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Aakash Educational moves NCLT to implead EY in edtech firm Byju's dispute
In an impleadment application filed on June 1, AESL has urged the tribunal to either dismiss the company petition filed by Byju's under Sections 241 and 242 of the Companies Act, alleging oppression and mismanagement, or make EY LLP and its partner Ajay Shah respondents in the case.
AESL alleges that EY, which has been involved in a wide range of strategic, financial, and compliance-related advisory services for the company, is now acting against it through Shailendra Ajmera, the Resolution Professional (RP) of Byju's, who is also a senior EY functionary.
'This is a classic case of conflict of interest and abuse of the process,' said the application. 'The very transactions now being challenged in the petition — such as the issuance and conversion of non-convertible debentures (NCDs), equity restructuring, and internal governance matters — were structured and overseen by EY,' the application added.
According to the filing, EY advised on the valuation and structuring of NCDs issued to Davidson Kempner. It also advised on tax and regulatory aspects of equity conversion to the Manipal group. Additionally, EY was involved in internal board-level decisions and corporate strategy at AESL as recently as October 2024.
AESL is showcasing internal emails and advisory documents, evidencing EY's alleged involvement in financial forecasting, liquidity management, and decision-making processes.
'The RP has suppressed material facts, has no locus standi to file this petition under the Companies Act, and is acting in excess of his powers under the Insolvency and Bankruptcy Code (IBC),' AESL said in the filing.
AESL has also warned that it may escalate the matter to regulators, including the Insolvency and Bankruptcy Board of India (IBBI) and the Ministry of Corporate Affairs, alleging that Ajmera's position as RP is 'severely compromised'.
The move comes just days after the RP wrote to the AESL board, seeking clarity on the independence and nomination status of its directors, signalling a broader governance challenge in the ongoing tussle.
What's at stake
The fight over Aakash, which Byju's acquired in a $1 billion deal in 2021, has become a flashpoint in the edtech giant's ongoing financial and legal troubles. The Manipal group, which took over a significant stake by converting debt into equity, now controls the board of AESL.
With this filing, AESL is preparing for a full-blown legal and reputational offensive, challenging both the admissibility of Byju's petition and the professional neutrality of the advisers involved.
Both EY and the RP are yet to file a formal reply to the impleadment request.
'The matter is sub judice and, therefore, we cannot offer any further comment at this time. However, we refute the allegations and will defend any such legal action vigorously,' an EY spokesperson told Business Standard on Tuesday.
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