MOHIT SARAF  Vs RAJIV K LUTHRA AND ORS

O.M.P. (I ) (COMM) 339/2020 Page 1/148
IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment delivered on: January 18, 2021

+ O.M.P. (I) (COMM) 339/2020, I.As. 9626/2020 & 9772/2020

MOHIT SARAF
….. Petitioner
Through: Mr.Par ag Tripathi and Mr.Arvind
Nigam, Sr. Advs. with Mr.Promo d
Nair, Mr.Sandeep Das, Ms.Anusha
Nagaraj, Mr.Raghuvendra Singh &
Ms.Arushi Mishra, Advs.

versus

RAJIV K LUTHRA
….. Respondent
Through: Dr. Abhishek Manu Singhvi, Sr. Adv. ,
Mr. Neeraj Kishan Kaul, Sr. Adv. &
Mr. A. S. Chandiok, Sr. Adv. w ith
Ms.Ha ripriya Padmanabhan,
Ms.Pooja Dhar, Mr.Shrutunjay
Bharadwaj, Mr.Dipak Joshi,
Ms.Ashima Chauhan and
Ms.Simran Kohli, Advs.

CORAM:
HON’BLE MR. JUSTICE V. KAMESWAR RAO
J U D G M E N T
V. KAMESWAR RAO, J
I.As. 9626/2020 & 9772/2020
These applic ations hav e been filed by the petitioner
seeking permiss ion to file additional documents on record.
The same are allowed and the additional documents are
taken on record. Applications are disposed of.
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O.M.P. (I) (COMM) 339/2020
1. The present pet ition has been filed by the petitioner under
Section 9 of the Arbitrat ion and Conciliation Act, 1996 ( „Act of
1996 ‟, for short) with the following prayers :
“Therefore, in the light of the facts and circumstances of
the present case, and the submissions mad e in regard
there to, this Hon’ble Court may be pleased to:
a) Stay the notice issued by the Respondent No. 1
to the Petitioner by way of email sent on
13.10.2 020 purportedly t erminating the Petitioner’s
partnership with L&L Partners, New Delhi and all
actions taken consequ ent there to;
b) Restrain the Respondent No. 1 from directly or
indirectly, interfering wit h the management and /or
administration, and from participating in t he
affairs of the firm L&L Partners, New Delhi;
c) Restrain the Respondent No. 1 from holding
hims elf out a s, or representing himself to be a
partner in L&L Partners, New Delhi;
d) Direct the Respondent No. 1 to forthwith hand
over to the Petitioner all as sets and properties of
the firm L&L Partners, New Delhi, currently within
his pos session, includin g ownersh ip and control
over the website www.luthra.com;
e) Restrain the Respondent No. 1 from accessing or
using any of the assets of the fi rm, including but
not limited to restraining the Respondent No. 1
from withdrawing any monies, or authorizing any
payments o ut of, or otherwise operating bank
accounts held by the firm, without the consent of
the Petitioner;
f) Restrain the Respondents fro m interdicting the
Petitioner’s rights to conduct and manage the
affairs of the firms L&L Partners , New Delhi, L&L
Partners, Mumbai and L&L Partners Litigation,
New Delhi;
g) Direct the Respondents to fort hwith restore the
Petitioner’s access to his firm e mail id –
MSaraf@luthra.com and the Petitioner’s name as
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being part of the management on the websi tes of
the firms, L&L Part ners, New Delhi, L&L
Partners, Mumbai and L&L Partners, Litigation,
and further r estrain the Respondents from directly
or indirectly , preventing or otherwise restricting
the Petitioner’s access to and use of the Delhi
Firm’s IT in frastructure such as perso nal laptop,
desktop, email with the domain name@luthra.com,
servers, database, so ftware subscriptions;
h) Direct the Respondents to forthwith restore the
access of all employees and staff to, and enable use
of the IT infrastructur e such as persona l laptop,
desktop, emails with the domain
name@luthra.com, servers, database, software
subscriptions, whose access has been dr astically
block ed since 13.10.2020;
i) Direct the Respondent No. 1 to remove the
‘bouncers’ stationed by him at t he office of the
Delhi Fir m at the 1st and 9th Floors, Ashoka
Estate, 9, Barakhamba Road, New Delhi – 11000 1
and further restrain the said Resp ondents from
restricting any manner the Petitioner’s ingress and
egress to the office space at 1stand 9th Floors,
Ashoka Estate, 9 , Barakha mba Road, New Delhi –
110001;
j) Restrain the Respondents from causing any
disturba nce or damage to the office cabin of the
Petitioner ;
k) Direct the Respondent No. 1 to cease and desist
from entering the offices at 1st and 9th Floo rs,
Ashoka Estate , 9, Bara khamba Road, New Delhi –
110001, soliciting or contacting the employees,
retainer s, or clients of L&L Partners, New D elhi;
1) Restra in the Respondent No. 1 from making any
representation to any of the clients or retainers or
emplo yees of any of th e firms, L&L Partners, New
Delhi, L&L Partners, Mumbai or L&L Partners,
Litigation, New De lhi, and from making any
representation, communicat ion, filing, applications
etc. to any regulatory authorities including the
Registrar of Firms, or to the media to t he effect or
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on the basis that the Petitioner’s partnership h as
been terminated, or that t he Petitioner has ceased
to be a partner of any of the said firms, or that the
petitioner is not authorized to represent the said
firms, and further direct the Respon dent No. 1 that
if any such communication has been made, then to
forthwith withdraw the sa me;
m) Restrain the Respo ndent No. 1 from using the
name “Luthra &Luthra” or “L&L Partners” or any
variation thereof, for carrying on any business
competing with the business of L&L Partners, New
Delhi;
n) Grant ex parte ad interim reliefs in terms of the
above;
o) Pass such order and any further other ord er as
this Hon’ble Court may deem fit and proper in the
facts and circumstances of the present cas e.”

