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    Delhi HC issues summons in BharatPe’s suits against Grovers and others

    Synopsis

    The Court has granted the couple two weeks to file a reply to the interim relief application. The matter is expected to be heard starting January.

    Ashneer Grover & Madhuri Jain Grover’s lesser known love storyAgencies
    The Delhi High Court on Thursday issued summons to BharatPe’s former managing director Ashneer Grover, his wife and former head of controls Madhuri Jain Grover, and their family members in a suit filed by the fintech firm.

    BharatPe has filed both civil and criminal suits against the defendants, in addition to a complaint filed with the Economic Offences Wing (EOW).

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    Grover, Jain and her brother Shwetank Jain, her sister’s husband Deepak Gupta, and her father Suresh Jain are the five defendants in the suit.

    The company has sought Rs 88 crore in damages for alleged misappropriation of funds and reputational harm.

    A counsel for BharatPe said Grover and the Jains have been running a “vicious and vitriolic campaign” against the company on microblogging site Twitter. Senior counsel Mukul Rohatgi and counsel Anuj Berry appeared for BharatPe.

    Ordering the summons, Delhi High Court Justice Navin Chawla also granted them two weeks’ time to respond to the company’s plea seeking interim relief.

    Arguing for BharatPe, Rohatgi highlighted the tweets posted by Grover and sought that Grover should be restrained from doing so.

    BharatPe has been under intense investor and media scrutiny after Grover in January sought damages from Kotak Mahindra Bank managing director Uday Kotak, alleging that the lender refused him financing for a personal investment in omnichannel beauty retailer Nykaa’s Initial Public Offering in November 2021.

    By the end of January, BharatPe’s board hired independent auditors Alvarez & Marsal, and PricewaterhouseCoopers after receiving complaints from an internal whistle-blower on alleged financial malpractices and corporate misgovernance at the fintech company.

    This led to the ouster of Jain.

    Grover resigned from the company and its board in March.

    BharatPe soon alleged that Grover had tendered his resignation “after receiving the agenda for an upcoming board meeting that included submission of the PwC report regarding his conduct”.

    Since then, Grover and Jain have on different instances commented about the goings-on at the company on Twitter.

    In its complaint, the company has alleged that the Grovers indulged in practices such as creating fake bills, overcharging for recruitment, and enlisting fictitious vendors to provide services to the company.

    In a statement, BharatPe said: “BharatPe has initiated civil and criminal action against erstwhile co-founder and managing director, Ashneer Grover, former head of controls, Madhuri Jain Grover, and other connected parties of their family for various claims, including misappropriation of company funds. We have full faith in the courts and authorities and are confident that justice will be done. As the matter is sub judice, we have no further comment to offer at this stage.”

    Grover and Jain did not respond to repeated requests for comments.

    The Delhi High Court posted the matter for further hearing next month.

    During the arguments in court on Thursday, the counsel for the defendants said that they were not served the suit, to which Rohtagi argued: “We didn't serve them because the moment he knows about it, he (Grover) will again go on a rampage.”

    The Allegations

    In its suit, BharatPe has alleged that the defendants, after occupying key positions in the company, treated it “as their personal fiefdom”.

    “By wilfully perpetuating the lack of internal governance policies in the Plaintiff company (BharatPe), they conducted its affairs for their personal benefit,” it noted.

    BharatPe said it had been able to “unearth embezzlement to the tune of Rs 81.28 crore, through its internal investigation”.

    ET has reviewed a copy of the complaint.

    This is the first time that BharatPe has revealed extensive details about the investigation which was undertaken against Grover and his family members since the start of the year.

    “In this manner, the Defendants conspired to misappropriate the Plaintiff’s funds, thereby abusing the authority conferred on them and breaching their fiduciary duties towards the Plaintiff, inter alia by entering into dubious transactions and by utilising the Plaintiff’s money to fund their personal expenditures,” BharatPe alleged.

    In the civil suit, among several allegations, BharatPe has accused misappropriation of funds to the tune of Rs 59.73 lakh from the company by Grover and his wife “towards the payment of their personal expenses, such as rent and utilities paid on their personal residence, purchase of home appliances, purchase of airline tickets for family members, payments towards personal skincare, etc”.

    With the EOW, BharatPe has filed a criminal complaint, which include forgery, embezzlement, criminal breach of trust and document fabrication. The criminal complaint was filed by MZM Legal LLP on behalf of BharatPe.

    In one example cited in the complaint, the company has alleged that the defendants siphoned off Rs 7.6 crore from 2018 to 2021 through forged invoices raised by eight “bogus HR consultants” which had ‘nexus’ with the Grovers.

    “Accused No.1 (Madhur Jain’s) illegal actions were throughout endorsed and supported by Accused No.2 (Ashneer Grover) in his capacity of managing director of the company. In fact, in November 2020, Accused No. 2, had made it clear that hiring requirements from Accused No.2 should be treated as pre-approved,” the BharatPe’s complaint with EOW showed.

    It also alleged that summons issued to BharatPe by the Directorate General of GST Intelligence (DGGI), Rohtak — to provide evidence and documents pertaining to purchases made from 30 vendors — was “suppressed from the Board of Directors” by the accused.

    The company in its complaint noted that some of these ‘sham HR consultants’ even had the same office address.

    “It has now been learnt that out of this list of thirty (30) GST numbers (vendors) listed in the DGGI summons, correspondences for twenty such vendors were with a single email id,” it added.

    Due to these activities, BharatPe said it had to cough up a penalty of Rs 1.66 crore in GST proceedings. Further, it still has not been able to verify the underlying transactions to the tune of Rs 71.76 crore for the over 30 vendors mentioned in the DGGI order.

    Among other accusations, BharatPe has noted that the defendants – including Deepak Gupta, who was head of administration and logistics – ‘maliciously cancelled’ orders for some materials placed by the company with the original vendors and routed them “at an inflated rate of 15% to 40% through other passthrough vendors who were related to the accused persons, thereby embezzling the additional sums.”

    The fintech platform has also alleged that “dishonest and illegal payments” to travel agencies connected to Grovers were made “basis false and fabricated invoices for services already availed from genuine providers”.

    In a particular instance, the Grovers, through the company, allegedly made a “double payment” to a travel agency called Golden Holidays. The company had already made the payment for the same trip with different dates to a different travel agency called Mohit Holidays, it said.
    The Economic Times

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