•  •  Dark Mode

Your Interests & Preferences

I am a...

law firm lawyer
in-house company lawyer
litigation lawyer
law student
aspiring student
other

Website Look & Feel

 •  •  Dark Mode
Blog Layout

Save preferences

Breaking: Amarchand Mangaldas Delhi managing partner Shardul Shroff sues brother Cyril in Bombay HC [UPDATE-5]

A tale of two cities: Shardul v Cyril (l. to r.)
A tale of two cities: Shardul v Cyril (l. to r.)

Amarchand Mangaldas Delhi managing partner Shardul Shroff has filed legal action in the Bombay high court against his brother and Mumbai-region managing partner Cyril Shroff.

According to authoritative sources, Amarchand’s Mumbai office was served the legal notice this evening.

Bharucha & Partners is appearing for Shardul Shroff, according to the Bombay high court case status. Bharucha & Partners was started in 2008 by senior Amarchand Mumbai partners MP and Alka Bharucha.

Update: Federal & Rashmikant is representing Cyril and the other respondents, according to the Times of India.

Background

It is understood that the claim revolves around a conflict over the equity division between the two brothers after three months ago their mother, Bharati Shroff, passed away.

Bharati Shroff was the single largest equity holder at Amarchand.

According to sources, it is understood that the partnership deed envisaged her equity to be split evenly between the brothers in the event of her death.

However, it is understood that Bharati Shroff’s will allegedly conflicts with the deed.

We have reached out to Cyril Shroff and Shardul Shroff for comment.

Case status (Update-1)

There is a notice of motion and a declaratory suit, both under the Code of Civil Procedure, with the reference Shardul Suresh Shroff vs Cyril Suresh Shroff, Vandana Vyril Shroff, L Viswanathan, James Abraham, George Goulding, Ashwin Maheshwari and the firm M/S Amarchand and Mangaldas and Suresh Shroff and Co (NMSL/2559/2014 and SL/1072/2014, respectively).

There is also a petition for probate under section 5 of the Indian Succession Act (Law regulating succession to deceased person's immoveable and moveable
property, respectively), filed by Shardul Shroff against the estate of his later mother (TPL/1864/2014).

Viswanathan is a Mumbai-based equity partner and management committee member.

Goulding and Abraham are respectively former partners at UK law firm Slaughter and May and consultancy BCG, who are both part of the firm’s management committee as independent members who commit at least 40 days per year to help in managing the firm.

Maheshwari is the firm’s chief financial officer (CFO).

Amarchand is India’s largest law firm with around 700 lawyers and 86 partners, planning to grow to 1,000 lawyers and 100 partners by 2017.

Management at the firm is split between two regions – Mumbai, and Delhi – with Cyril Shroff in Mumbai overseeing the Bangalore, Chennai and Hyderabad offices, and Shardul Shroff in Delhi managing Kolkata, Ahmedabad and Gurgaon.

The possible crux of the dispute (Update-2)

CNBC-TV18 executive editor Menaka Doshi and founder of the TV show The Firm, has blogged that according to a source, Bharati Shroff held around 22 per cent equity, while each of the brothers held 17 – 18 per cent, with Bharati Shroff having willed her entire equity stake to the elder brother, Shardul.

With the disclaimer that she had not seen the petition and neither of the Shroffs had made a comment, Doshi wrote:

A Family Framework Agreement (FFA) in 2001 apparently codified 3 important principles.

- Branch equality and that no member of the family will act in any way to jeopardise branch equality

- That the Shroff family will vote at all times in a single block

- That, upon her death, Mrs. Bharati Shroff’s interest in the partnership will be divided equally between her 2 sons

I’m told all members of the family were signatories to this FFA and over the last decade the FFA became core to the partnership understanding in Amarchand as the firm expanded, reorganised and brought in more partners..

Mrs. Shroff’s decision to bequeath all her property, specifically her entire Amarchand partnership interest solely to Shardul Shroff is being interpreted as a breach of the FFA and partnership understanding. It apparently prompted Cyril Shroff to distribute her partnership units equally, in an effort to give effect to the FFA. Cyril’s decision to distribute the units equally between himself and Shardul was ratified by the Managing Committee at Amarchand. But Shardul Shroff has interpreted Cyril’s action as inter-meddling with the estate of his late mother, of which he is executor and sole beneficiary.

Hence he has filed a legal suit against Cyril Shroff in the Bombay High Court. At the same time he has also filed his mother’s will for probate.

MSM coverage (Update-3)

Two mainstream papers covered the dispute on Saturday morning. The Times of India carried a short article, reporting that Cyril Shroff has instructed Mumbai firm Federal & Rashmikant (hat-tip @superselector5 on Twitter).

The Economic Times in a detailed article, rich with apparent insider info, had a comment from Cyril Shroff:

I will never initiate any legal action which is public in nature, as it impacts the family and firm's name. I have not yet decided as to whether I am accepting the will or not. We are more focused on our clients, partners and people working with us, and for them there will be business as usual.

An Amarchand Delhi spokesperson told ET that “this is an internal family matter and we do not wish to comment on such issues”.

The ET wrote that the the brothers’ jointly held around 60 per cent of equity in the firm and that a 1994 agreement between the family envisaged equal division of the late Bharati Shroff’s equity stake. Bharati Shroff also held a stake in the firm’s Delhi offices, held by a separate company, which was willed to Shardul.

According to ET:

The petition, which was filed on Friday, is the denouement of a dispute which has simmered for months and had become common knowledge in Mumbai's corporate, banking and legal circles. Two of India's top bankers and a number of top industrialists are said to have acted as mediators in an attempt to resolve the matter. These attempts appear to have failed, at least for now…

The ownership dispute has been discussed by members of Amarchand Mangaldas' management committee, according to people familiar with the matter. Two independent members (the committee has seven members in all), George Golding and James Abraham, recently moved a resolution that there cannot be ambiguity in the ownership of the firm and on principle of equality, Bharti Shroff's shares should be distributed equally between the two managing partners.

They also contended that family matters should not have any consequence for the firm. Sources said the resolution, which was circulated over email earlier this week, was passed 5:2 in Cyril Shroff's favour. Cyril declined comment on the resolution.

MSM wave 2 (Update 4 & 5)

Two further mainstream publications, the Business Standard and the Indian Express, covered the dispute late yesterday and this morning, respectively.

The Express reported that the first hearing in the case is scheduled to take place in 14 days.

However, the cause list for the Bombay high court has listed it as the sixth matter on Tuesday, 18 November, in court number 8 before Justice RD Dhanuka (hat-tip @ProphetRafiki on Twitter).

Update 1: Case details added.

Update 2: Meenaka Doshi blog post added

Update 3 (15 November 10:21): MSM coverage details added

Update 4 (16 November): Express coverage and hearing in 14 days

Update 5: Corrected: Next hearing on Tuesday

Click to show 361 comments
at your own risk
(alt+c)
By reading the comments you agree that they are the (often anonymous) personal views and opinions of readers, which may be biased and unreliable, and for which Legally India therefore has no liability. If you believe a comment is inappropriate, please click 'Report to LI' below the comment and we will review it as soon as practicable.

Latest comments