NCLT Bengaluru Refuses To Examine FEMA Issues In Aakash–Byju's Rights Issue Dispute, Says Outside IBC Jurisdiction

The Bengaluru bench of the National Company Law Tribunal (NCLT) has refused to examine questions relating to foreign exchange law compliance in a dispute arising from the Aakash Educational Services–Byju's rights issue. It held that such issues fall outside its jurisdiction under the Insolvency and Bankruptcy Code.

The order was passed on Tuesday by a bench of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada. It came on an application filed by Aakash Educational Services Limited against Think & Learn Pvt Ltd, the parent entity of ed-tech Byju's.

The company is currently undergoing insolvency proceedings and holds a stake in Aakash.

Aakash had undertaken a Rs 240 crore rights issue. It received around Rs 25 crore from Think & Learn towards subscription. The funds were raised by the corporate debtor through a Debenture Subscription Agreement dated November 7, 2025 with a a US entuty GLAS Trust.

Aakash told the tribunal that certain clauses in the agreement raised concerns. It said the instruments may not qualify as compulsorily convertible debentures.

According to Aakash, if treated as debt, the funds could fall within the External Commercial Borrowings framework. This would restrict their use for equity investment under the Foreign Exchange Management Act regime.

Citing these concerns, Aakash kept the allotment of shares to Think & Learn in abeyance. It placed the funds in a separate account. It then approached the tribunal seeking directions, including a clarification from the Reserve Bank of India on the legality, regulatory classification, and permissibility of the funds.

Opposing the plea, the resolution professional of Think & Learn argued that the application was not maintainable under Section 60(5) of the IBC. It said the plea sought adjudication on FEMA compliance, which falls within the domain of specialised regulatory authorities.

The Reserve Bank of India stated that the applicability of FEMA provisions would depend on complete transaction details. It said no conclusive opinion could be given in their absence.

Examining the scope of its jurisdiction, the tribunal observed, "Section 60(5) of the Code confers residuary jurisdiction upon this Adjudicating Authority to entertain or dispose of any question of law or fact arising out of or in relation to the insolvency resolution process; and while it is not in dispute that the decision to raise funds and participate in the rights issue was taken by the RP pursuant to the approval of the CoC during the CIRP of the Corporate Debtor, thereby establishing a nexus with the insolvency process, the mere existence of such nexus does not, ipso facto, confer jurisdiction upon this Adjudicating Authority to adjudicate upon all aspects of such transaction, particularly where the reliefs sought require determination of issues falling within the domain of specialised statutory frameworks."

Referring to the limits of its powers, the tribunal held: “This Adjudicating Authority, exercising jurisdiction under the IBC, 2016, cannot assume the role of a regulatory authority under FEMA or undertake determination of the legality or 'colour' of funds which can be done only under such specialised statutory regime.”

Rejecting Aakash's contention that the transaction formed part of the corporate insolvency resolution process, the tribunal said: “While actions of the RP and CoC are subject to supervisory jurisdiction of this Adjudicating Authority, such jurisdiction cannot be stretched to adjudicate upon independent statutory compliances under other enactments. To do otherwise would result in this Adjudicating Authority assuming jurisdiction over matters reserved for specialised regulatory authorities, which is impermissible in law and We respectfully decline to enter into such an exercise..”

The tribunal dismissed the application. It granted liberty to Aakash Educational Services Limited to seek remedies before the competent regulatory authorities in accordance with law.

For Applicant: Advocate H.V Shyam Sunder

For Glas Trust Company LLC: Advocate Tejas C Shetty

For RP: Advocates Pooja Mahajan, Ichchha K and Aishwarya V.R