Ashok Kumar Saxena, a former director of payments giant Paytm, has urged Indian markets regulator Securities and Exchange Board of India (SEBI) to stall the upcoming IPO of the company, according to a report by Reuters.
Saxena has alleged that he had invested $27,500 in the company two decades ago but was never given the shares.
However, Paytm insists that the claims of fraud levied by Saxena are attempts to harass the firm, according to Reuters. The dispute is currently cited under the ‘criminal proceedings’ category, going by Paytm’s July IPO prospectus that was filed as part of the regulatory approval procedure.
Saxena has denied the claims of harassment, saying that the high-profile position that Paytm holds could not possibly be affected by one individual.
Saxena, in a letter to SEBI, said that the IPO had to be stalled, arguing that potential investors could lose money if his claim is proved right, going by a previously unreported complaint Reuters claimed access to.
SEBI is yet to publicly respond to the whole argument, according to the report.
The dispute is most likely to become a legal blockade for the IPO of Paytm. Prominent investors in the company include Chinese marketplace giant Alibaba and Japanese conglomerate SoftBank.
The dispute rewinds back to 2001 between Saxena and Paytm’s CEO Vijay Shekar Sharma. Reuters said. Saxena was to get a 55% stake in One97 Communications, the parent company of Paytm. The rest was to be owned by Sharma.
Reuters reviewed a June 29 response the company gave to the Delhi Police, where it says the document was "merely a letter of intent" which "did not materialize into any definitive agreement".
Paytm’s police filing, which is not public, denied Saxena was a co-founder. However, the organisation’s incorporation documents showed that Saxena was a director in the 2000-2004 period.
According to Paytm, it had transferred the shares to an Indian firm in 2003-04 as it was "informed" that Saxena had reached a private understanding with them. Saxena said he never received any shares and there was no such understanding.
Saxena however reverted saying he did not receive such shares and there was no such understanding, according to Reuters.
Saxena added that he was silent all these years as he had medical issues and had found a few misplaced documents last summer.
The case is now at a New Delhi Court and is expected to be heard on August 23. The Delhi police are expected to make necessary submissions to the court, according to Reuters.
Earlier this month, One97 Communications sought shareholder approval to increase its employee stock option pool (ESOP) to about 6.1 crore options from the existing 2.4 crore. The move came ahead of its public outing.
One97 Communications filed for an initial public offering (IPO) at a size of Rs 16,600 crore, to raise Rs 8,300 crore through issuance of new shares and Rs 8,300 crore worth of shares on sale.
In July, One97 Communications filed for its estimated Rs 16,000 or $2.2 billion IPO. Of the total size, Rs 8,300 crore will be raised through issuance of new shares and Rs 8,300 crore worth of shares will be part of an offer for sale.