What the Karnataka HC’s share attachment means for the Aakash rights issue

Although there is no immediate threat to AESLs ₹According to lawyers, the 100-crore rights issue was settled in December and the decision calls for a sharper scrutiny on who ultimately owns the shares and who benefits from it.

The court order also raises the question of whether AESL can create a clean paper trail, such as shareholder records, beneficial ownership declarations and full allocation tracking, if the court asks. Mint explains:

How did AESL rights expose the land to legal trouble?

AESL granted permission to Beeaar Investco Pte. Ltd., a little-known Singaporean vehicle wholly owned by Raveendran, will be attending its first event ₹100 crore slice ₹250 crore rights issue even though the board had blocked the subscription of Byju’s parent company Think & Learn Pvt. Ltd (TLPL) to keep Raveendran at bay and expose the app to possible legal challenges. Mint It was reported on December 5.

Of course, TLPL is currently going through bankruptcy proceedings and according to records with the National Company Law Tribunal (NCLT), Byju’s $1.2 billion term loan is managed by a committee of creditors in which US-based GLAS Trust Company, B’s managing agent, holds nearly 99% of the voting rights.

The same AESL shares held through Beeaar are alleged to be at the heart of the arbitration award by Qatar Investment Authority Holding Llc (QIA), the Gulf nation’s sovereign wealth fund, and global freezing orders issued by the Singapore International Arbitration Center (SIAC) in connection with its $150 million loan to Byju’s Investments Pte. Ltd (BIPL) is another Singapore-based company that is partly owned by Raveendran in 2022.

However, applications made to the Registrar of Companies (RoC) mint In December, Bisy Philip, a businesswoman based in the United Arab Emirates (UAE), was seen subscribing for approximately 32.2 million shares. ₹16.09 crore – the same stake that AESL announced in its November 28 statement Beeaar Investco Pte. Received by. Ltd.– raises the question of whether the subscription ultimately complies with Beeaar, whether it is transferred or structured through a connected contact path.

Notably, Bisy Philip is the wife of Rajendran Vellapalath, who is linked to Dubai and UAE-based tech firm Voizzit and is named in US court filings regarding allegations of Byju’s US assets.

What does the Karnataka high court have to do with this?

The question of who ultimately acquires the rights-related shares, QIA’s enforcement action against Raveendran. Qatar Holding, an arm of QIA, has turned AESL’s cap table into a potential enforcement area by asking the Karnataka high court to recognize the arbitration award as a decree and help enforce it against Indian assets.

The Karnataka high court has now marked Raveendran as the “beneficial owner” of the AESL stake held through Beeaar Investco. This means that even if Beeaar is the owner of the records, the court will proceed on the basis that Raveendran is the person who controls or benefits from them.

The court also granted a temporary lien to protect the claimed interest; This amounts to a temporary, interim freezing order that can be modified after other parties raise objections and the court hears the objections in detail.

The court also notified Beeaar Investco and AESL of the provisional application for a further hearing and ordered the hearing to be listed “in two weeks’ time” (i.e. in late January).

The origins of this dispute date back to the September 2022 financing transaction, in which QIA Holding advanced $150 million to BIPL for the purchase of AESL-related shares, backed by Raveendran’s personal guarantee.

Following repeated allegations of default, QIA Holding terminated the agreement in February 2024 and invoked a clause that allowed it to seek an immediate, fixed payment of $235 million rather than waiting for the original repayment timeline, triggering arbitration in Singapore.

How does this affect AESL’s rights issue?

The essence of the share seizure is to prevent the transfer of disputed shares while the court considers QIA’s request.

“The provisional attachment order of the Karnataka high court is, at this stage, a protective measure aimed at blocking Raveendran’s alleged beneficial interest in AESL shares and does not automatically resolve an already concluded rights issue unless the allotment itself is shown to be a means to extinguish creditor claims,” ​​said Sunayana Basu Mallik, partner at King Stubb & Kasiva, advocates and advocates.

He added that a consummated title issue is not invalid simply because there is a parallel lien dispute. “To be reopened or stayed, the QIA must show that the allocation involved suppression of beneficial ownership, fraud, or intentional circumvention of the court’s restrictions,” Mallik said.

This distinction is important because it distinguishes two questions: whether AESL followed corporate process in issuing shares and whether the disputed economic interests behind a particular group of shares can still be “locked in” as they are currently being reviewed by the courts.

Where is the real risk for AESL?

The immediate risk is less about reversing the fundraising and more about compliance and record keeping once the company reports, lawyers said. “The risk for Aakash is not the ‘invalidation of the rights issue by default’ but the risk of court compliance and governance,” said Alay Razvi, managing partner of Accord Juris.

Razvi said the company must ensure that it does not record transactions or corporate actions that could be seen as helping anyone bypass foreclosure. It also highlighted a practical problem: if the court begins to examine who ultimately financed, controlled or benefited from the shares, AESL may need to show a clean and consistent paper trail.

Supreme Court of India lawyer Tushar Kumar framed this as a governance issue under the Companies Act. “The key risk for AESL apparently lies in the accuracy and completeness of its compliance under Sections 89 and 90 of the Companies Act, 2013,” Kumar said.

He added that when a constitutional court begins examining the beneficial ownership behind a pool of shares, the issuer’s records, board documents and disclosure trails become critical.

Sections 89 and 90 of the Companies Act 2013 are disclosure rules that require companies (and related persons) to declare who actually benefits from or controls the shares.

What might the courts look at next?

While the Karnataka high court judgment itself flagged QIA’s concern that subsequent changes in the shares held by Raveendran might circumvent the restriction, the respondent (Raveendran) claimed that the transfers were in respect of pre-existing agreements and that QIA was aware of the same. How the court views Beeaar’s ultimate ownership pursuit (if present in the AESL share allocation) may therefore become central.​​

Razvi said the “default” outcome was not a general postponement or reopening of the full rights issue. “The practical risk is therefore less of ‘reopening the matter’ and more of ‘locking the disputed part in court regardless of whose name it is now in’,” he said.

Ashima Obhan, senior partner at Obhan & Associates, said the ruling indicates that courts will examine layers to determine the ultimate beneficial owner, and issuers must be able to demonstrate proper registration and compliance. “Can the rights issue itself be reopened or stopped? This is a high threshold,” he said.

Obhan said QIA’s realistic next steps could include seeking continued commitment, sworn statements and, in some cases, the appointment of a receiver and instructions to maintain the status quo.

This simply means that the QIA can now ask the court to continue the freeze and appoint an independent court officer (“receiver”) to assume custody and control of the disputed shares if the court considers that the asset needs tighter control.

“Overall, the message is clear: courts will not allow institutional set-up or rights-related issues to be used as a shield against enforcement,” Obhan said.