- The directors of a Gupta-owned company have lost their bid to oppose a restraint order without the approval of the business rescue practitioners.
- The Free State High Court in Bloemfontein handed down its ruling on Wednesday.
- The court said that BDK attorneys did not have the proper mandate to appear on behalf of the company.
The directors or shareholders of a Gupta family company have no legal standing to oppose a restraint order without the approval of the business rescue practitioners, the Free State High Court in Bloemfontein ruled on Wednesday.
The National Prosecuting Authority (NPA) had questioned the authority of Ronica Ragavan to represent the Gupta-owned Islandsite Investments 180, which is in business rescue.
Ruling in the NPA's favour, the court said: "The directors and or shareholders of the third defendant [the company] have no standing to oppose these proceedings without the approval of the business rescue practitioners."
Ragavan, a director of Islandsite Investments, who has worked for the Gupta family, hired her own legal team to oppose the restraint application.
But Judge President Cagney Musi said Gupta lawyers, BDK Attorneys, had no authority to act on behalf of the company.
Musi said the company had no right to authorise BDK to oppose proceedings on its behalf, without the authority of the business rescue practitioners.
"BDK had no proper mandate to appear on behalf of the third defendant. The company's decision is void for lack of approval by the business rescue practitioners."
In June, the high court granted the provisional restraint against dealing with realisable property of suspected Gupta associate Iqbal Sharma, his company, Nulane Investments, as well as Islandsite Investments, Issar Global Limited, Issar Capital, Tarina Patel-Sharma and the business rescue practitioners connected to the companies.
Disclosed
The court further ordered that such property be disclosed and surrendered.
The order was made in terms of the Prevention of Organised Crimes Act (POCA).
The court also appointed a curator to take control and preserve the assets, pending the outcome of the criminal case of fraud and money laundering against Sharma and members of the Gupta family, in relation to the failed Estina dairy farm project.
In court papers, the NPA asked the court for leave to dispute the authority of BDK attorneys to represent Islandsite Investments.
In her affidavit, the head of the NPA's Investigating Directorate, Hermione Cronje, said Islandsite Investments had been placed into business rescue and that the business rescue practitioners, Kurt Knoop and Johan Klopper, were the duly authorised representatives of the company.
She argued that the practitioners had full management control of Islandsite Investments because the company went into voluntary business rescue.
Cronje further pointed out that Ragavan failed to disclose any authority to represent the company in the proceedings.
Furthermore, the business rescue practitioners had already appointed a legal team, and affidavits had been deposed in respect of the restraint application.
Cronje said the current situation prejudiced the NPA as it would be put in a position of filing replying papers without knowing whether Ragavan was authorised to represent the company.
Legal
While the company remains in business rescue, the continuation of Knoop and Klopper has been subject to legal battles.
In 2018, the Guptas asked the Gauteng High Court in Pretoria to remove Knoop and Klopper. In 2019, the court found in favour of the Guptas.
However, the matter was then appealed - and the Supreme Court of Appeal ordered that Knoop and Klopper remain in office.
The Guptas have since approached the Constitutional Court.
In her affidavit, Ragavan contended that the business rescue practitioners could not represent the company in terms of asset-forfeiture restraint applications.
She added that directors of a company continue in their capacity of directors and remain responsible for the company's affairs and the company's governance, insofar as the company needs to be run outside of the function and authority of the business rescue practitioners.
She further argued that the company was no longer in business rescue, pending the outcome of her leave to appeal application before the Constitutional Court.