At the core of AESL’s latest submission is a blistering critique of EY’s dual role—both as a longstanding adviser to AESL and now, allegedly, a key player in actions hostile to it.
Credits: Outlook Business
Aakash vs Byju’s: AESL Accuses EY of Misconduct in Intensifying Legal Feud
In a major twist in the corporate showdown between Aakash Educational Services Ltd (AESL) and troubled edtech giant Byju’s, AESL has launched a scathing attack on global consultancy firm Ernst & Young (EY), accusing it of professional misconduct and conflict of interest. The battle, which has been brewing ever since Byju’s acquired AESL for $1 billion in 2021, has now taken a legal and reputational turn.
AESL Takes EY to Task at NCLT
According to court filings reviewed by a media group, AESL filed an “implementation application” on June 1 with the National Company Law Tribunal (NCLT) in Bengaluru. In it, the company seeks to either add EY LLP and its partner Ajay Shah as respondents in the case or have Byju’s original petition dismissed entirely.
Byju’s had earlier filed a case under Sections 241 and 242 of the Companies Act, citing “oppression and mismanagement” at AESL. However, AESL’s new application not only defends its position but also counters with allegations that could put EY and Byju’s on the back foot.
Conflict of Interest at the Core
AESL’s petition centers around what it calls a “classic case of conflict of interest.” The edtech company alleges that EY—through its senior employee Shailendra Ajmera, who also serves as Byju’s Resolution Professional (RP)—is acting against AESL despite being a close adviser until recently.
EY reportedly played a pivotal role in shaping and managing transactions that are now under dispute in Byju’s petition, including the issuance and conversion of non-convertible debentures (NCDs), equity restructuring, and internal governance practices.
AESL claims that EY not only advised Byju’s and its investors like Davidson Kempner on NCD structuring and valuation but also assisted in providing tax and regulatory advice for transferring shares to the Manipal Group—who now controls the AESL board.
Emails, Documents Used as Evidence
To support its case, AESL has submitted internal emails and advisory documents which it claims prove EY’s deep involvement in liquidity planning, forecasting, board-level strategies, and even daily decision-making.
AESL argues that EY’s continued involvement on both sides of the fence has not only compromised its neutrality but also raised questions about ethical and professional boundaries. This, the company says, goes against standard governance norms and constitutes procedural abuse.
RP’s Role Questioned
The allegations go further. AESL is also questioning the conduct of Shailendra Ajmera in his role as RP, claiming that he has been overstepping his legal mandate under the Insolvency and Bankruptcy Code (IBC). According to AESL, the RP lacks the legal standing to even file the petition under the Companies Act and has failed to disclose key facts in court filings.
The company warned that it may escalate the matter further by approaching the Ministry of Corporate Affairs and the Insolvency and Bankruptcy Board of India (IBBI) if needed.
Power Struggle Over AESL Control
This legal firestorm comes amid an ongoing power struggle at AESL. The Manipal Group, which converted its debt into equity, now holds a significant stake and controls the AESL board. Recently, the RP reportedly wrote to the AESL board questioning the independence and legitimacy of its directors, suggesting that the battle may only intensify from here.
For Byju’s, which is already navigating a storm of financial woes, regulatory scrutiny, and investor exits, this development adds yet another layer of complexity.
Credits: Startuptalky
Conclusion: A Legal and Reputational Minefield
The AESL vs Byju’s case has morphed into far more than a corporate ownership dispute. With allegations now targeting one of the world’s most respected consultancy firms and a court-appointed resolution professional, the fight has entered dangerous territory. If the NCLT finds merit in AESL’s claims, it could lead to wider scrutiny on advisory practices and RP conduct in India’s corporate ecosystem. For now, all eyes are on the tribunal’s next move—and how EY, Ajmera, and Byju’s respond.
