The companies belonging to the controversial Gupta family received a temporary reprieve with South Africa's North Gauteng High Court, Pretoria ordering that Bank of Baroda may not close their accounts at this stage.
The bank was due to close the Gupta-owned companies’ bank accounts at the end of September, but Judge Tati Makgoka on Monday ordered that the accounts had to remain open pending an application by the companies to review and set aside the decision of the bank to terminate its relationship with the Guptas.
The judge meanwhile ordered that the Gupta companies had to within 15 days launch their application to challenge the legality of the the banks’ termination notice to it.
He made it clear that if the companies did not launch this application within 15 days, the order preventing the bank from closing the bank accounts, will lapse.
The companies turned to court a week ago, a day before their bank accounts were due to be closed.
Judge Hans Fabricius earlier dismissed an application by the companies for the Bank of Baroda to keep their bank accounts open.
The bank indicated that it was closing the accounts at the end of September, as it no longer wanted to be associated with the Gupta family.
The companies, which included the Oakbay Group, on an extremely urgent basis approached the court again on the eve of the closing of the bank accounts and pleaded for the accounts to remain open, at least until December when they will challenge the bank’s decision to close the accounts.
The court was told that it would take up to two years for the companies to wind down their businesses with the bank as the nature of the business were so complex that this could not be done overnight.
But the main issue was that the Gupta employees could not be paid once the accounts were closed. The court was told that if the bank accounts were closed at this stage, it would leave thousands of employees destitute. It would not only bring the companies to its knees, but it would also affect the fiscus.
The judge commented in his judgment that the payment of employees and supplies is dependent on having banking facilities. If they did not have a bank account, they would have to find a way to physically remove money out of the country, which is not an option.
The judge also said the bank’s claims that it suffered damage to its reputation by having a business relationship with the Guptas, is “more speculative than real.”
“But even if it is real, it has to be balanced against the indubitable irreparable harm that then applicants ( the companies) are likely to suffer if an interim order is not granted,” the judge said.
- Pretoria News