Surprise: The court orders... mediation!
19:27: Apologies for the slight delay in updates. The order is out and has told the parties to mediate with Sriram Panchu tomorrow (Saturday 17 October) or by Sunday (18 October) at the latest, but without granting any stay orders to Saraf (which puts him in the position where he is locked out of his firm email and Luthra has notified all clients that they can’t work with him, even on ongoing matters).
Read the full order here (PDF).
The court ordering mediation and staying out of it is not surprising, particularly since counsel on both sides said they were happy to mediate.
But considering both parties have been ‘mediating’ for nearly a year now, it’s anyone’s guess whether that will yield significant results beyond what has to date been achieved (to use the term loosely).
The court will hear the interim injunction petition again on Tuesday, 20 October.
If mediation fails, it is possible to court will get stuck in but that could very well be usher in a more drawn out process.
Justice V Kameswar Rao noted:
2. In substance, the petitioner has challenged the notice, issued by the respondent No.1 terminating the petitioner’s partnership with L&L Partners, New Delhi.
3. I have heard Mr. Arvind Nigam, learned Sr. Counsel for the petitioner, Dr. Abhishek Manu Singhvi and Mr. Neeraj Kishan Kaul, learned Sr. Counsels for respondent No.1 for quite some time.
4. During his submissions, Mr. Nigam has stated that the petitioner is ready and willing to work out differences with the respondent No.1 before a learned Mediator, provided a status quo ante is granted.
5. On the other hand, Dr. Singhvi and Mr. Kaul both have stated that even the respondent No1. is not averse to the mediation process but without any order of status quo ante.
Live blog updates of the hearing from earlier in the day below.
Liveblog of the hearing
Update 16 October 10:58: We understand that the hearing is due to start shortly (for earlier background to the hearing, please scroll down).
11:03: Also, we have been told that Luthra has published advertisements in newspapers warning “members of the public” that they should not deal with Saraf as a “representative of L&L” (see picture below).
11:29: The hearing has still not started though is expected to soon. In the meantime, here are some possible options for what could happen:
- Justice V Kameswar Rao could decline to get involved (as the judiciary has often been loathe to interfere in law firm politics) and instead ask the parties to mediate their differences first (or proceed to arbitration), or
- the judge could order Luthra to reinstate Saraf as a partner, pending the arbitration / mediation of the parties, which is presumably what Saraf will be asking for.
Please share any other speculation or thoughts in the comments.
12:15: The court is running rather late today, as far as Saraf v Luthra, which is item number 4 on the list, is concerned. The court is currently still hearing item 2.
12:42: According to Bar & Bench on Twitter, Saraf has senior advocate Arvind Nigam appearing for him, with Luthra having senior counsel NK Kaul and Abhishek Manu Singhvi on his side.
According to Bar & Bench’s live tweets on the case, Nigam said for Saraf that it was really not a matter that should have come to court.
12:46: Court has passed over the matter, according to B&B:
It appears that the first doc.. the earlier volumes are not here: Court
Then the Court doens’t have the first two volumes: Nigam
Court may pass it over: Nigam
We can have it on Monday: Singhvi.
We’ll pass it over. You also pursue : Court.
Matter to be taken up in some time.In other words, after that missing document volume 1 is supplied to the court (presumably having been unavailable to the judge due to some technical issue or other), the matter might get heard later today (though the court’s timetable is already running late, so who knows).Saraf's counsel Nigam explains history of partnership
13:10: The matter has restarted, with the judge having received the file. Also, by way of update, we understand that senior counsel Dayan Krishnan (the second NLSIU Bangalorian who became a senior), is also acting for Saraf.13:12: Bar & Bench is live tweeting Nigam going through the background of the case, which is mostly in the public domain following our previous reports, going through the 1999 partnership deed between Saraf and Luthra.13:18: The genesis of the dispute was the clause about induction of new partners, explains Nigam, referring to when Luthra unilaterally began making new partners. Nigam states there was no unanimity between both partners on this induction. The court has taken a break for lunch now.13:20: For context and background, in terms of inducting new partners to the firm, the 1999 deed stated that Luthra could unilaterally share his profits with others, though if those others were to have management rights, Saraf would also have to agree:In the event it is deemed necessary and feasible to induct new partners in the Firm, the same shall require the unanimous consent of RKL and MS. In the event of an induction being agreed upon, the percentage interest that is allocated to such new partner shall initially be only a nominal percentage and shall be contributed by reducing hte existing percentage interest of the Parties, pro-rata.
