Investor dispute at Byju's edtech firm is seeking arbitration

Byju, the edtech company tried to deflect criticism by suggesting arbitration; it was revealed during the hearing at the NCLT Bengaluru bench.

Byju's has formally asked for arbitration to settle the ongoing dispute with irate investors. This action is taken in the midst of growing hostilities between Byju's and a faction of investors. According to PTI, which cited people with knowledge of the situation, Byju challenged the investor council's claims at the National Company Law Tribunal (NCLT).

The allegations state that by issuing shares to rights issue investors without finishing the required procedure of raising authorized share capital, the edtech company violated tribunal decisions. It was revealed at the NCLT Bengaluru bench hearing that Byju's tried to deflect by suggesting arbitration. However, in light of the alleged violations, the petitioners' lawyer cited pertinent parts and legal precedents that indicate such problems cannot be sent to arbitration.

The first legal session after Byju's extraordinary general meeting (EGM) on March 29 was this hearing. Increasing the company's authorized share capital to enable a $200 million rights offering was the main goal of the EGM agenda. The $200 million infusion was meant to pay for ongoing costs, including labor compensation, which are crucial to keeping Byju's business running.

The legal dispute started when a group of investors, led by Tiger and Owl Ventures and consisting of Prosus, General Atlantic, Sofina, and Peak XV, approached the NCLT to express their opposition to the EGM.