2. The facts , as note d from the petition, are as follows:
2.1 Petitioner and respondent are Advocates within the
meaning of the Advocates Act, 1961.
2.2 On March 31, 1999 petitioner and respondent
executed a partnership deed („Deed‟, for short) and fo unded
the partner ship firm L&L Partners , New Delhi (formerly
Luthra & Luthra Law Offices, New Delhi) („Delh i
Corporate Firm‟, for short) having its office at Ashoka
Estate, Barakhamba Road, New Delhi. It is undisputed and
noted from the Deed that the partn ership was not at will. The
Delhi Corporate Firm was registered with the Registrar of
Firms, New Delhi bearing regist ration number 615/04 on
April 31, 2004.
2.3 On April 01, 2002 , petitioner, respondent and three
other lawyers entered into another pa rtnershi p with o ne
another for carrying on litigation related l egal services and
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executed the written partnership deed and founded t he
partnership firm L&L Partners Litigation (formerly Luthra
& Luthra Law Offices, Litigation) with office in New Delhi
(„Delhi Liti gation F irm‟, f or short) . Th is firm is a
partnership at will.
2.4 On March 03, 200 3, petitioner and the respondent
executed the written partnership deed and founded the
partnership firm L&L Partners Mumbai (formerly Luthra &
Luthra Law Offices, Mum bai) („Mumbai Co rporate Firm‟,
for short) . The firm is also a partnership at will.
2.5 On April 04, 2004 , petitioner and th e respondent
varied and altered the profit (and loss) share in the
partnership firms, Delhi Corporate Firm and Mumbai
Corporate Firm to 33.33% and 66 .67%, r espectively.
2.6 It is stated that the aforesaid three partnership firms
namely Delhi Corporate Firm , Delhi Litiga tion Firm and
Mumbai Corporate Firm (collectively hereinafter referred t o
as „L&L Firms ‟) have achieved tremendous growth and
success i n the p ast two decades and are amongst the leading
law firms in the country today. Together, the L&L Firms
approximately r etain 300 lawyers, 75 non -equity retainer
partners, 200 employees and su pport staff. The Delhi
Corporate Firm and the Mumbai Corporate Firm
approximately retain s 250 lawyers, 43 non -equity retainer
partners, 150 employees and support staff. The cumulative
revenue of the L&L Firms is more than INR 350 crores. The
L&L Firms serve some of the larges t industrial houses and
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high net worth ind ividual s and have won seve ral accolades
over the past few years. Illustratively, the L&L Firms were
awarded the National Law Firm of the Year by Chambers
and Partners in 2012, National Law Firm of the Year by
IFLR -Asia for 3 years after 2013.
2.7 It is sta ted tha t the petitioner has played a pivotal
role in developing the business and clientele of the L&L
Firms . Particularly in the context of the Delhi Corporate
Firm and the Mumbai Corporate Firm , the Petitioner h as
been the head of the corporate practice, and has been
instrumental in the growth of the big practices like M&A,
private equity, capital markets, ban king & project finance,
insolvency, ge neral corporate etc., which have grown by
leaps and bounds under th e leadership and guidance of
petitio ner.
2.8 On the salient features o f the Deed, it is stated by
the petitioner as follows:
2.8.1 the name, goodwill, clients, assets, counsels, staff
etc., exclusively belong to the Delhi Corporate Firm.
2.8.2 Deed envisages a gradual devolution of rights in
favour of the petitioner over a period of t ime.
2.8.3 Between March 31, 1999 (date of entering into the
Deed) and October 31, 2003, either party could leave the
Delhi Corporate Firm, without being entitled to any value
towards goodwil l. However, if the petitioner was asked to
leave the D elhi Corp orate Firm, he would be entitled to
fifty percent of the goodwill amount computed in the
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manner stipulated in the Deed . During the same period, if
the respondent intended to leave the Delhi Corporate Firm
and retain its na me, the respondent was re quired to
compensat e the pet itioner for the full value of the
goodwill.
2.8.4 After October 31, 2003, but before 12 years from
the Effective Date under the Deed (i.e., 01.04.1999), if the
respondent intended to leave the De lhi Corporate Firm
and retain its name ( in other w ords, exc lude the petitioner
from the Delhi Corporate Firm), the respondent was
bound to compensate the petitioner for five times the
amount o f the goodwill as computed in accordance with
the Deed, and all the clie nts of the Delhi Corporate Firm
were to be retaine d by the petitioner .
2.8.5 That the Deed categorically an d unequivocally
provides that after the expiry of 12 years from the
Effectiv e Date, i.e., from March 31, 2011 onwards, the
respondent may onl y leave the Del hi Corporate Firm, but
shall have no right to r etain its n ame, and that such name
shall conti nue to be used by the remaining partners of the