It is further agreed that if RKL and MS do not agree upon the induction of a new partner, RKL may elect to nominate someone, who will be entitled to receive a portion of his profits, which should have accrued to RKL, by giving a share from his own percentage interest, provided however, such new person shall not have any rights in the management of the Firm. However, if any such person has been part of the Firm for a continuous period of five (4) years, or practised law for seven years such person may also be admitted to the benefits of partnership with management rights. The extent of management rights would need to be unanimously agreed by all the Parties
Post-lunch resumption: Nigam for Saraf
14:19: The court has begun its hearing again, with Nigam continuing to lay out the deed for the judge, according to B&B on Twitter.14:21: Nigam argues that it is Saraf’s case that Luthra withdrew from the firm and gave notice to to the firm to terminate his partnership (as Saraf had previously also stated in internal emails to the corporate partnership). Nigam outlines the same purported 6 January notice by Luthra, which Luthra then allegedly extended on 4 April, 30 April and 30 August via WhatsApp messages. According to Nigam, Saraf then accepted Luthra’s withdrawal on 12 October (as per Saraf’s internal email).14:25: The court is asking the right questions, requesting the purported 6 January notice from Luthra.14:33: Several interruptions, due to Justice Rao video feed dropping repeatedly, meaning Nigam has still not gotten around to reading out the notice to the court (which seems like it’d be a crux in Saraf’s contention that Luthra resigned and Luthra’s denial that he had not).14:36: The messages from Luthra, apparently go into how much Saraf would pay him to resign from the partnership (under the goodwill payment provisions of the deed, presumably). According to B&B, which has not quoted the text of the notice:In the communication, Luthra seeks to know the amount that would be paid to him. The communications go on between the parties: Nigam
Nigam reads another communication on deferring automatic dissolution.I [Saraf] never wanted dissolution and termination of the firm. I wanted to induct new partners. Luthra has practically been a sleeping partner this year: Nigam14:40: Nigam is claiming that Luthra had extended this notice several times after that, and Saraf allegedly replied that he accepted Luthra’s withdrawal and while there had been “material breaches” of the 1999 deed by Luthra, he had “no intention of depriving him from any amount legally due to him”. (That does sound like some negotiation over the goodwill amounts took place: as a reminder, under the deed Luthra on leaving the firm might have been due around 45% of one year’s revenue of the firm.)14:44: According to B&B’s Twitter, Nigam is reading out one of Saraf’s communications to Luthra (which we assume had not been circulated to the entire firm):It was always been your intent to terminate the association with the firm... It was always been your intent to terminate the association with the firm... You have remained adamant on safeguarding your pecuniary benefit... Your sole motivation was not the benefit of the firm.. your announcement of giving away your equity share was nothing but a facade.
14:46: Now Nigam is going into Luthra’s termination of his client, for which he states that besides removing his name from the website, he has also blocked all IT infrastructure including emails (as we had suspected but could not authoritatively confirm in our earlier report). “I accepted his resignation but I did not block his access. A partner remains a partner till accounts are settled. He has barred me from the assets for the firm which he cannot do. He was published it in the newspaper,” said Nigam, according to B&B.14:48: Nigam prays to the court that Luthra can not dissolve the firm (unilaterally), and that “irreparable damage” (invoking the magic words) would be caused to firm, its lawyers and clients, giving Saraf the balance of convenience. He is also asking for Luthra to be restrained from interfering in the functioning of L&L Partners. The other respondents besides Luthra (which includes a number of administrative staff in accounts and technology), were included in the case to give effect to the court’s orders.14:53: Nigam says that Saraf wants his access restored, and the “bouncers deployed” at the office to be removed and for L&L to continue. Nigam then reads out emails Luthra has sent to clients.14:54: “I‘m sorry that this matter has come to court. It should have been mediated and settled .. I’m willing to go to a time-bound scheduled... I’m willing for meditation subject to status quo ante,” notes Nigam according to B&B on Twitter.Luthra's counsel NK Kaul begins arguments
14:56: Kaul, arguing for Luthra, says that there had been “cherry picking of lines” by Saraf, tweeted B&B. “The man who created the institution, started in 90s. Impression is being given that suddenly in Jan he decided to leave.” It was a “bizarre interpretation” of Saraf’s that Luthra had withdrawn. He also added that 90% of partners were supporting Luthra.14:59: Kaul is claiming that “confidential information” has been leaked and that in the petition Saraf claimed he couldn’t work with Luthra anymore. The way out was for Saraf to leave, therefore, and Luthra to pay him what he was entitled. Kaul is now summarising some clauses from the deed, notably that Luthra had notable veto and other powers retained by him under the deed intentionally. “Now they say that suddenly you are out .. there has been a cherry picking by them,” Kaul repeats.15:10: Kaul summarises the parts of the deed (as described earlier) relating to the wider powers that Luthra has, vis-a-vis Saraf, on termination, inducting new partners, and casting votes in certain areas. According to B&B, Kaul said: “I was interested in Saraf leaving the firm and not destroying the firm that I created... The entire exercise that Luthra carried out from Jan was the attempt to terminate Mr Saraf’s partnership.”15:17: What of Luthra’s 90 days notice to leave, asks the court. Kaul responds that he’d get to it but Luthra had the sole right to dissolve and terminate the partnership. As per B&B:The emphasis is on “resolve”.. everything was in the direction of resolution before termination. If Luthra was interested in termination, he would have done it right away. He has always taken people along with him. He has mentored three generations of lawyers.
