A group of four investors in Byju’s has taken legal action against the company’s management, filing a suit for oppression and mismanagement before the Bengaluru bench of the National Company Law Tribunal (NCLT). According to PTI report, the investors are seeking to declare the founders, including CEO Byju Raveendran, as unfit to lead the company and are pushing for the appointment of a new board.

In addition to questioning the leadership’s competence, the suit also aims to nullify the recently concluded rights issue. The investors allege “mismanagement and failures” at what was once considered India’s leading tech start-up, prompting their call for Raveendran and his family’s removal from the board.

The plea, submitted to the NCLT on Thursday evening, also requests a forensic audit of Byju’s. It highlights concerns over financial mismanagement, including the loss of control over Aakash, default on Byju’s Alpha (TLB loan), and ongoing corporate governance issues such as the absence of a CFO and independent director.

The investors seek to prevent further value erosion for shareholders and safeguard the interests of employees and customers. The suit specifically addresses issues surrounding the recent $200 million rights offer, alleging regulatory non-compliance and lack of transparency in sharing information with stakeholders.

Signed by investors Prosus, GA, Sofina, and Peak XV, with support from Tiger and Owl Ventures, the petition aims to halt corporate actions that may prejudice investor rights. It also raises concerns about undisclosed inter-corporate loans and multiple insolvency petitions filed against Byju’s by various parties.

The suit marks a significant challenge for Byju’s management and underscores growing unrest among investors over the company’s direction and governance practices. Byju’s, once a shining star in India’s tech landscape, now faces legal scrutiny as it grapples with internal and external pressures.

Meanwhile, on Thursday, the Enforcement Directorate (ED) issued look out notice (LOC) against Byju Raveendran over FEMA violations. Earlier this month, the central agency made a formal request to the Bureau of Immigration (BOI) in a bid to ensure that Raveendran remains within the national borders.