“Take It To Mediation, Return If It Doesn’t Work Out” – Delhi HC on the Rajiv Luthra v. Mohit Saraf matter

The Delhi High Court on Friday has sent the Rajiv Luthra v. Mohit Saraf dispute matter to Senior Advocate Sriram Panchu for Mediation.

The dispute between the Senior Partner Mr. Saraf, and Founder of L&L Mr. Luthra were asked to settle their dispute by Mediation. Justice V. Kameswar Rao said that if it doesn’t work out, then he will decide upon the petition.

As per the Orders given by the High Court, the mediation is to take place as per Advocate Panchu’s convenience, either on the 17th or 18th of September. The fee payable to Panchu will also be shared equally by both the parties to the dispute, the Court added.

In the hearing, Senior Advocate Arvind Nigam, who was representing Mr. Saraf, said that the partnership deed highlighted all the clauses regarding induction of new partners, termination and dissolution of partnership, etc., emphasizing that the matter should not have come to the Court in the first place.

As per the Deed, Advocate Nigam points out, the clause for the induction of new partners says –

If the two (Saraf and Luthra) don’t agree to induction of a partner, Luthra may give away a part of his own profit to the new partner. However, this new partner will have no rights.

Advocate Nigam submitted to the Court the notice of withdrawal of Mr. Luthra from his firm which was given on January 6th this year, was extended till April 4. Again, the notice period was extended on April 30, and then on August 30. Lastly, it was extended till October 30.

Nigam says that Saraf finally accepted Luthra’s withdrawal from the firm on October 12. He further adds that Luthra had been a sleeping partner this year, and that he did not want the dissolution and termination of the firm.

When the Court discussed Luthra’s decision to remove Saraf from the Partnership, Nigam argued –

There is no consent on dissolution of firm… not only has he terminated (me), he has removed my name and removed my access to my email, papers. Entire IT infrastructure is blocked… 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 of the firm, which he cannot do. He published it in the newspaper.

Nigam sought that Saraf’s access to the firm’s infrastructure and assets. Nigam adds that there would be ‘irreplacable damage caused to all the lawyers and clients of the firm’.

The other party, represented by Senior Advocate Neeraj Kishan Kaul later made his submissions for Mr. Luthra. He accused Mr. Saraf of leaking confidential information of the firm. He alleged that he shared his private WhatsApp communications with third parties. Kaul regarded Mr. Saraf’s conduct as unbecoming of a lawyer.

Kaul next brought the Deed’s clauses in the Court, mentioning about the powers of Mr. Luthra –

The deed is replete with clauses which give power to Mr. Luthra and the person who has to leave is Mr. Saraf … In the event of disagreement, the decision of Luthra was final … The only person who has the right to induct new partners in case of disagreement is Luthra and not Saraf.

Referring to the clauses, Kaul says that in the matter of termination, Luthra had the ultimate say. He said that under the given circumstances, Luthra had no option but to terminate the Partnership of Saraf.

Senior Advocate Abhishek M. Singhvi, who was also appearing for Rajiv Luthra raised an objection –

He (Saraf) has made persons who are not party to the arbitration agreement as parties.” He also said that to say Luthra was intending to retire was a complete red herring.

Both the Councils disagreed on the passing of any Order at this stage, but agreed to set up a mediation agreement for the dispute.

The dispute has been on for weeks now.

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