BharatPe: BharatPe vs Ashneer Grover settlement: making sense of the legal battle between the two parties

On Monday, Gurgaon-based fintech firm BharatPe settled all pending legal matters with its cofounder Ashneer Grover. The two parties had been in a protracted legal battle since 2022, when Grover and his wife Madhuri Jain were ousted from the company amid allegations of corporate governance lapses and misappropriation of funds.

The tussle saw multiple court cases – both civil and criminal – being filed over the past two years.

Here’s a look at how the clash unfolded in various fora:

Resilient Innovations Pvt Ltd vs Madhuri Jain Grover, others

While issues between Resilient Innovations, the parent company of BharatPe, and Grover started brewing in early 2022, the fintech company approached the Delhi High Court in December.

It named Jain, the company’s head of controls, Grover, Jain’s brother Shwetank Jain, her sister’s husband Deepak Gupta and her father Suresh Jain as defendants.

The company sought Rs 88 crore in damages for alleged misappropriation of funds and reputational harm. The high court soon issued summons to the defendants in the matter.

BharatPe has been under intense investor and shareholder scrutiny ever since Grover, in January 2022, sought damages from Kotak Mahindra Bank managing director Uday Kotak, alleging that the lender refused him financing for a personal investment in omnichannel beauty retailer Nykaa’s initial public offering in November 2021.By the end of January 2022, BharatPe’s board hired independent auditors Alvarez & Marsal and PricewaterhouseCoopers after receiving complaints from an internal whistle-blower on alleged financial malpractices and corporate misgovernance at the fintech company.

This led to the ouster of Jain in February 2022.

In the civil suit, among several allegations, BharatPe also accused misappropriation of funds to the tune of Rs 59.73 lakh from the company by Grover and his wife “towards the payment of their personal expenses, such as rent and utilities paid on their personal residence, purchase of home appliances, purchase of airline tickets for family members, payments towards personal skincare, etc”.

Criminal complaint with Delhi Police Economic Offences Wing (EOW)

Along with the Delhi High Court case, BharatPe registered a criminal complaint with the Delhi Police’s EOW. This complaint included charges of forgery, embezzlement, criminal breach of trust and document fabrication.

In one example cited in the complaint, the company alleged that the defendants siphoned off Rs 7.6 crore from 2018 to 2021 through forged invoices raised by eight “bogus HR consultants” which had ‘nexus’ with the Grovers.

The firm also alleged that the defendants – including Deepak Gupta, who was head of administration and logistics – “maliciously cancelled” orders for some materials placed by the company with the original vendors and routed them “at an inflated rate of 15% to 40% through other passthrough vendors who were related to the accused persons, thereby embezzling the additional sums”.

The probe into this case by the Delhi Police’s EOW led to Gupta’s arrest in September this year, days before the settlement was reached between BharatPe and Grover.

Singapore arbitration bid

Shortly after taking the Grovers to court in Delhi, BharatPe also approached the Singapore International Arbitration Centre (SIAC) in December 2022, seeking to clawback its cofounder and former managing director’s restricted shareholding in the company.

In its arbitration plea, BharatPe urged the SIAC to transfer Grover’s restricted shares to another cofounder, Shashvat Nakrani, for a total consideration of Rs 33.02 lakh.

Prior to this submission by the company, Grover had, in February 2022, unsuccessfully approached the SIAC filing an emergency plea for review of BharatPe’s governance review.

Bhavik Koladiya vs Ashneer Grover

In January 2023 – when early proceedings of BharatPe’s case against the Grover and Jain family were underway – the company’s original cofounder Bhavik Koladiya moved the Delhi High Court looking to reclaim his shares in the fintech firm from Grover, to whom he had earlier transferred those securities.

Koladiya filed the suit to reclaim the disputed shares, saying Grover had not paid for the shares as per an agreement between them.

Shortly after founding the fintech firm in 2017, Koladiya, who held a 30.21% stake in the company, had to exit BharatPe’s capitalisation table owing to his past conviction for credit card fraud in the US.

To this effect, Koladiya transferred his shares to Grover, Nakrani and his father Mansukhbhai Mohanbhai Nakrani and some other early-stage and angel investors in December 2018.

Eventually in this case, while the Delhi High Court passed an interim order preventing Grover from creating any third-party rights or transferring the disputed shares, as per the final settlement agreement, around 3% stake held by Grover is being transferred to Koladiya.

Ashneer Grover vs Resilient Innovations Pvt Ltd

In January 2023, Grover moved the New Delhi bench of the National Company Law Tribunal (NCLT) pleading before the tribunal to declare the actions of BharatPe’s management led by chairman Rajnish Kumar as being against the interests of the company.

He also sought the revocation of Madhuri Jain’s termination from the company.

The tribunal first heard the matter only in December that year and initially asked Grover to establish the maintainability of his plea. While a final order is yet to be passed in this case, as part of the settlement, it was agreed that Grover will not be associated with BharatPe in any capacity nor be a shareholder in the company.

Shashvat Nakrani vs Ashneer Grover

In a similar case to Koladiya’s suit, Nakrani also filed a suit in the Delhi High Court in March 2023 to reclaim shares he sold to Grover, over unpaid dues.

However, in this case, the Delhi High Court refused Nakrani’s plea to stop Grover from selling the disputed shares.

Resilient Innovations Pvt Ltd vs Ashneer Grover

In November 2023, when multiple suits between the two parties were underway, BharatPe’s parent company again approached the Delhi High Court, this time seeking an injunction against Grover to prevent him from divulging “confidential information” relating to the company.

The case followed Grover putting up a post on social media platform X about the equity allocation and secondary components during the company’s Series E funding round.

The financing round was led by Tiger Global and saw participation of the Dragoneer Investor group and others.
Grover later deleted the post.

In August this year, barely a month before the settlement pact was announced, the court appointed a sole arbitrator to decide the dispute between BharatPe and Grover over the alleged violation of confidentiality under the latter’s employment agreement.