BharatPe founder Ashneer Grover's lawyers are all set to invoke an arbitration and will be sending a notice to the company very soon, challenging their decision to conduct a governance review and making claims for an exit, according to sources privy to the development.
"The agreement says you can't go to a civil suit and only file an arbitration. If the company agrees then they will mutually appoint an arbitrator. If not then the plan is to go to the High Court seeking the appointment of an arbitrator," said one of the sources quoted above adding that the lawyers will be sending a notice to BharatPe.
However according to a report in Mint, the lawyers have already filed an emergency arbitration plea in the Singapore International Arbitration Centre (SIAC).
The details of the arbitration clause is mentioned in the Share Purchase Agreement and Share Holding Agreement among other documents, none of which are public.
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Grover is being advised by senior lawyer Ritin Rai besides two law firms -Karanjawala and Meraki Law.
"Karanjawala is trying very hard to invalidate this whole exercise (governance review)," added the source quoted above.
While Grover did not respond to queries from Moneycontrol, in an interview with Moneycontrol last month, he had questioned the board's intent to launch a governance review.
"Here is my question to the board. What was the need for a governance review in the first place?" he said in the interview.
Grover had also questioned the media leaks, after parts of the audit report by Alavarez and Marsel started circulating in social media.
Also Read: Why BharatPe needed to hire PwC to oust Ashneer Grover
"If it is such a well run audit you (board) are doing, why are there so many media leaks? Have you ever heard of any company doing a governance review, where the person who's doing the governance review is declared in public? Those are confidential processes. Here's a board who's coming out and saying, oh, we're getting the review done by this guy," he said.
On January 28, BharatPe disclosed it had hired Alwarez and Marsal to conduct a governance review of the company. The next week, it confirmed it had roped in PwC alongside Alwarez.
Moneycontrol also reported on February 7 that the decision to bring PwC after hiring Alwarez was a step towards terminating the services of Jain, controller finance of the company and co-founder and managing director Ashneer Grover, as their ouster can only happen after a report by a Big 4 audit firm indicts them.
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Even as the final outcome is likely to come out in the next few days, Alvarez and Marsal’s early reviews pointed towards inconsistencies in dealings with vendors and flagged payments to vendors and consultants that were non-existent.
The report stated that a total expenditure of Rs 53.25 crore was made towards vendors that did not exist and the company incurred a loss of Rs 10.97 crore in these dealings.
Legal experts who spoke to Moneycontrol said that while Grover had a fair chance to get away if financial irregularities are proven, Madhuri Jain, Grover's wife, may land in trouble given that all the expenses had been authorised by her.
Jain acted as the head of controls at the $3-billion fintech company and was also sent on leave days after Grover was put on leave of absence.
In an interaction with Moneycontrol last month, Grover had mentioned that the board was arm-twisting him into exiting the company.
Grover took a leave of absence till March-end amid backlash over the controversy regarding his alleged abusive language to a Kotak employee, toxic culture at BharatPe, and brash behaviour. His wife, who headed Controls, was also sent on leave. BharatPe’s board and external consultants are conducting a forensic investigation into the company’s practices, including accounting, approval processes, expenses, and hiring.
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