Ashneer Grover loses arbitration against governance review

Ashneer Grover loses arbitration against governance review

He pleaded before the Singapore International Arbitration Centre claiming that the BharatPe investigation against him was illegal

BharatPe co-founder and managing director Ashneer Grover has lost an arbitration that he had filed against the company's investigation against him.

The emergency arbitrator (EA) rejected all the five grounds of his appeal and denied a single relief to him.

Developments around Grover snowballed ever since the emergence of an audio clip in which he was allegedly heard threatening an employee of Kotak Wealth Management, the private banking arm of Kotak Mahindra Bank over his failure to secure financing for Nykaa's initial share sale.

Following allegations of using abusive language against the Kotak staff and fraudulent practices, on January 19, he was sent on voluntary leave of absence till March-end.

A preliminary internal investigation pegged the magnitude of the financial misconduct at over Rs.50 crore. BharatPe engaged a law firm and risk advisory consultant to conduct a more detailed investigation after allegations of financial irregularities emerged.

Grover had filed an arbitration plea with the Singapore International Arbitration Centre (SIAC) claiming that the company's investigation against him was illegal. He sought the dissolution of the review panel and pleaded that a new 'lawful committee' be constituted to assess and conduct an all-encompassing review of the affairs at BharatPe.

He pleaded before the arbitrator that the preliminary investigation was in violation of the shareholder agreement and articles of association. Stating that the company had no authority to conduct such an investigation, he termed all appointments for the independent audit of the company's internal processes and systems as immoral in law.

He alleged that the members of the committee reviewing governance processes, including the company's CEO Suhail Sameer and general counsel Sumeet Singh, were biased.

Grover further said, "The appointment of Sameer as a director be kept in abeyance, and he be restrained from discharging any functions." He also sought that no action should be taken against him.

On the claim of bias, the EA said that Grover's claim did not seem reliable or credible because until recently both Sameer and Singh were among the best employees and everything was great about them. Also, everything the company did was as per the law and governance norms.

In his plea, Grover alleged that despite numerous representations, BharatPe had deliberately kept the review and assessment by the review committee an opaque process. He was not given the chance to present his case.

While Karanjawala & Co represented Grover; senior counsel Abhishek Singhvi represented BharatPe.

PricewaterhouseCoopers (PwC) and Alvarez & Marsal have been doing the audit.