No relief in arbitration for BharatPe co-founder Ashneer Grover

Portions of the order passed on February 25 said that Grover has not established any lawful right under shareholder agreement (SHA) or common law to seek such relief.

Questions sent to Grover and BharatPe spokesperson were not immediately answered.

BharatPe had in January set up a review committee to look into some alleged financial irregularities and governance lapses at the three-year-old fintech firm. The committee will rely on the findings of third-party investigators Alvarez & Marsal and PwC.

Grover had on February 8 filed an application for emergency relief in the SIAC seeking emergency relief before the tribunal was constituted. Grover feared that the review committee was not conducting a real governance review, was acting hastily and was formed with the sole purpose of depriving him of his stake.

The SIAC said in the order that the review committee was constituted a month back and still has not come to a conclusion whether Grover is guilty of misconduct and gross negligence and no action has been taken against him.

This would, to a large extent, allay the claimant’s apprehension of a hasty review committee organized by the SIAC.

The SIAC said that whether the findings of the preliminary inquiry are justified, it will be considered by the arbitral tribunal at an appropriate time.

“In any event, the functioning of the Review Committee cannot have a direct prejudicial effect on the claimant (Grover) and his contractual rights under the SHA,” the person said, citing the order.

Grover was represented by Karanjawala & Co, while senior advocate Abhishek Singhvi represented Bharatpe.

In his February 8 petition, Grover claimed that the constitution of the review committee by BharatPe is “violating the SHA and the Articles of Association and thus illegal.”

Grover alleged that despite several representations/objections, BharatPe deliberately kept the review and evaluation by the review committee in an opaque process and did not give them any opportunity to present their case.

“The review committee, which has been constituted in contravention of the terms of the SHA, continues to function to the detriment of the claimant (Grover). If the operation of the review committee is not stopped and irreparable loss and damage is caused, the claimant has to face extreme prejudice,” Grover said in the petition.

In his petition, he demanded that the current review panel should be disbanded, and a new ‘legitimate committee’ set up to evaluate and conduct an overall review of BharatPe’s affairs.

“The order says that if the review committee is ordered to be dissolved at the stage of emergency relief, it will amount to granting final relief in favor of Grover even before the constitution of an arbitral tribunal. This is unacceptable,” said the person above, requesting anonymity.

“Grover has not been able to establish a prima facie case of illegality in the constitution of the review committee. The SIAC also ruled that the constitution of the review committee “is not outside the purview of the powers of the Board,” he said.

The emergency arbitrator also rejected Grover’s plea that Chief Executive Suhail Sameer’s directorship be kept in abeyance and he be barred from discharging any functions as a director of the company.

Grover’s allegations against Alvarez & Marsal and PwC for assisting in the governance review exercise also found no merit.

In his plea, Grover said that the review committee conducted a “preliminary inquiry” with the law firm and the audit firm, which found evidence of wrongdoing by him and that he was “neither informed of any of these incidents at the relevant time”. not been informed nor an opportunity of being heard by a review committee”.