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Why Kotak Mahindra Bank is taking legal action against BharatPe founder Ashneer Grover & wife

Grover sought damages of Rs 500cr in Oct 2021 for a notional loss allegedly suffered because of the bank. Kotak says it replied to notice, pursuing 'appropriate legal action'.

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New Delhi: A statement from the Kotak Group Sunday said that the Kotak Mahindra Bank was pursuing “appropriate legal action” against BharatPe co-founder and managing director Ashneer Grover, and his wife Madhuri, for the “inappropriate language” used in a call allegedly made by Grover to an employee of the bank, probably last year.

While there was a reported fallout between Grover and Kotak last year over an alleged breach of assurance regarding funds, Kotak’s statement came after a social media user leaked an alleged audio recording last week, accusing Grover of hurling abuses at a Kotak bank employee.

On 5 January, a Twitter user @BabuBongo posted the alleged audio recording on Twitter. The shared audio clip has two male voices and one female voice, and it was claimed by the Twitter user that the voices were those of Grover and his wife and an employee of the Kotak Mahindra Bank. The tweet, however, makes no mention of when the clip was recorded.

The tweet has since gone viral on social media.

In response, Grover claimed on social media that the audio clip claiming to be of him was “fake” and an attempt to extort money from him.

“Folks. Chill. It’s a fake audio by some scamster trying to extort funds (US$ 240K in bitcoins). I refused to buckle. I’ve got more character. And Internet has got enough scamsters,” Grover tweeted on 6 January.

The tweet has since been removed, however, while Kotak Bank has said they are pursuing legal action against Grover.


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Dispute between Grover & Kotak Mahindra Bank

In October last year, Grover sent a legal notice to Kotak Mahindra Bank seeking damages of Rs 500 crore against a notional loss that Grover and his wife had allegedly incurred because of the bank not providing them with funds to subscribe to the initial public offer (IPO) of the beauty cosmetic firm Nykaa.

Nykaa is an Indian e-commerce company, founded by Falguni Nayar in 2012. It sells beauty, wellness and fashion products across websites and its offline stores and is the first Indian unicorn startup headed by a woman.

Grover’s notice also sought damages of Rs 1 lakh for the cost of the legal notice.

According to the notice, Grover and his wife had wanted to apply for the shares of Nykaa, worth Rs 250 crore each in the IPO on 28 October 2021, when the offer had opened for subscription. Grover alleged that on the same day there was an assurance from Kotak Mahindra Bank that all formalities for his funding were done.

“However, to the shock and surprise of our clients, on 28 October 2021, after having repeatedly assured our clients that the shares of FSN (Nykaa) would be allotted to them, Kotak informed our clients that it would not be able to provide IPO financing for the Nykaa IPO,” the notice had reportedly claimed.

It further alleged that the bank had refused to comply with its assurances on the pretext that it had decided not to finance the Nykaa IPO due to erratic movements in foreign institutional investors and very high lending rates.

Therefore, Grover alleged that Kotak would be liable to compensate his clients for the losses suffered due to the bank’s breach of contract.

“Kotak is called upon to compute this amount on the listing of Nykaa and promptly pay this sum to our clients within 24 hours of listing of Nykaa stocks. Kotak is also liable to pay the costs of this legal notice in the sum of Rs1 lakh. Kotak’s failure to comply with its obligations would compel our clients to take the necessary action in law,” the notice had reportedly claimed.

Kotak’s statement on the issue

Kotak Mahindra Bank has now said they had replied to this notice at the time they received it and was pursuing appropriate legal action against Grover and his wife.

“This 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…We would like to confirm that there is no breach or violation by the Kotak Group in any manner whatsoever,” the bank said Sunday.

Besides Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank, the notice was also served to Oisharya Das, chief executive officer of Kotak Wealth Management, Shanti Ekambaram, Kotak Mahindra Bank’s group president for consumer banking and KVS Manian, corporate, institutional and investment banking.

(Edited by Poulomi Banerjee)

(Disclosure: Uday Kotak is among the distinguished founder-investors of ThePrint. Please click here for details on investors.)


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