NCLT Orders Byju’s to Pay Salaries or Undertake Risk Audit

The National Company Law Tribunal (NCLT) has mandated that the troubled edtech giant Byju’s pay outstanding worker salaries regardless of its funding situation. If the tribunal’s warning was ignored, the Institute of Chartered Accountants of India (ICAI) would perform an audit. Following the NCLT’s Bengaluru bench’s consideration of a workers’ plea seeking restitution for unpaid wages, this order was made.

Throughout the trial, the tribunal emphasized that Byju’s, being a legitimate firm, should generate sufficient revenue to meet its pay obligations. “Your company is operating. “Surely you should be having revenues,” the panelists observed, underscoring the presumption that companies who are still in operation should be able to fulfill such basic financial duties.

Byju’s has verified that it has paid salaries for the months of April and May; however, it has not yet made payments for the months of February and March. The company explained these delays as the result of restricted access to funds raised in a rights issue in February. These money are being held in an escrow account in accordance with NCLT’s directive, awaiting the resolution of outstanding legal problems.

The tribunal ordered Byju’s to respond to the employees’ appeal and scheduled further hearings for the following week. This development is a part of a wider range of legal problems that Byju’s is handling, including lawsuits filed by at least seven vendors seeking to recover past-due bills.

In a related issue, Byju investors are contesting a recent Karnataka High Court decision since they are embroiled in a lawsuit over alleged non-payment. The order overturned an earlier NCLT ruling that barred Byju’s from raising a second rights complaint. The investors accuse Byju’s of distributing shares and receiving money from the rights sale in violation of the tribunal’s orders.

The Karnataka High Court is scheduled to hear the investors’ appeal on July 5. In addition, NCLT will reconsider the move to postpone the second rights dispute on July 9 in compliance with the high court’s orders. A contempt petition against Byju’s filed by the investors will also be examined.

This series of court cases indicates that Byju’s is navigating operational and financial instability. The edtech company is under increasing pressure to enhance its financial management and ensure that employee salaries are paid on time, as evidenced by the harsh warning issued by the NCLT and the potential ICAI audit.

Byju’s, once a pioneer in the edtech industry, is now having trouble afloat due to heightened regulatory and financial scrutiny. This demonstrates how crucial sound financial management and effective governance are to preserving operational integrity and business credibility.

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