The tussle between BharatPe’s co-founder and managing director (MD) Ashneer Grover and Kotak Mahindra Bank is taking a new turn. On Sunday afternoon, a legal notice by Mr Grover to Uday Kotak and seniors in the Bank suddenly appeared on social media and in-boxes of journalists. It turns out that the ugly spat on social media, including an audio recording that has been making news in the past weeks, goes back to at least 31 October 2021, the date of Mr Grover’s legal notice to Kotak Bank. Last evening, the Bank put out a brief statement that said: “This notice was received by us and was replied to appropriately at the time, including placing on record our objections to inappropriate language used by Mr Grover”. It further says, “Appropriate legal action is being pursued. We would like to confirm that there is no breach or violation by the Kotak Group in any manner whatsoever.”
However, the issue raises several questions that we have asked both sides to respond to (if they do), but here is the background to the spat.
Last week, an audio clip surfaced on social media where a couple is speaking to someone who appears to be a Bank employee. The male voice hurls abuses and the other male voice is heard pacifying him. It was claimed that the voices were those of Ashneer Grover and his wife and the employee was from Kotak Mahindra Bank. Even as the clip went viral, especially since Mr Grover is a celebrity due to his appearance on a popular television show called Shark Tank, two things happened. Mr Grover denied the same calling the tape 'fake' and speaking about extortion attempts. Soon after, he deleted the clip and the audio clip is no longer available on Soundcloud from where it was uploaded and tweeted by @BabuBongo.
On 7 January 2022, someone with a Twitter handle of @Korporatekumar had tweeted the alleged audio clip.
Mr Grover and his wife Madhuri Grover had sent a legal notice to Kotak Mahindra Bank’s managing director and chief executive officer (CEO) Uday Kotak and some senior executives, accusing the Bank of failing to secure financing and allocation of shares in the initial public issue (IPO) of FSN E-Commerce Ventures Ltd (Nykaa).
The notice sent on 30 October 2021 had sought damages for the gains Mr Grover and his wife would have made after subscribing to shares worth Rs500 crore in the company besides Rs1 lakh towards the cost of the legal notice.
According to the notice, Mr Grover has earlier availed Kotak Bank’s Wealth Management Services for IPO financing of Rs100 crore each for the IPOs of Zomato and CarTrade. He and his wife wanted to apply for shares worth Rs250 crore each in the Nykaa IPO. It may be recalled that the Nykaa IPO opened for subscription on 28 October 2021; according to the notice, on the same day, Kotak Mahindra Bank informed the Grovers that the subscription formalities for the Nykaa IPO on their behalf were done.
“However, to the shock and surprise of our clients, on 28 October 2021, after having repeatedly assured our clients that the shares of FSN would be allotted to them, Kotak informed our clients that it would not be able to provide IPO financing for the Nykaa IPO. Kotak’s refusal to comply with its assurances was on the pretext that it had decided not to finance the Nykaa IPO due to ‘erratic FII movements’ and ‘very high lending rates’,” says the notice.
“In the event of Kotak’s failure to do so, Kotak would be liable to compensate our clients for the losses suffered on account of Kotak’s breaches, i.e. the gains our client would have made through the Nykaa IPO, by submitting an application of Rs500 crore in the high-network individual (HNI) segment, less the cost of borrowing computed at 10% for seven days,” the notice says.
“Kotak is called upon to compute this amount on the listing of Nykaa and promptly pay this sum to our clients within 24 hours of listing of Nykaa stocks. Kotak is also liable to pay the costs of this legal notice in the sum of Rs1 lakh. Kotak’s failure to comply with its obligations would compel our clients to take the necessary action in law.”
Besides Mr Kotak, the notice was also addressed to Oisharya Das, CEO of Kotak Wealth Management, Shanti Ekambaram, Kotak Mahindra Bank’s group president for consumer banking and KVS Manian, corporate, institutional and investment banking.
Here are the questions we have asked the Bank: 1. Why would a Kotak Bank employee tape and publicly humiliate a wealth management client? (We understand the person is no longer employed by the Bank but the Bank has not confirmed it. 2) Kotak Bank correctly objects to “inappropriate and objectional language” allegedly used by Mr Grover (thereby indirectly confirming the recording) isn’t it a fact that recovery agents employed by banks use far more abusive language and threats in their dealings with borrowers? Can the Bank take a high moral ground vis-à-vis its employee while it is open season for abusing customers even when there are genuine reasons for payment delays? 3) Does the recording indicate that all client calls are being recorded by Kotak employees? In which case, can clients demand the recordings when they fight the Bank in cases of mis-selling of products? After all, it cannot be a one-way street for recordings to be used only for the Bank’s defence.
There are several holes in Mr Grover’s actions too and we would update this article on hearing from both parties.
Responding to Moneylife's email, BharatPe says, "We do not have any comments on this matter."