Siblings of Vijay Sondhi stake claim for brother's share in L&L Partners; Delhi High Court refers dispute for mediation

Even as siblings of late L&L Partners Founding Partner Vijay Sondhi claimed the illegal apportionment of his 18.5% equity stake in the firm by the existing Partners, the Delhi High Court on Friday referred the matter for mediation..After hearing the matter in chambers, Justice Prateek Jalan asked the parties to attempt to resolve the dispute by mediation before former Delhi High Court judge, Justice Jayant Nath..Sondhi's brother Ajay and sister Sangeeta have demanded that they be inducted into the equity partnership of the firm, and in the meantime, for Sondhi's share to not be diluted by the Partners..In their plea filed before the High Court, the Sondhis alleged that Rajiv Luthra and fellow Founding Partners Bobby Chandhoke and Sudhir Sharma are in the process of restructuring the equity model of L&L Partners.Mohit Saraf of Saraf & Partners too is one of the respondents..It is the Sondhis' case that as per the 2002 partnership deed signed by the Founding Partners, upon the death of one of them, their stake would devolve to their legal heirs. Clause 13 of the deed states,"13. That the death or insolvency shall not result the firm into dissolution and shall be taken over by the legal heirs of the Partners. If the legal heir/s do not qualify to become the Partner in the firm, the capital balance lying in the firm shall be paid to the legal heirs."Sondhi, who passed away in January this year, had bequeathed his share in the firm to Ajay and Sangeeta equally. Since the succession took effect from January 28, they claimed that they had a right to take part in the conduct of business of the firm, as per the provisions of the Partnership ActThe Sondhis claimed that Rajiv Luthra had assured them that their rights will be duly honoured, and at their option, they would either be absorbed in the firm as Partners, or be transferred business and clients to the extent of their share..However, they claim that Chandhoke and Sharma, under the guise of amicably resolving the issues, have deliberately delayed the process, as well as the rights and benefits due to them."On many prior occasions, the Respondent no.3 & 4 (Chandhoke and Sharma) have not only tried to shake the confidence of the Petitioners by making disparaging statements but have also breached the trust and the faith reposed by the Petitioners and Late Sh. Vijay Kumar Sondhi," the plea stated.Despite the passage of more than two months since obtaining assurances from Luthra, the petitioners stated that they have not been given their legitimate legal rights."...it seems that the assurances were never intended to be acted upon, and were only deployed to mislead the Petitioners, who now believe, on the basis of the recent communication and a meeting thereafter wherein the Respondent nos. 1 & 3-5 (Luthra, Chandoke, Sharma and Deepali Chandoke) have denied the claims of the Petitioners and it is clear that the Respondents now have no intention of honouring their words or the partnership deed dated 01.04.2002.".Reference was also made to the dispute between Luthra and former L&L Partner Mohit Saraf (impleaded as Respondent No 2), who has now sent the firm a notice invoking arbitration, in which he recognised the rights of the Sondhis.The petitioners are given to believe that the firm is being restructured, by which process the share held by Sondhi will be apportioned for business expansion and given to new partners. They have also claimed that the firm's top brass are denying all the claims, rights, interest and benefits they are entitled to. The plea further stated,"The Respondent no. 6 is a cash rich firm, and apart from the cash in hand, it also generates significant revenue on monthly basis, also has considerable outstanding( s) from its various clients, in which the Petitioners, as the successors to Late Sh. Vijay Kumar Sondhi, have a legitimate share. The constitution of the firm, including its receivables, and assets are required to be urgently protected so that the same are not whittled away or altered to the detriment of the Petitioners.".On the above grounds, the Sondhis have made the following prayers, among others:Pass an interim injunction restraining the Partners of L&L from preventing the petitioners from participating in the management and/or administration, of the affairs and/or legal practice of the firm; Restrain the respondents from preventing the petitioners to have access to or to use any of the assets of the firm for discharging the role and responsibility as partners of the firm; Restrain the Partners from changing/altering/modifying the structure and/or constitution of the firm; Restrain the Partners from implementing any new plan or administrative action including any equity model which may directly or indirectly affect the share/equity of Vijay Kumar Sondhi in the firm; Restrain the Partners from inducting any equity partner in the firm by utilising the equity of Sondhi which has devolved upon the petitioners or in any manner which will lead to diluting the share/equity of Sondhi in the firm; Direct the Partners to provide the petitioners with the account books/records of the firm to be audited by an independent auditor who will carry out the forensic audit of the accounts/books of records; Direct the Partners to not undertake any profit distribution of the firm and to deposit the monthly profits of the firm in a designated bank account maintained in the name of the Registrar of the High Court..The petition was filed through Advocate Abhishek Rana. Senior Advocates Ashwini Kumar Mata and Sunil Dalal appeared for the Sondhis. Senior Advocate Rajiv Nayar appeared for Bobby Chandhoke and Sudhir Sharma, while Advocate Haripriya Padmanabhan appeared for Rajiv Luthra. Advocate Raghvendra Singh appeared for Mohit Saraf. The matter was directed to be listed for hearing on Wednesday, May 25..Sources close to Rajiv Luthra indicated that he was very upset at these unfortunate circumstances leading up to the petition before the High Court. The sources also indicated that Luthra firmly believes that no one should be cheated of their money..[Read Order]