Aakash Educational Services Takes Legal Action Against EY Over Conflict of Interest

In a significant move, Aakash Educational Services Limited (AESL) has filed a legal notice against the audit and advisory giant Ernst & Young (EY). The notice accuses EY of professional misconduct and serious conflict of interest due to its dual engagement with AESL and its competitor, Allen Career Institute. This case highlights the critical importance of ethical practices in advisory roles, especially within the competitive educational sector.

Background of the Conflict

The crux of AESL’s allegations lies in EY’s simultaneous involvement as both a financial advisor for AESL and as the “exclusive financial advisor and official result validator” for Allen Career Institute. This dual role poses a significant conflict of interest, raising concerns about the integrity of advisory practices in high-stakes environments like educational services.

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Details of the Legal Notice

The legal notice explicitly mentions that AESL has previously engaged EY for sensitive financial advisory roles related to crucial business decisions. This includes a proposed merger with BYJU’S in April 2021 and the complex structuring and conversion of debentures into equity in January 2024. According to AESL’s Head of Legal, Sanjay Garg, the discovery of EY’s undisclosed involvement with a direct competitor is alarming and warrants further legal action.

AESL has already initiated prior notices regarding EY’s conduct, including direct communications with specific EY partners like Ajay Shah, who was also named in a pending oppression and mismanagement petition linked to BYJU’S parent company, Think & Learn Pvt Ltd (TLPL). This litigation underscores the escalating tensions and complexities surrounding ownership disputes and financial management in the educational sector.

Attempts for Compliance and Documentation

In its notice, AESL has highlighted attempts to acquire transaction-related documentation from EY repeatedly throughout April and May 2025; however, these requests have gone unfulfilled. The lack of cooperation from EY raises questions about transparency and accountability, which are crucial in maintaining professional and ethical standards among advisory firms.

The notice specifically calls out multiple EY officials involved in the dealings, including Ajay Shah, Shailendra Ajmera, Riad Joseph, Dinkar Venkatasubramanian, and Pulkit Gupta. AESL has demanded that EY immediately cease its role in the insolvency proceedings related to TLPL, further intensifying the scrutiny on EY’s dual engagements.

Implications for the Educational Sector

This unfolding situation serves as a critical reminder of the ethical obligations faced by advisory firms operating in competitive landscapes. The educational sector, particularly the test preparatory industry, is fraught with challenges, and any breaches of trust can lead to irreparable damage for firms involved.

AESL’s proactive stance in addressing these concerns not only aims to protect its interests but also to emphasize the need for more stringent regulatory oversight of conflict-of-interest scenarios in the advisory landscape. The firm’s actions could set a precedent for how similar disputes are managed in the future.

Next Steps for AESL and EY

As AESL moves forward with its legal notice, the fallout from this dispute could have lasting effects on how advisory roles are perceived within the industry. The growing scrutiny on firms like EY may lead to enhanced protocols aimed at preventing such conflicts of interest, thus reinforcing professional integrity.

While Aakash Educational Services prepares for potential civil and criminal proceedings against EY, the educational community and stakeholders will be keenly observing how this situation unfolds. Both firms are now positioned at a pivotal juncture that could redefine their operational approaches and governance structures.