15:17: Kaul now comes begins explaining exactly under what provision of the deed Saraf had been terminated. As predicted in our earlier report, Kaul is arguing that Saraf’s “conduct was unbecoming of a lawyer. He leaked WhatsApp messages” [unclear]“What option do I have today in view of the letters that receive. Can I let you ruin the partnership? The remedy is damages in such case. He cannot bring the Partnership to its knees,” adds Kaul according to B&B.15:21: Kaul is claiming that Saraf had made “selective appointments and had no power to induct new partners” (we are not sure whether Saraf has inducted new partners already or just threatened to). Kaul says Luthra would not agree to restoring Saraf to the status quo, since the firm which had hundreds of cases would come to a standstill.15:25: Saraf had no rights other than clearing his accounts under the agreement, says Kaul, and Luthra could only withdraw or go on retirement under the agreement, he explains, after prompting by the judge.15:26: Luthra had never given any indication of wanting to retire or withdraw, argues Kaul and Saraf had chosen to wrongly interpret the WhatsApp messages, for instance. Kaul claims that the message was about “hurt of a person who mentored” Saraf, not that Luthra was leaving.15:45: Kaul argues that Saraf’s quoting of WhatsApp messages was out of the context of ongoing conversations and reiterates that Saraf has been leaking those conversations to the detriment of the firm. (it is not clear which WhatsApp messages have been leaked.) “The cheque is ready,” he adds, for Saraf to leave.15:54: “It’s a fact that they can’t work together,” says Kaul, according to B&B, reiterating that they’re ready for mediation.15:58: Three-way argument between judge and lawyers. “You people should sit together and work it out,” says Justice Rao. At this point, Manu Singhvi pipes up for Luthra the first time: “Nobody can object to the spirit of working it out.” Nigam responds for Saraf: “Don’t precipitate the matter. Give me my documents.”Singhvi shoots back: “It is too far gone”, noting that the court’s can’t give directions in such cases.16:12: Singhvi now on a roll, argues that Saraf has been making things worse for nine months and has purported to kick out Luthra. Is this a way to conciliate? Luthra’s retirement was a “red herring”, and Luthra’s side strongly opposed the court making any order.Nigam says on behalf of Saraf that termination could only happen when both are unanimous and that Luthra might not like him but he he had no power to throw him out.16:33: Court orders mediation, adjourned till Tuesday, 20 October. According to B&B: “Let them not delete or access my email: Nigam. I’m not saying anything but don’t access his official email: Court”.Original story of 15 October
L&L Partners senior partner Mohit Saraf has filed a case against managing partner Rajiv Luthra in the Delhi high court today, as first pointed out by a Legally India commenter.
Nigam specifically mentions the goodwill payments due to a leaving party, which we had analysed in detail earlier this week (the deed has several provisions about what happens within 4 and 12 years of signing and thereafter, with respect to goodwill and who gets to keep what).
Nigam now outlines the majority vote and casting vote powers of Luthra that we had reported in more detail, which after 2010 were restricted to only some very specific areas.
Saraf’s advocate-on-record is Sandeep Devashish Das, according to the case status of OMP(I) (COMM) 339/2020.
Sandeep D Das had left Trilegal in 2013 to become an independent litigator (Das is also one of the lawyers who is part of the firm-cum-chambers of former Trilegal co-founding partner Anand Prasad, though we believe according to multiple sources that neither Prasad nor the AP & Partners firm is not involved in this case).
However, we understand from two sources with knowledge of the matter that Sitesh Mukherjee - another former Trilegal partner and its former litigation head, who went independent in April 2020 [CORRECTION] - has been instructed by Saraf.
We have not yet been able to confirm which senior counsel will appear for each side (a number are understood to be instructed on both sides).
