NCLT asks Byju's to pay salaries to employees, warns firm of facing audit

The edtech firm has paid April, May salaries but is yet to make full payments for February and March

The National Company Law Tribunal (NCLT) ‘asked’ Byju's on Thursday to pay salaries to its employees regardless of whether the cash-strapped edtech firm had access to the funds raised through its rights issue. The tribunal also warned the company that the failure to pay its staff would attract an audit by the Institute of Chartered Accountants of India (ICAI).

According to sources, it was an oral comment passed by the quasi-judicial body in response to the petition filed by the employees last month, seeking relief related to the payment of salaries.

“NCLT commented that Byju’s as a company is operational and they should be having revenues. The tribunal also warned of an audit by the Institute of Chartered Accountants of India (ICAI) if the firm failed to pay the employees,” said a person familiar with the matter.

 

NCLT directed the company to file a response to the employees’ application. It has listed the plea for hearing in the coming week.

Though Byju's paid April and May salaries, it is yet to make full payments for February and March, sources said.

Earlier, Byju’s said the delay stemmed from funds raised through a recent rights issue, which have been locked in a ‘separate account’ due to the ongoing dispute with the investors. The company management, including founder Byju Raveendran, had assured employees that regardless of the court verdict, they would receive payments.

Byju’s and its investors are fighting at NCLT over the company’s $200 million rights issue in a petition alleging oppression and mismanagement. The four investors — Prosus, General Atlantic, Sofina, and Peak XV (formerly Sequoia) — had sought a stay on the rights issue at less than 99 per cent enterprise valuation compared to Byju’s peak valuation of $22 billion.

Over 2,000 disgruntled former employees of Byju’s also joined hands to fight for their rights. Several among them were in the process of taking their former employer to the NCLT in Bengaluru for the payment of their dues. At least seven vendors have also sued Byju's at NCLT to recover their dues.

Karnataka Labour Minister Santosh Lad recently held a meeting with representatives of Think and Learn Pvt Ltd, the parent company of Byju’s. During the meeting, Lad urged the company to address the unpaid dues owed to former employees. Byju’s employee count currently stands at around 13,000, down from nearly 15,000 at the end of 2023. The total salary burn for the company ranges between Rs 40 and 50 crore, according to sources.