Byju’s is Ordered by NCLT to Pay Salaries or Risk Audit
The beleaguered edtech behemoth Byju’s has been ordered by the National Company Law Tribunal (NCLT) to pay outstanding staff salaries regardless of its funding status. The Institute of Chartered Accountants of India (ICAI) would conduct an audit if the tribunal’s warning was disregarded. This order was issued when the NCLT’s Bengaluru bench considered a plea from workers seeking reimbursement for unpaid wages.
The tribunal stressed throughout the trial that Byju’s, as a functioning business, ought to make enough money to cover its wage commitments. “You are an operational firm. The panel said, “Surely you should be having revenues,” highlighting the assumption that businesses in existence ought to be able to meet such fundamental financial obligations.
Byju’s has confirmed that it has paid salary for April and May, but it has not yet paid compensation for February and March. The company said that limited access to funds obtained through a February rights offering was the cause of these delays. According to NCLT’s direction, these funds are being kept in an escrow account while pending the settlement of pending legal matters.
The tribunal set up additional hearings for the next week and directed Byju’s to reply to the employees’ appeal. This development is a part of a larger set of legal issues that Byju’s is dealing with, such as litigation from at least seven vendors who are attempting to collect unpaid invoices.
In a similar development, investors in Byju have challenged a recent Karnataka High Court ruling because they are involved in a legal dispute regarding purported non-payment. An earlier NCLT decision that prohibited Byju’s from bringing up a second rights concern had been overturned by the order. Byju’s is accused by the investors of disobeying the tribunal’s rulings by distributing shares and taking money from the rights offering.
The investors’ appeal will be heard by the Karnataka High Court on July 5. Furthermore, on July 9, NCLT will reevaluate the motion to delay the second rights issue in accordance with the high court’s directives. Additionally, a contempt petition filed by the investors against Byju’s will also be reviewed.
Byju’s is navigating financial and operational turmoil, as seen by this string of court disputes. The severe warning from the NCLT and the possible ICAI audit indicate that the edtech company is coming under more and more scrutiny and pressure to improve its financial management and make sure that staff salaries are paid on time.
Once a leader in the edtech sector, Byju’s is currently struggling to stabilize its business in the face of increased financial and legal scrutiny. This shows how important strong governance and financial discipline are to maintaining operational integrity and company credibility.
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