The 1999 partnership deed between the sole equity partners of the corporate firm includes an arbitration clause, stating:
Any dispute or difference arising amongst the Parties, pursuant to this Deed shall be resolved by Arbitration. Upon any difference or dispute arising amongst the Parties they shall first endeavour to resolve the same by mutual discussions, for a period of sixty (60) days the same shall be referred to arbitration in accordance with the procedures laid down under that Arbitration and Conciliation Act, 1996, of India. The venue of the arbitration shall be New Delhi.
It appears likely that in light of the case type and the arbitration clause, Saraf will be seeking an interim injunction against Luthra, under section 9 of the Arbitration and Conciliation Act.
The case is listed for hearing tomorrow for a virtual video hearing before Justice V Kameswar Rao as the fourth item in the list.
We have reached out to Saraf and Luthra for comment.
We will update this story once we get further details, if any.
For the most recent events until now, read our article from earlier today: Analysing the partnership deed, as Rajiv Luthra makes termination fait accompli in client emails, erases Mohit from website, posts armed guards.
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Thanks in advance
Anybody placing bets on this? Who has the odds in his favour RKL or MS?
MS - 1 ka 5
And for the longest time, they wanted us to believe it was about equity for the salaried partners. All along it was about becoming Managing Partner by enginerting an exit of the incumbent.
Good to know the advisors behind on the half copped "forcing a retirement" legal strategy.
www.gallantryawards.gov.in/Awardee/mohit-saraf
The arbitrator
Even the second rung of firms such as KCO, Trilegal, JSA are more wholesome (if dull) places to work.
I would even say that smaller niche firms like Anand, P&A, Samvad et al are better places that might be paying only a small bit less than Luthra.
If the shroffs personified crony capitalism with their Adani-type deals, Luthra was the proverbial [...]
Anyways it will be good for the industry, a catharsis of sorts for this firm to be laid to rest. I'm sure plenty of lawyers are having a secret bit of schadenfreude and wondering - "Couldn't have happened to a nicer firm"
Besides, Lit partners are with RKL
Why are the employees being sued, but not the yes-men, nominal partners? Is it because, there is no point?
Will these yes-men partners have any ability to pay any relief? If they have been left out for that reason, the same logic should apply to the employees also. Harish is a company secretarial guy and was a partner designate till 2 years ago and has spent just about 2 years in the firm will not be able to provide any juice in the litigation.
AS, is a partner with a longer standing at the firm and his being made a party would have made some sense, but why was he left out? Is it because MS doesn't want to recognise HK and AS as his equity partners?
If it were not Covid times, it would be A
Giant learning to hear/ watch the matter being argued.
So muck for L&L not wanting to associate with LI. [...]
Arre thali lao re
twitter.com/barandbench/status/1317047461991440385?s=20
Also, how incompetent would a person has to be to let it happen? To be locked out!
And, yes, kind of bad lawyering to have not seen that RKL would take such actions. He should have moved Court much earlier seeking protection from being locked / thrown out!
Whichever way this plays out, I think both will be the losers in this game. Whether they saw eye to eye or not, they complemented each other and the firm was running smoothly and successfully. Now, for either, it will be a herculean task to build something ground up. My guess, RKL will try for a few years - trying some rag-tag combinations - but in 10 years time will retire and wind up the firm. MS will also try his own set up but I think he will succumb to the temptation of joining a biggie with a regional MP - by then all his 'loyal' supporters would have deserted him.
[...]
Boss, Mohitji please move on, take the money and go. If you are seen to be a fighter / bully type, nobody will join you. All these guys who have pledged support to you will eventually only look after themselves and let you fight it out alone. They would prefer to be part of the old Luthra brand rather than the new Saraf brand. You know how spineless they all are. Even now SAM and others may take you on.
That’s why most people are commenting here in the first place.
A set of partners got together, massaged Mohit's ego. He started believeing what they told him, without verifying. They had nothing to lose, but he did - his de facto control of the firm, $$$, and his relationship with his mentor and partner. [...]
The new contract is all poorly drafted and unclear. Turning people's variable to equity is not how equity dilution happens. The contract doesn't even tell the equity partner the percentage they get. What kind of consultants, supporters and lawyers are advising you?
He is litigating against all his partners, several of the employees he has worked with for years. Mohit, people don't earn goodwill by just throwing Holi parties. I hope in the next version of yourself, you will learn to put people first and not $$$.
Like who are the possible candidates currently?
Would a top Tier-1 lawyer be willing to come to Luthra now if promised a lot of equity?
Or will someone from one of the “lower” firms be roped in?
After this newspaper notice and email to clients Rajiv Luthra has pretty much ensured that no mediation can result in sarf returning, Imagine how pathetic it would be to tell clients that saraf is now kosher and publish another newspaper notice retracting the earlier one.
