This article on “Bharatpe files a Rs. 88 crore lawsuits against Ashneer Grover: Facts and Laws” was written by Swaroopa Royadu, an intern at Legal Upanishad.
The ex-managing director and co-founder of BharatPe, Ashneer Grover’s wife Madhuri Jain, and other family members are being sued for up to Rs 88 crore in damages. The business claims that the Grover family fabricated invoices, hired phoney vendors to provide services for the business, and overcharged the business for them.
Facts of the case:
Bharatpe company was incorporated in March 2018. The company is famous for developing a single QR code for all types of payment and making such payments interoperable.
- Ashneer Grover was the Managing Director and co-founder of Bharatpe. His wife Madhuri Jain Grover was working as Head of Controls at Bharatpe.
- It is alleged that the company was under the complete supervision of Ashneer Groover and his family from 2018- January 2022. It was during this period funds were misappropriated by them.
- At the beginning of the year 2022(January), an audio clip of Ashneer Grover was leaked which involved using of inappropriate language and threats to Kotak Group employees who failed to allot funds for Ashneer to buy the IPO of Nykaa Company.
- Ashneer Grover took voluntary leave after this phone conversation.
- Kotak Mahindra Bank was pursuing legal action against Ashneer Grover for using inappropriate language against its employee.
- To review and determine whether Ashneer committed the offense of misconduct, the company’s Board appointed Shadul Amarchand Mangaldas, Alvarez, and Marsal as well as PwC to conduct corporate governance.
- Madhuri Jain Grover was fired from the company for misappropriating funds and Ashneer Grover resigns from Company in March/2022
- The company has filed a criminal case with the Economic Offences Wing (EWO) in New Delhi on 17 counts which include criminal breach of trust, forgery, embezzlement, destroying of the evidence, etc.
- A civil suit is filed before the High Court of Delhi for recovery of damages of Rs 88 crore in the month of December/2022
- The Delhi High court issued notice to Ashneer Grover and his family and asked them to reply within 2 weeks. The summons has been issued to the family members.
The Company is demanding Rs. 88 crore from Ashneer and his family members for the misappropriation of company funds. Ashneer Grover’s wife Madhuri Jain Grover has raised fake invoices of non-existing vendors and overcharged the Company for recruitment by forwarding such invoices to the accounts department. This was supported by her brother and other family members.
How the Company has arrived at damages of Rs 88 crore:
- Against fake invoices of non-existing vendors -Rs. 71.7 crore
- Claim for penalty paid for GST authorities – Rs. 1.66 crore
- Payment to vendors providing recruitment service – Rs. 7.6 crore
- Payment for damaging the reputation – Rs. 5 crore
The company has also asked the court to pass a permanent injunction restraining Ashneer Grover and his family members from making defamatory statements and derogatory statements concerning every member of the company and restrain them from publishing or printing them on any social media or another place. The company has also asked Ashneer and his family members to disclose their assets.
- Misappropriation of funds:[Companies Act, 2013, Section 447- punishment for fraud] “ Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud involving an amount of at least 10 lakh rupees or 1%of the turnover of the company, whichever is lower, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud” The term fraud for the purpose includes “affairs of a company or anybody corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss.
- Defamation: [IPC Section 500. Punishment for defamation]. Whoever defames another shall be punished with simple imprisonment for a term which may extend to two years, with a fine, or with both.
- Criminal breach of trust: [IPC Section 406. Punishment for criminal breach of trust.] criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, with a fine, or with both.
- Forgery [IPC Section 465. Punishment for forgery]. Whoever commits forgery shall be punished with imprisonment of either description for a term which may extend to two years, with a fine, or with both.
- Destruction of Evidence: [IPC, Section 229 – Penalty for furnishing false statement, mutilation, destruction of evidence]: penalty of the amount involved in the fraud or 3 times the amount of fraud/ imprisonment of minimum 6 months to maximum 10 years.
Probable defense Ashneer Gover and his family members can take:
- Lack of intention behind the misappropriation of the company’s funds. It was done for Companies benefit and not for personal gain.
- Ashneer and his family members had reasonable and good faith to believe that they are the rightful owner of the funds of the company.
- The acts were done with the due permission of other members or directors of the company.
- All the allegations are wrong and this could be proved with all the necessary documents and evidence.
- There was a force or use of violence or threat used to perform the act of fund misappropriation.
- The evidence provided by the opposition is insufficient to prove that the funds were misappropriated by Ashneer and his family.
- By providing sufficient evidence to prove the sentences made against the company on social media are true and not defamatory.
- “BharatPe files criminal suit against Ashneer Grover, family:, Times of India, 8 December 2022, available at: https://timesofindia.indiatimes.com/business/india-business/bharatpe-files-criminal-suit-against-ashneer-grover-family/articleshow/96086592.cms
- “BharatPe sues former MD Ashneer Grover for fraud”, LiveMint, 9 December 2022, available at: https://www.livemint.com/companies/news/bharatpe-sues-former-md-ashneer-grover-for-fraud-11670523800678.html
- “BharatPe drags Ashneer Grover to arbitration; Snapdeal halts $152 million IPO”, Economic Times, 9 December 2022, available at: https://economictimes.indiatimes.com/tech/newsletters/tech-top-5/bharatpe-drags-ashneer-grover-to-arbitration-snapdeal-halts-152-million-ipo/articleshow/96114170.cms?from=mdr