Just when everybody thought that the BharatPe saga is over, the fintech major has filed a civil suit against its former managing director (MD) Ashneer Grover, the startup’s former head of controls and his wife Madhuri Jain Grover, and his family members.
The development comes months after Ashneer was removed from all positions at the company over allegations of misappropriation of funds.
BharatPe has filed a 2,800-page civil suit in the Delhi High Court seeking INR 88.7 Cr in damages from the Grovers. Besides, the fintech startup has also demanded disclosures relating to assets owned by the Grover couple and other family members.
The fintech unicorn has also sought a restraining order against the duo from posting any derogatory material on social media against it and the permission to approach all media houses to remove any material which is purportedly against the company.
As a result, the HC issued summons to the Grover family and asked them to respond to the charges within two weeks. It set January 9 as the next data for hearing in the matter.
Alongside, the fintech giant has also filed a criminal complaint against Grover and his family with the Economic Offences Wing (EoW) on 17 charges, including alleged criminal breach of trust, forgery, document fabrication, and embezzlement.
If found guilty of the charges, Grover could be looking at a 10 year sentence for the offences.
“BharatPe has initiated civil and criminal action against erstwhile cofounder 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,” said a BharatPe spokesperson.
“We have full faith in the courts and authorities and are confident that justice will be done. As the matter is subjudice, we have no further comment to offer at this stage,” the spokesperson added.
Inc42’s request for a statement from Ashneer elicited no response.
In the latest development, BharatPe has even dragged Asheer Grover to the international tribunal Singapore International Arbitration Centre (SIAC) to claw back his 1.4% unvested shares in the company and to desist Grover from using the title of company’s cofounder.
BharatPe’s Accusations Against Ashneer Grover & Family
- Madhuri allegedly approved payments amounting to INR 72 Cr to 30 third-party vendors that did not provide any real services or goods to the company
- BharatPe has also alleged that she okayed payments totalling INR 7.6 Cr towards third-party recruitment contractors who did not assist the company in hiring employees
- The Grovers allegedly used a duplex apartment in posh Delhi neighbourhood as their personal residence despite the premises being requisitioned as company guest house. The company also claimed to have paid nearly INR 52 Lakh as rent and security deposit for the house
- The tenure of Ashneer saw INR 48 Lakh contract being awarded to Madhuri’s company for office renovation and decoration
- BharatPe has claimed that the couple invoiced the company for family vacations to Dubai and the United States
- In one instance, Grovers, as per BharatPe, billed the company twice for the same trip to Thailand. The vendor, in question, purportedly did not offer any services and was paid despite BharatPe already paying another travel agency for the same bookings and dates
BharatPe has sought the recovery of nearly INR 83 Cr, which it says was misappropriated on account of Grovers causing the company to ‘enter into various dubious transactions’. This, BharatPe said, led to a monetary loss of the said amount.
“…the Defendants (Ashneer and Madhuri) conspired to misappropriate the Plaintiff’s (BharatPe’s parent firm Resilient Innovations) 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 said in the court filings.
BharatPe is also seeking to recover INR 59.73 Lakh from the couple which was allegedly spent towards personal expenses including air tickets for family members, rent for their personal residence.
The company has alleged that a Rajasthan-based travel agency invoiced the duo twice for international travel, once together and the second time for their minor kids. Not just this, the two former executives also invoiced the company for purchase of home appliances including two televisions (one costing more than INR 1 Lakh) and a fridge.
In one instance, BharatPe alleged that Madhuri was reimbursed for INR 22,500 skincare treatment which was raised by her interior design business Mauve and Brown. The fintech firm has claimed that she was not authorised to do so.
An additional INR 5 Cr has been sought for ‘grave injury to the goodwill and reputation’ of BharatPe owing to the alleged derogatory statements made by the Grover couple.
“Once the Defendants occupied these key positions and roles, they treated the Plaintiff (BharatPe’s parent firm Resilient Innovations) as their personal fiefdom. By willfully perpetuating the lack of internal governance policies in the Plaintiff company, they conducted its affairs for their personal benefit,” added the fintech player’s petition.
Behind The Tussle
This follows a long line of drama that erupted at the company earlier this year. The power struggle ensued after BharatPe roped in Alvarez & Marsal (A&M) to conduct an independent audit of the company.
Later, the contents of the report were leaked which led to a public spat between then Head of Controls Madhuri and the board. After a tug of war between the two sides, BharatPe accepted the resignation of Madhuri, while she claimed that she never tendered her resignation.
Her ouster came right before Ashneer was also forced out of the company, even as it launched a full scale corporate governance review at BharatPe.
BharatPe, founded in 2018, is a fintech startup that offers a range of products catering to small merchants and also helps them accept digital payments. The Delhi-based startup was last valued at more than $2.8 Bn and is backed by big investors including Sequoia Capital India, Coatue Management and Ribbit Capital.
In what has become emblematic of the lax corporate governance norms within the Indian startup ecosystem, the BharatPe saga appears to be far from over. This is the first time that an Indian startup has dragged its former top executive to court over allegations of misappropriation of funds.