Bank of Baroda free to leave SA as Gupta-linked companies lose court bid
The Bank of Baroda has “every right” to terminate business contracts‚ including those of 20 Gupta-linked companies.
That is what Judge Ntendeya Mavundla said in his judgment on Monday in the High Court in Pretoria. He dismissed the application by 20 Gupta-linked companies who 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 in his judgment.
“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 (Baroda).”
The companies also sought an interim interdict to force Baroda to comply with the judgment that Judge Tati Makgoka delivered in October last year‚ and that Baroda CEO 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 Gupta-linked 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 is a commercial decision and the Makgoka order has “nothing to do” with it. “It cannot therefore be said that the exit is malafide (in bad faith) and calculated to frustrate the Makgoka order‚ or in contempt thereof.”
Baroda informed the Gupta-linked companies on July 6 last year that it was ending its relationship with them.
Advocate Azhar Bham SC‚ on behalf of Baroda‚ previously argued that the Gupta-linked companies 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 they prepared to wind down their 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.