Court rules Gupta-owned company directors have no standing to challenge restraint order

The high court in Bloemfontein on Wednesday ruled that the directors and shareholders of Gupta-owned company Islandsite have no standing to represent the company in legal proceedings against the Investigating Directorate.

The court made this order after the preliminary point raised by the national director of public prosecutions that Islandsite's directors or attorneys have no standing to oppose a provisional order issued against the company, which is in business rescue.

Islandsite was placed under voluntary business rescue in 2018. However, one of its directors, Chetali Gupta, successfully sought the removal of the two business rescue practitioners in the high court in Pretoria in December 2019. 

The practitioners were reinstated after they successfully appealed to the Supreme Court of Appeal in December last year.

Gupta filed a late application for leave to appeal to the Constitutional Court out of time in January this year. That application has not yet been considered by the Constitutional Court.   

In June, the National Prosecuting Authority's Investigating Directorate brought a successful application to restrain the assets of businessman Iqbal Sharma, his company Nulane Investments 204 (Pty) Ltd and Islandsite, which belongs to Atul and Rajesh Gupta and their wives, Chetali and Arti Gupta.

The provisional restraint order passed in June was returnable last week where the defendants were called upon to show cause why the provisional order should not be confirmed pending the outcome of the trial of the defendants.

Last week, the directors of Islandsite, represented by Ronica Ragavan, sought to oppose the confirmation of the restraint order against Islandsite.

Free State judge president Cagney Musi ruled against Ragavan and her attorneys and said directors have no standing to oppose these proceedings without the approval of the business rescue practitioners.

The order in effect means that the business rescue practitioners, Kurt Knoop and Johan Kloppers, are still in charge of the Islandsite's affairs, business and property.

The interim restraint order was extended until November 18.

“What this judgment essentially means is now we can focus our efforts as the Investigating Directorate on the next appearance in November when the court will best deliberate as to whether to confirm the restraint order or discharge it.

“But it also means that we need to intensify efforts in terms of preparation for the criminal case which is back in court in September ... where we are alleging that Islandsite, Iqbal Sharma and various other people unduly benefited from the Free State department of agriculture,” ID spokesperson Sindisiwe Seboka said.

TimesLIVE