The real humiliation for RKL will happen once clients and associates start leaving. I already am aware of many CVs in the market, all rats leaving the sinking ship.
LI had done a piece analyzing tbe partnership deed which said that RKL couldn't terminate a partner unilaterally, and also said that for cause termination required notice. That should be enough to establish a prima facie case for stay.
However, the focus of the hearing seemed to be on whether or not RKL had retired, which is irrelevant to the relief claimed (both interim and final).
Seems like a strategic error to me. If they harped on about the illegal termination only, there'd be a greater chance that the judge grant interim relief regarding effecting that illegal termination.
And the hamhanded "retirement" of RKL, the intimations to clients saying the firm is going through rough weather, arraying innocent staff members as Respondents, all because he cares for the firm?
He didn't freeze out RKL for one reason: because he couldn't. Nobody in L&L takes him seriously anymore.
Whatever may have been the ultimate designs of Mohit, it is undeniable that he was at least talking about giving equity and had made offers of equity to all. We have all witnessed how RKL has behaved over the last 6 months and many agreed that he is no longer competent or able to run a professionally managed firm. Even in LI there have been many comments blaming him. Now that seemingly his bouncer strategy has not been interfered with- suddenly there is a rush of sympathy.
Ask how much equity his newly inducted “Equity Partners” have?! Forget everything, [...]
It’s easy to kick a horse which is down, and sure the bouncer strategy has been a setback for MS. But in all this- let’s not forget the actions of the big man himself are not really visionary or thoughtful towards the future of the Firm.
God, I am so confused...this has more suspense than Money Heist......
The story develops and the spate of resignations from the firm has started. LI will you please cover it?
Both feuding parties claim they have the most partners with them. Any headcounts? Do the departures / notices affect these headcounts.
MS had announced a new firm and the purge of partners including RKLbnot with him in 60 days. Any status update on that? LI, stop censoring, these are genuine questions and should not affect anyone's sensitive eggshell skulls.
Pleaaase please please induct the batch of 2020 joinees
This is torture
At least give our teams and location
Please please
This is so stressful we have been waiting for 6 months
And now also we are worried whether our jobs are safe or not
Please induct us
We beg you
This is leading to a mental breakdown for us
At least guarantee us a date for joining and honour it
You can reach out to the HR or Mr. L himself, if you REALLY are that concerned and require further assurance that your offer would be honoured. You only make us all look stupid with these incessant comments.
I mean, what do you want really? Induction? A mere intimation of teams and location? A specific date on which you'd be onboarded and a "guarantee" for the same? (Also, what form would such a guarantee take place?) I mean, you've basically asked for all so which one is it?
Having gone through the same thing, I can empathize with the uncertainty of the future being a source for concern but god damn you gotta get your shit together if you want to last in the law firm world.
But could you maybe tell us if you’re a part of the firm and if you’re relatively on the senior levels of the same?
As to the other dude who’s also from 2020 I’m guessing you’ve already started working so it’s really easy and convenient for you to judge my current predicament and label it as stupid especially since my guess is that you’ve probably joined wherever it is that you joined. The people that comment here are part of the firm and they anonymously disclose information so it’s not entirely stupid to get a feeler from the comments here what the situation is like.
Additionally, what I asked for isn’t contradictory. I asked for city and team and them giving that to us would show a further resolve in them inducting us and that would go a long way in assuaging our fears. The rest was at best superfluous, but not contradictory.
Also with regard to the stress, yes it is stressful and us stressing about this is not in any way less than the stress people on the job have. Having uncertainty about an offer for 6+ months is worrisome especially in this market when all tier 1 firms effectively have a hiring freeze. This is a highly unprecedented situation. On the job stress is something that everyone takes into account when they decide to go for a law firm job. So, yeah it’s quite valid for us to be worried about our entry into our jobs.
Recruiters right now.
They settled all differences and now getting drunk
How many partners resigning? How many associates fleeing?
Us, in this market, with no work experience, waiting for 6+ months over something that was promised to us, is not a small matter.
And yeah again, we asked because there are people anonymously commenting here who are a part of the firm be it in the capacity of an associate, senior/managing associate or even partner. So just getting feelers from here isn’t as stupid as you’d think
If it were, you wouldn’t hover around here all the time yourselves just to throw shade at me.
At the end of the day, albeit no one can know for sure in this uncertain global environment as well as the specific circumstances at L&L, but it seems more likely than not that L&L (in whatever shape/s it ends up continuing) will honour the contracts.
Also, surprising to see that you are an LI Subscriber :)
The Judge has also made statements which show how MS' strategy was not clearly thought through.
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