Court gives Guptas reprieve on Baroda

Gupta-linked companies have 15 days to launch their final bid to stop the Bank of Baroda from closing their accounts. In the meantime these accounts will remain open.

Gupta-linked companies have 15 days to launch a final bid to stop the Bank of Baroda closing their accounts.

On Monday, the High Court in Pretoria granted an interim interdict stopping the bank from “deactivating and/or closing” the accounts or from terminating the banker-customer relationship. Judge Tati Makgoka ordered that the Bank of Baroda could not limit the manner in which the accounts were operated by the firms.

The court also stopped the bank from demanding that four of the companies — Annex Distribution, Confident Concepts, Sahara Computers and VR Laser Services — repay the sums owed in terms of their loan and overdraft agreements.

The bank informed the companies in July that it would close the business and loan accounts of 20 firms on September 30.

The companies argued that the bank had not given them sufficient notice of intention to close the accounts. But the Bank of Baroda said it had given them at least three months’ notice.

Makgoka said a bank was entitled to terminate its relationship with a client on the basis of reputational and business risks. However, he said the notice period did arguably “not constitute reasonable notice”.

In granting the Guptas some relief, Makgoka said if the firms failed to lodge the application in the stipulated timeframe, the interim order would lapse.

The Bank of Baroda was one of the last financial institutions to provide the Gupta family with bank accounts even after four local and two international banks cut ties. The bank has been accused of helping the family to launder money.

This was the companies’ second bid to try to retain their Baroda accounts. The companies lost a bid for an interiminterim order in September, before bringing this application.

In his judgment at the time, Judge Hans Fabricius said he believed the companies had very little prospect of success in their main application because of the ramifications it would have on the bank.

The companies’ main application was set to be heard in December, but after Fabricius’s judgment, they approached the court again in a bid to have the date brought forward.

The Gupta companies also tried to have paragraphs in the Bank of Baroda’s arguments struck off. These related to allegations against the family. Makgoka dismissed this part of the application, saying there was no relevance in the arguments.