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September 21 - Judgment day for Guptas’ Baroda bank accounts

08 September 2017 - 18:26 By Kyle Cowan
Ajay Gupta and his younger brother Atul. File photo.
Ajay Gupta and his younger brother Atul. File photo.

After a full day of highly technical arguments the high court in Pretoria has reserved judgment in the urgent application for an interdict preventing further closure of Gupta family bank accounts.

Judge Hans-Joachim Fabricius presided over what is an unprecedented application for interim‚ interim relief brought by 20 companies owned by or linked to the Gupta family.

They are seeking an interdict that will prevent the Bank of Baroda from closing their accounts come September 30. Their main application to have the termination of their accounts overturned is set for December 7.

“Obviously I will have to very carefully consider all the aspects put before me‚” Fabricius said.

He will hand down judgment on September 21.

Before lunch the court heard from Philip Daniels‚ senior counsel for the Gupta companies‚ that continued association with the Gupta entities would not cause further reputational harm than it already had done to the Bank of Baroda‚ given its voluntary relationship with the companies.

After lunch‚ senior counsel for Bank of Baroda Gilbert Marcus argued that he found it “very difficult to fathom” aspects of the applicant’s arguments.

“Another reason this application is stillborn is that it would be an abuse of procedure in so much as a person may not litigate the same issue twice‚” Marcus said.

The most damning argument the Gupta family will have to overcome came from Marcus’s colleague‚ SC Dennis Fine.

Fine pointed out that in the contracts signed by the Gupta owned companies and the Bank of Baroda exist clauses that clearly state the bank may terminate the relationship at its discretion.

“Credit facilities in this regard may be terminated at the bank’s discretion from that date or a date set out in notice of such‚” he quoted from papers.

The issue of pay agents was also dealt with extensively‚ with counsel for the bank making it clear they did not directly pay salaries but rather paid a pay agent who distributed the funds to various Gupta company employees.

Daniels argued that for the pay agent system to work‚ a bank account must exist for the family to accumulate funds in. He admitted under questioning by Fabricius that at least two international banks and four local banks had indicated they would not be willing to assist the Gupta family.

“It is unlikely‚ but there is a glimmer of hope [that we will find a bank willing]‚” Daniels said.

Daniels concluded his argument by saying the clauses pointed out by Fine were contradictory.

“We point out that the term loan agreements contained many clauses which were contradictory. Some provide for loans to be repayable over a period of time and where the loans were granted for a specific purpose.

“What this means is that the bank can extend credit today and take it back tomorrow‚” he said.

Throughout proceedings the possible negative effect on the 7 500 employees the Gupta companies say they employ was highlighted.

The possible sale of the Gupta mines and media companies did not form part of these proceedings as the possible sale of the companies will only come into effect after the closure of the bank accounts.