The Supreme Court on Friday directed Aakash Institute not to give effect to the Extraordinary General Meeting (EGM) resolution to amend its Articles of Association (AoA) [Singapore VII Topco Pte Ltd v. Manipal Health Systems Pvt Ltd]..A Bench of Chief Justice of India Sanjiv Khanna and Justice PV Sanjay Kumar directed Aakash Education to approach the National Company Law Appellate Tribunal (NCLAT) in seven days. The stay on implementation of the resolution will remain in place till the first date of hearing of the appeal before the NCLAT. Aakash Institute and Manipal Health Systems informed the apex court that they will not be pursuing the writ petition in the Karnataka High Court against the National Company Law Tribunal (NCLT) order. The NCLAT has been directed to decide the case uninfluenced by the decision of the High Court. Singapore Topco was represented by Senior Advocates Kapil Sibal and Maninder Singh and advocate Malak Bhatt.Aakash Institute and Manipal Health were represented by Senior Advocates Gopal Subramanium, Abhishek Manu Singhvi and Neeraj Kishan Kaul..On November 25, 2024, the Karnataka High Court stayed the National Company Law Tribunal (NCLT) order that restrained Aakash from implementing a resolution to amend its AoA. This resolution, proposed during an Extraordinary General Meeting (EGM), had the potential to dilute the shareholding rights of certain investors.Aakash challenged the NCLT order in the Karnataka High Court, arguing that the Tribunal had failed to provide sufficient reasons for halting the resolution.Justice Hemant Chandangoudar of the Karnataka High Court agreed with Aakash’s submissions, observing:“It is settled law that reasons are an objective expression of an opinion, and the Tribunal [must] substantiate their orders in the interest of legality, propriety, and adherence to principles of natural justice.”Consequently, the High Court granted an interim stay on the NCLT order. However, it clarified that this stay should not be interpreted as a final opinion on the matter..The NCLT’s earlier order, passed on November 20, 2024, was in response to an oppression and mismanagement petition filed by Singapore VII Topco I PTE LTD, an entity owned by Blackstone which holds a 6.97% stake in Aakash. The petition alleged that the amendment to the AoA violated shareholder rights granted under a previous Merger Framework Agreement (MFA).The investors argued that the proposed amendments were designed to dilute their stake in Aakash, a profitable entity acquired by Byju’s in 2021 for $1 billion. It was also contended that Byju’s, struggling financially, depended heavily on Aakash for its valuation and operational stability.However, Aakash and its shareholders contended that the investors had obtained shares as a result of a Merger Framework Agreement (MFA). The merger did not got through as planned, as a result of which they do not have any right in the company. It further argued that Think and Learn had initiated arbitration against it in the Singapore International Arbitration Centre (SIAC) in this regard.In its November 20 order, the NCLT directed Aakash to refrain from enforcing the EGM resolution until the main petition was resolved.
