In an application a Fin24 report suggests could ultimately lead to the collapse of the Gupta empire, business practitioners for a Gupta linked-company are accusing another Gupta-linked company of fabricating a ‘management agreement’ in court to avoid being liquidated.

In September, business rescue practitioners – appointed to rescue Tegeta Exploration and Resources – lodged an application to have the Guptas' Oakbay Investments liquidated. This was because, the business rescue practitioners argue, Oakbay owes Tegeta about R2m in unpaid rent.

Tegeta, along with several other Gupta-linked companies, was placed under business rescue in February. But in response, Oakbay says it is Tegeta that actually owes it money, and it has attached a copy of an agreement between the parties that Tegeta's business rescue practitioners say is a fabrication.

If Oakbay Investments goes under it could effectively sink the other companies owned by the family and their associates. Oakbay is the Gupta family’s holding company, and it is central to the family and its network's empire.

According to court papers, Tegeta’s directors are Ronica Ragavan, Ravindra Nath and Ashu Chawla.

Oakbay's directors are Ragavan and Chawla.

Because of the business rescue action, Tegeta is effectively being run by business rescue practitioner Kurt Knoop and his associates, and not its directors, notes Fin24.

In responding papers filed on 2 November, Ragavan, in her capacity as director of Oakbay, says there is a ‘management agreement’ in place between the two companies, whereby Oakbay would provide Tegeta with a number of management services. In terms of this, it is actually Tegeta which owes Oakbay money.

Ragavan alleges that the business rescue practitioners have launched a ‘frivolous’ liquidation application, knowing ‘full well’ that Oakbay is not insolvent. She also says that the applicants know that Tegeta actually owes Oakbay an amount ‘far exceeding’ the amount owed for rent, because of the alleged outstanding management fees.

In a replying affidavit, Knoop said the management agreement was ‘recently-manufactured to be presented as a defence (and set-off) against the respondent's admitted debt arising from arrear rentals’.

‘There is no management agreement and there are no arrear management fees. The allegations in these regards are so far-fetched and improbable that the court is justified in rejecting them on the papers,’ he says.

The report notes it is not clear just how many companies owned by the family or their associates could be affected should Oakbay Investments be liquidated. But it would have an impact on the Gupta family, who are the ultimate owners of the company.

Full Fin24 report