The turbulent saga surrounding Byju’s, India’s embattled edtech unicorn, took a dramatic turn on Tuesday as a powerful investor group leveled explosive allegations against the company. 

Led by the Dutch tech investment behemoth Prosus, the disgruntled investors claimed before the National Company Law Tribunal (NCLT) in Bengaluru that Byju’s had blatantly violated a previous order issued by the very same tribunal.

At the heart of the controversy lies Byju’s recent $200 million rights issue, a crucial capital-raising exercise aimed at shoring up the edtech firm’s precarious financial position.

However, according to the investors’ counsel, Byju’s allegedly allotted shares under this rights issue occurred on March 2, in direct contravention of the NCLT’s order dated February 27.

The NCLT’s previous directive had explicitly barred Byju’s from utilizing the proceeds raised through the rights issue and issuing shares to the subscribers until the company increased its authorized share capital.

The investors argue that by proceeding with the share allotment, Byju’s flagrantly disregarded the tribunal’s instructions.

Further exacerbating the allegations, the investor group claimed that Byju’s failed to comply with another critical component of the NCLT’s order – the requirement to maintain the funds raised through the rights issue in an escrow account. 

Instead, the company allegedly utilized these funds, a move that the investors argue constitutes a clear violation of the tribunal’s directives.

In a dramatic courtroom showdown, Byju’s legal counsel mounted a vigorous defense, contending that the company’s actions were entirely lawful and did not violate the NCLT’s order based on their interpretation of the order’s language.

The high-stakes legal battle has thrown Byju’s into even deeper turmoil, compounding the numerous challenges the once-celebrated edtech giant has been grappling with in recent months. 

Valued at a staggering $22 billion at its peak, Byju’s has faced an investor revolt, intense regulatory scrutiny, a crippling funding crunch, and waning demand for its services.

In a bid to stem the financial bleeding, the company has implemented sweeping cost-cutting measures, including laying off thousands of employees and repeatedly delaying salary payments to its remaining workforce. 

According to reports, Byju’s founder and CEO, Byju Raveendran, has been forced to raise personal debt against his stake in the company to facilitate these salary disbursements.

The current legal showdown with the Prosus-led investor group is the latest chapter in Byju’s rapidly unraveling saga. 

While the company had previously announced that its $200 million rights issue was fully subscribed, the veracity of this claim has now been called into question by the investors’ explosive allegations.

As the NCLT prepares to reconvene on June 6 for further hearings, the fate of Byju’s hangs in the balance. 

The tribunal’s ultimate ruling could have profound implications not only for the future of the embattled edtech firm but also for the broader Indian startup ecosystem and the burgeoning edtech industry.

With billions of dollars in investor capital at stake and the credibility of one of India’s most celebrated unicorns on the line, the high-stakes legal battle between Byju’s and its disgruntled investors is shaping up to be a watershed moment in the country’s tech landscape.

The Information is Collected from Business Outlook India, CNBC-TV18 and Hindustan Times