BharatPe's Co-founder Ashneer Grover takes voluntary leave of absence until March-end

Days after a controversy between BharatPe's Ashneer Grover and Kotak Mahindra Bank executive, BharatPe has announced that Co-founder Ashneer Grover has taken a voluntary leave of absence until the end of March 2022.

"Ashneer Grover, our Co-founder & MD, has today informed the Board of his decision to take a voluntary leave of absence from BharatPe till March-end. Ashneer has co-built BharatPe from scratch, and his decision is consistent with his passionate commitment to the future success of the company," the company said in a release.

"For now, the board has accepted Ashneer's decision which we agree is in the best interests of the ‘company, our employees and investors, and the millions of merchants we support each day," it said.

The company also said there will be no change in the top management. Suhail Sameer (Co-founder & Chief Executive Officer) will continue to lead the company, it added. Suhail Sameer was appointed to the post in August last year.

The announcement comes after Ashneer Grover came into a controversy where he was alleged to be in inappropriate behavior and threatened to get the Kotak Bank employee killed in an encounter over the failure of getting an IPO allotment of FSN E-Commerce Ventures, which runs a beauty ecommerce platform Nykaa.

According to multiple media reports, Ashneer and his wife Madhuri Jain Grover had accused the bank of failing to secure finance and allocation of shares in the Nykaa initial public offer (IPO) and sought around Rs 500 crore in damages.

On October 30, 2021, Ashneer Grover, through Regstreet Law Advisors, sent a twelve-point legal notice to Uday Kotak (Managing Director & CEO, Kotak Mahindra Bank); Oisharya Das (CEO, Kotak Wealth Management); Shanti Ekambaram (Group President – Consumer Banking, Kotak Mahindra Bank); and KVS Manian (Whole Time Director - Corporate, Institutional and Investment Banking and Wealth Management, Kotak Mahindra Bank). In the notice, Grover had sought damages for the gains they would have made by getting allocation to Nykaa's IPO worth Rs 500 crore.

The notice also said Grover and his wife Madhuri alleged that they were in communication with Rohit Mohan, Senior Director of the ultra-high net worth individuals practice at Kotak Bank, to obtain the necessary internal approvals for subscribing to Nykaa (FSN E-Commerce Ventures Ltd) shares.

“Our clients had proposed to apply for subscription to the shares of FSN in the name of both Mr. Ashneer Grover and Ms. Madhuri Grover, for shares worth Rs 250 crore each," said Sumit Agrawal, partner, Regstreet Law Advisors, in the legal notice.

Grover added that the funding for Nykaa's IPO did not come through despite assurances, leading him to lose out on a profitable trade.

“Kotak’s refusal to provide IPO financing to our clients for the Nykaa IPO constitutes a blatant violation of its legal obligations owed to our clients as their wealth managers," the legal notice added. However, Kotak, through its law firm Khaitan, said that any funding is at the bank’s sole discretion, and Grovers do not have any contractual rights.

“Our client denies that there has been any breach on its part with regard to any financial assistance that has been alleged by you or otherwise. Your clients are well aware that financial assistance is at the sole discretion of the lender and that there is neither any concluded contract nor any sanction letter executed in favor of your clients," Kotak said.

In response to Kotak’s assertion, Grover’s lawyers said, “Our clients vehemently deny the defamatory allegations pertaining to any unparliamentary or foul language having been used by our clients, or that our clients have issued any threats to your clients or its representatives whatsoever. It is evident that your clients have concocted these allegations merely as a counterblast to the claims made by our clients for the breach of various legal obligations committed by your clients."

In the first week of January this year, The matter emerged public after an anonymous Twitter handle --- bongo babu had shared an audio clip, where Ashneer Grover was allegedly seen abusing and threatening a Kotak Mahindra Bank employee over the phone call after missing an allocation of Nykaa's Rs 5,352 crore IPO.

However, Grover had denied the allegations and claimed that the alleged audio clip was "fake", and a "scamster" was trying to extort funds worth $240,000 or Rs 1.78 crore in bitcoins, which he claimed to have refused to buckle.

Following the first week, The dispute between Ashneer Grover and Kotak Mahindra Bank over IPO financing escalated sharply with the bank’s wealth management unit pledging to pursue legal action over Grover’s use of inappropriate language.

Kotak's statement on the recent issue

On January 9, Kotak Mahindra Bank in a statement had said it is pursuing "legal action" against Grover and his wife Madhuri in connection with the abusive call matter.

In a response to Grover's behavior, Kotak Wealth Management, through a law firm Khaitan and Co., said it reserves the right to pursue legal action for the threats to the lives of its employees.

In an emailed response, Kotak Wealth Management said that it filed appropriate responses to legal notices sent by Ashneer Grover's law firm. “Notice was received by us and was replied to appropriately at the time, including placing on record our objections to inappropriate language used by Mr. Grover. Appropriate legal action is being pursued".

“Your clients have, in the recent past, on several occasions called our client’s employees on the phone and had issued threats to their lives, besides using unparliamentary and foul language, for which our client and its employees reserve their rights to take appropriate legal steps as they may be advised," Kotak said in a 2 November response to Grover’s legal notice sent on 30 October.

The bank had also said that there was no breach or violation by the Kotak Group in any manner whatsoever.

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