within the next seven days, with a stay on the resolution’s implementation until the NCLAT adjudicates the appeal.
This decision follows Aakash Institute and Manipal Health Systems’ withdrawal of their writ petition in the Karnataka High Court, which had initially challenged an order from the National Company Law Tribunal (NCLT). The Supreme Court emphasized that the NCLAT should make an independent ruling, uninfluenced by prior decisions from the Karnataka High Court.
The legal battle attracted prominent advocates: Kapil Sibal and Maninder Singh represented Singapore Topco, while Gopal Subramanium, Abhishek Manu Singhvi, and Neeraj Kishan Kaul appeared for Aakash Institute and Manipal Health Systems.
The controversy began when the NCLT issued an order on November 20, 2024, in response to a petition by Singapore VII Topco I PTE LTD, associated with Blackstone, which holds a 6.97% stake in Aakash. The petition argued that the proposed AoA amendments during the EGM would unfairly dilute the shareholding rights of certain investors, contravening the terms of a Merger Framework Agreement (MFA).
Aakash Institute contended that these investors, whose stakes were contingent on the now-stalled MFA, possessed no enforceable rights within the company. The debate extends to the operational dynamics within Byju’s, Aakash’s parent company, which acquired Aakash in 2021 for $1 billion and is currently facing significant financial hurdles. Byju’s reliance on Aakash for valuation support has been a critical aspect of this dispute.
The NCLT’s decision to halt the AoA amendments was aimed at ensuring fair shareholder treatment and maintaining corporate governance standards amidst this corporate feud. Following the Supreme Court’s latest order, the case will move to the NCLAT, which will play a crucial role in determining the future course of corporate governance and shareholder rights within Aakash Institute.
