BharatPe Co-Founder Resigns, Founder of the Company reduced to 1

BharatPe Co-Founder Resigns:

The co-founder of BharatPe resigned from his position and had given up on the company. Ashneer Grover’s leaked audio of allegedly talking down to an employee of Kotak Mahindra Bank was leaked two months before the notice at hand. Relations worsened with the co-founder of BharatPe. He threatened an employee of a bank, and was then, looked at with disdain.

The clip came out in January, where the employee was harassed for missing out on the allotment of shares of FSN E-commerce ventures IPO (Nykaa). Grover claimed in a tweet that the audio was fake. But he deleted his tweet after a few days.

Apparently, Kotak Mahindra Bank had filed a case against Grover and his wife for using inappropriate language with their employees. After the leak, Grover said in a statement that he would be on leave till the end of March, 2022. An Independent Audit was being carried out by the board, Alvarez and Marsa were appointed. 

They was a part of the leading risk advisory and management consultant company. The preliminary report shared by them stated that there were inconsistencies in deals. Grover, however, contended that the report was based on prejudice and he also wrote a letter to the board asking them to remove chief officer Suhail Sameer from the board. Grover was against the review committee as he believed that the formation of such a committee was against the Articles of Association (AOA), it was also against the Shareholders Agreement (SHA) and was thus, illegal.

The assessment process carried out by the company was not proper, according to him. Hence, he was given no chance of being heard or to present his case. He also believed that the committee should dissolve. There should be a new panel made lawfully to look into how the company functions. 

Grover had filed an arbitration case with the Singapore International Arbitration Centre. He claimed that the investigation that the company made against him was illegal. However, the decision of the arbitration center was not in his favor either. 

The emergency arbitrator held that there were no supporting grounds to stop the governance review against him at the company. There were five grounds of appeal & all of them were rejected by the emergency arbitrator, thus granting no relief to Grover.

The SIAC said that there were no rights that Grover had – neither under the shareholders’ agreement nor under the general law for the relief that he was asking. But, the SIAC also laid down that the review committee was formulated a month back but they had still not concluded the gross misconduct or the negligence on the part of Grover. Moreover, it also stated that whether the preliminary report submitted by the investigation team was reliable or not, would be decided by the Arbitral Tribunal in due course.

The SIAC also explained in its order that if the review committee was dissolved at that stage when the parties had come to seek emergency relief then it would be concluded that the final relief had been given in favor of Grover even before an Arbitral panel was constituted and the proceedings, been initiated, which was not permissible and would lead to grave injustice.

The committee was made, not outside the scope of power of the board of BharatPe and Grover hadn’t been able to prove a prima facie case relating to the constitution of the committee. The resignation came a day after the decision, when he came to know about the agenda of the board’s next meeting which required him to submit a PWC report to the board regarding his conduct and actions. The board was going to take further action based on the report. The wife of the co-founder, Madhuri Jain, who was also the controller for BharatPe was charged with misappropriation of funds.

The services she extended to the company were also terminated. The company claimed that the funds misallocated by Madhuri were used for personal use. She bought beauty products and funded family trips to the US and Dubai. The employment contract and the stock options that she had were canceled. Grover claimed that he was treated disrespectfully by the team. He claimed it himself, in a self-written letter, that he had sent to the fintech’s board. 

He also claimed that there had been targeted attacks on his family to harm his and the company’s reputation which they are, apparently, trying to protect. He also wrote about the investors trying to make an unwanted founder leave the company. Since the investors were at the top of the chain, they could downsize him and his wife. He was forced into resigning from a company that he founded. He treated the company like his baby. He also claimed that there would not be any acts of impropriety that the company would be able to hold against him.

Since the board believed that the company was be better off without him, he left the company, with the challenge of building half the value to the company that he had created to date. He left the company with three times the funds that he had used. However, Grover continued to be the sole largest shareholder of the company. The top investors at the company had decided not to buy the 8.5% stake that he had in the company which amounted to Rs. 4,000 Crore. 

The investors believed that the valuation done by Grover had no ground since the company valued by him at $6 billion. The company was not estimated correctly. They believed that the valuation was $2.85 billion. His share was Rs, 1,824 crore. Grover believed that he was being treated poorly, like slaves used to be treated and he was not able to tolerate the shame that the company was continuously putting on him and his family. The company was founded with Shashvat Nakrani in the year of 2018. He felt proud that his company had helped many small-scale businesses over fighting the issues of e-commerce in the times of Covid. The company had over 8 million merchants on the platform.

Grover believed that what had happened was an ego clash. To cover it up, it was given the title of “Good Governance”. During the legal truffle, Grover was represented by the advocates of Karanjawala & Co and BharatPe was represented by Senior Counsel, Abhishek Singhvi. When Grover was asked about his next move, he replied that he was never going to tell anybody about his future moves as he was going to remain a private person from then on. He was not going to live his life like a servant to the media or the investors, any longer. 

He would continue to live his life on his own terms. He said that he looked up to people who dared to build up a business from scratch. Grover was asked about the help offered to him by the board in monetary terms. He responded that he was not a beggar and that the board was not even capable of looking him in the eye at the moment because of what they had done.

Grover mentioned that he would not be attending the meetings for which the notice was issued, since he lived his life on his terms and had stopped acknowledging the board at all. Since the members of the board were trying to get indulged in unfair practices, he would meet up with the Minister of Corporate Affairs and make it right. In conclusion, Grover had always taken pride over the fact that he had built the company into what it was and nobody had the right to take it away from him.