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MUMBAI : The dispute between BharatPe founder Ashneer Grover and Kotak Mahindra Bank over IPO financing escalated sharply, with the bank’s wealth management unit pledging to pursue legal action over Grover’s use of abusive language and threats.

Kotak Wealth Management, represented by law firm Khaitan and Co., in response to Grover’s legal notice, said it reserves the right to pursue legal action for the threats to the lives of its employees. Mint has reviewed a copy of the notice. The contents of the legal communication also dispute Grover’s public denial of the phone call.

In an emailed response, Kotak Wealth Management said that it filed appropriate responses to legal notices sent by Grover. “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. Appropriate legal action is being pursued".

A spokesperson for Grover declined to comment on the matter.

Kotak is referring to leaked audio of a phone call allegedly between Grover and an employee of Kotak Wealth Management. The clip first emerged online on Wednesday through an anonymous Twitter handle. In the leaked audio, Grover can allegedly be heard abusing and threatening to get the Kotak employee killed in a so-called police encounter for his failure to secure funding for buying shares in the Nykaa IPO.

After the audio clip became public, Grover put out a statement on Twitter, claiming that the clip was fake. “Folks. Chill! It’s a FAKE audio by some scamster trying to extort funds (US$ 240K in bitcoins). I refused to buckle. I’ve got more character. And Internet has got enough scamsters," Grover said on Twitter. He subsequently deleted the denial from Twitter and LinkedIn.

Mint had first reported on the veracity of the call on 8 January.

A total of three legal communications have been exchanged between Grover, the founder of the fintech unicorn BharatPe, and Kotak’s wealth management arm.

Mint has reviewed the communications.

The legal battle was initiated by Grover through the law firm RegStreet Law Advisors. However, Kotak Wealth’s reply to the legal notice confirmed the veracity of the call between Grover and one of its employees.

“Your clients have, in the recent past, on several occasions called our client’s employees on the phone and had issued threats to their lives, besides using unparliamentary and foul language, for which our client and its employees reserve their rights to take appropriate legal steps as they may be advised," Kotak said in a 2 November response to Grover’s legal notice sent on 30 October.

The legal battle highlights how wealthy individuals corner shares of sought-after IPOs by funding their purchases by borrowing heavily from banks for the short term. They sell their shares after the stock lists and repay banks.

In the first legal notice, Grover and his wife Madhuri alleged that they were in communication with Rohit Mohan, senior director of the ultra high networth individuals practice at Kotak, to obtain the necessary internal approvals for subscribing to Nykaa (FSN E-Commerce Ventures Ltd) shares worth 500 crore.

“Our clients had proposed to apply for subscription to the shares of FSN in the name of both Mr. Ashneer Grover and Ms. Madhuri Grover, for shares worth 250 crore each," said Sumit Agrawal, partner, Regstreet Law Advisors, in the legal notice.

Grover alleged that the funding did not come through despite assurances, leading him to lose out on a profitable trade.

“Kotak’s refusal to provide IPO financing to our clients for the Nykaa IPO constitutes a blatant violation of its legal obligations owed to our clients as their wealth managers," the legal notice added.

In response, Kotak, through its law firm Khaitan, replied that any funding is at the bank’s sole discretion, and Grovers do not have any contractual rights.

“Our client denies that there has been any breach on its part with regard to any financial assistance that has been alleged by you or otherwise. Your clients are well aware that financial assistance is at the sole discretion of the lender and that there is neither any concluded contract nor any sanction letter executed in favour of your clients," Kotak said.

In response to Kotak’s assertion, Grover’s lawyers said, “Our clients vehemently deny the defamatory allegations pertaining to any unparliamentary or foul language having been used by our clients, or that our clients have issued any threats to your clients or its representatives whatsoever. It is evident that your clients have concocted these allegations merely as a counterblast to the claims made by our clients for the breach of various legal obligations committed by your clients."

The legal communication ended with Grover stating that it is withdrawing all banking relations with Kotak Mahindra Bank.

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