Karnataka High Court rejects Qatar Holding’s plea against Byju’s but orders status quo on asset alienation

The Karnataka High Court recently rejected Qatar Holding's petitions seeking injunctions to restrain Byju Raveendran and Byju's Investments from disposing of assets worth $235 million including shares in Aakash Education Services Limited (Aakash Institute). .Justice Ashok S Kinagi held that since the arbitral tribunal under the Singapore International Arbitration Centre (SIAC) Rules had already been constituted, Qatar Holding must seek interim measures before the tribunal rather than Indian courts under Section 9 of the Arbitration and Conciliation Act, 1996.“The petitions are rejected; however, liberty is reserved to the petitioner to make necessary application either before the Emergency Arbitrator seeking clarification or before the Arbitral Tribunal seeking interim relief,” the Court ordered.However, the Court granted interim relief to Qatar for three months by ordering that interim orders, undertakings and status quo arrangements already in place would continue for a limited period to safeguard Qatar Holding’s interests..Qatar Holding LLC provided $150 million to Byju's Investments Pte Ltd in September 2022 under a Cash-Settled Option Transaction to part-finance the acquisition of 17,891,289 equity shares in Aakash Educational Services Limited. Byju's acquired Aakash Institute in 2021 at the peak of the COVID-19 pandemic. Aakash was the largest acquisition by Byju's, valued at $1 billionThis financing was secured through a share security agreement by Byju's Global Pte Ltd and a personal guarantee from Byju Raveendran.Under the agreement, Byju's was required to repay $300 million by March 31, 2025. However, Qatar Holding terminated the transaction in February 2024 claiming defaults and demanded early payment of $235,187,165.78.Qatar Holding initiated arbitration at the SIAC on March 7, 2024. An emergency arbitrator granted an award on March 28, restraining the respondents from disposing of assets up to the claimed amount. This award was enforced by the Singapore High Court.Raveendran submitted disclosure affidavits regarding assets but Qatar Holding claimed these were deficient, particularly concerning the Aakash shares. Raveendran took contradictory positions, first listing the Aakash shares as assets but later claiming that was erroneous.Qatar Holding filed petitions in the Karnataka High Court seeking interim protection over assets including the Aakash shares..The Karnataka High Court emphasised that Qatar Holding must now seek relief before the arbitral tribunal constituted under the SIAC Rules.“With the law as it stands today, the arbitral tribunal has the same power to grant interim relief as the Court, and the remedy under Section 17 is as efficacious as the remedy under Section 9(1). There is, therefore, no reason why the Court should continue to take up applications for interim relief, once the Arbitral Tribunal is constituted and is in seisin of the dispute between the parties,” the Court ruled. .Rejecting Qatar Holding’s attempt to seek additional protections, the Court held: “By filing the present petitions under Section 9, the petitioner has sought reliefs over and above what was contemplated in the Emergency Arbitration Award. The petitioner is attempting to modify, supplement or better the scope of the Emergency Arbitration Award, which is legally untenable.”The Court clarified that any clarification or modification must be sought from the emergency arbitrator or the arbitral tribunal..However, Justice Kinagi also noted that Byju Raveendran had taken inconsistent positions regarding the ownership of Aakash shares in affidavits filed before the arbitral forum.“A litigant can take a different stand at different times, but cannot take a contradictory stand in the same case. A party cannot approbate and reprobate on the same facts. Taking inconsistent pleas by a party makes its conduct far from satisfactory,” the Court opined.Hence, it invoked the doctrine of estoppel, observing that such conduct prolongs proceedings unnecessarily..The Court thus ordered status quo while disposing of the plea by Qatar Holdings..Qatar Holdings was represented by Senior Advocate Uday Holla with advocate Harish B Narasappa and Mrinal Shankar..The respondents were represented by Senior Advocate Promod Nair with advocate Pradyumna Narasimha. .[Read Order]