Court blow for Gupta companies

Judge rules Bank of Baroda has right to terminate contracts and exit SA

The Bank of Baroda has every right to terminate business contracts‚ including those of 20 Gupta-linked companies, Judge Ntendeya Mavundla said in his judgment yesterday in the Pretoria High Court. He dismissed the application by 20 Guptalinked companies which had tried to prevent Baroda from cutting its ties and withdrawing from South Africa.

“The decision by the respondent [Baroda] to exit [the] South African banking sector cannot‚ in my view‚ be interfered with by the courts‚” Mavundla said.

“I therefore conclude that the respondent’s rights to trade or not to trade supersedes whatever right‚ if any‚ the applicants might have.

“I further conclude that the balance of convenience far outweighs that of the applicants [Gupta-linked companies] and tilts in the favour of the respondent.”

The companies had also sought an interim interdict to force Baroda to comply with Judge Tati Makgoka’s judgment delivered in October and that Baroda chief executive Manoj Jha should be held in contempt of court and imprisoned for 30 days.

Makgoka had ordered Baroda to continue providing banking services to the Guptalinked companies to protect their 7 000 employees. He also prohibited the bank from ending its relationship with the Gupta businesses or closing their bank accounts.

The Gupta-linked companies argued that if Baroda left South Africa‚ it would contravene the judgment.

Mavundla said Baroda leaving South Africa was a commercial decision and the Makgoka order had nothing to do with it.

“It cannot therefore be said that the exit is mala fide [in bad faith] and calculated to frustrate the Makgoka order or in contempt thereof.”

Baroda informed the Guptalinked companies on July 6 that it was ending its relationship with them.

Advocate Azhar Bham SC‚ on behalf of Baroda‚ argued previously that the companies had artificially created the urgency of their application by not finding another bank and relying on Makgoka’s judgment.

Nedbank informed Baroda in January that it would be cutting ties with the bank within three months.

Baroda, in turn, said it would not accept any deposits into Baroda accounts from March 1 as it wound down its operations.

Baroda has a correspondent banking relationship with Nedbank. This means Baroda relies on Nedbank to clear its transactions and service its customers.

Its customers include Gupta-linked companies Sahara Computers‚ VR Laser‚ Koornfontein Mines‚ Oakbay Investments‚ Oakbay Resources & Energy‚ Optimum Coal Mines‚ Shiva Uranium and Tegeta. – TimesLIVE

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