NCLT asks BYJU’S to pay employee salaries, warns of audit
The NCLT’s Bengaluru bench told BYJU’S to respond to the employees’ application, scheduling a hearing for the following week.
The National Company Law Tribunal (NCLT) has reportedly asked BYJU’S to pay employee salaries regardless of access to funds from its rights issue, warning that failure to do so could result in an audit by the Institute of Chartered Accountants of India.
On Thursday, during a hearing on employees’ salary payment plea, NCLT’s Bengaluru bench noted that as a functioning company, should have revenues, and instructed it to respond to the employees’ application, scheduling a hearing for the following week, according to a Moneycontrol report.
BYJU’S has claimed that it has paid all employees their April and May salaries but has yet to fully pay the salaries for February and March.
Earlier this week, Karnataka Labour Minister Santosh Lad called on BYJU’S to settle outstanding dues to former employees. The labour department received complaints from about 200 employees, totalling Rs 4.5 crore in dues.
The CapTable reported that BYJU’S core K-12 online sales have plummeted to Rs 55 crore, a figure comparable to its revenue in FY15 when the company was valued at approximately $100 million.
The Byju Raveendran-led company, facing severe liquidity issues and struggling to pay employee salaries, is seeking new funding at a 99% discounted valuation through a rights issue. It has previously blamed the “action by 4 foreign investors” for the delay in salary disbursements.
BYJU'S and prominent investors, including Prosus, General Atlantic, Peak XV Partners, and Sofina Ventures are in conflict. The investors have appealed to the NCLT to void the $200 million rights issue initiated in January.
The Tribunal has ordered BYJU'S to place the rights issue funds in a separate escrow account, with no withdrawals allowed until the oppression and mismanagement suit filed by four investors is resolved.
Earlier this week, the Karnataka High Court set aside an order issued by the NCLT that had barred BYJU'S from moving forward with a second rights issue.
A division bench of the high court will hear the plea on July 5, and the tribunal will rehear the plea for a stay of the second rights issue and a contempt petition filed by the investors on July 9.
During a Wednesday NCLT hearing, the edtech firm requested 48 hours to decide whether it could provide an undertaking not to pledge, sell, or transfer its assets amid a dispute with lenders. The case is scheduled for hearing on July 9.
The Bengaluru-based company is fighting multiple legal battles with its investors and lenders.
(The story was updated for clarity.)
Edited by Jyoti Narayan