Delhi Corporate Firm. Also, the clients, assets, employees
and goodwill were to be retained by the petitione r and t hat
after 2011, th e respondent has no right to exclude the
petitio ner from the Delhi Corporate Firm in any manner.
2.8.6 As per the Deed , after 2010 the respondent ‟s right
to render final binding decisi on was confined to certain
specific mat ters sti pulated therein .
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2.8.7 Even though respondent could appraise the
performance of the petitioner, as per the Deed, after 2010,
even if the respondent were to find the petitioner to be
wanting in any manner, only a token penalty could be
imposed upon petition er.
2.8.8 No new partners could be inducted by the
respondent wit hout the con sent of the petitioner
2.8.9 Upon retirement, withdrawal or death of any of the
partners or termination of the Deed, the Delhi Corporate
Firm would subsist and the remaini ng partn ers wou ld
continue to run the Delhi Corporate Firm.
2.8.10 In the event of death or r etirement/wi thdrawa l of
one of the partners from the Delhi Corporate Firm, or
termination of the Deed, it is expressly stipulated that the
survivi ng party shall: ( i) conti nue to be a part of the D elhi
Corporate Firm and retain all the assets, offices,
employees, cou nsel, client s etc., and; (ii) continue to
retain and use the name of the Delhi Corporate Firm and
the goodwill attached thereto.
2.9 It is the case of th e pet itioner th at until 2015, the
petitioner and respondent enjoyed a healthy relationship and
carried on the bus iness of the Del hi Corporate Firm
smoothly. And, w ith the growth of the L&L Firms, the need
for professionalization became necessary and that t he
petitioner recognized and adop ted this vision. The clamour
for opening up of the equity partnership also incre ased
within the organization, especially after several
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professionals of impeccable talent and competence, had
spent several years as a part of it.
2.10 It is stated that sometim e in 2009, t he petitioner
and respondent announced that the retainer non -equity
partners, who had been part of the firm for many years
would be inducted as partners into the firm s (Delhi
Corporate Firm and Mumbai Corporate Firm ). However ,
primarily due to reluctance on the part of the respondent to
dilute his equity in the partnership no further st eps were
taken to give effect to the same.
2.11 On several occasions, petitioner had requested the
respondent to take progressiv e and serious s teps towards
diluti on of the equity in favour of senior professionals
within the Delhi Corporate Firm and the Mumbai Corporate
Firm. As a step towards professionalization and
transparency in decision making, petitioner with the
concurrence o f the responden t, set up an Execut ive
Committee ( „EC‟, for short ) in September 2012, comprising
of certain senio r members of the Delhi Corporate Firm and
the Mumbai Corporate Firm. After due deliberation and
discussion, on July 24, 2019, the guiding princi ples and
frame work for dec ision -making by the EC was agreed to,
by the members of the EC, including the petitioner and the
responde nt. And, that until recently apart from the parties to
the present petition, the members of the EC include 4 other
senior no n-equity retain er partners of the Delhi Corporate
Firm and Mumbai Corporate Firm, who are also members of
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the Whats App Group nam ed „Executive Committee ‟.
2.12 It is stated by the petitioner that o n multiple
occasions, the petitioner solicited consensus of the
respondent to induct new part ners by diluting the equity,
however was unsuccessful. This adversely affected th e L&L
Firms as many retainer non -equity partners left the firms for
having been denied fair compensation. Particularly, from
July 2019 onward s, petitioner u rged the respondent to
expeditiously deliver upon his commitment with respect to
dilution of equity, and warned the respondent of the
immin ent danger of sever al competent and talented
professionals leaving the Delhi Corporate Firm and the
Mumbai Corporate Firm, in the event that the respondent
failed to do so.
2.13 Between July and December 2019, primari ly due t o
frustration amongst the senio r members of the Delhi
Corp orate Firm and the Mumbai Corporate Firm at the lack
of opening up of equit y, there was a spate of high-profi le
exits.
2.14 Amongst similar communications by petitioner on
the issue of equit y dilution, and in response to the
respondent requesting the petitioner to communicate his
thoughts on equity dilution, by way of a message s ent on
December 26, 2019, the petitioner communicated in de tail,
his views on the mann er in which equity needs to b e diluted
in favour of senior professio nals in the Delhi Corporate Firm
and the Mumbai Corporate Firm .
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2.15 It is stated that as a reaction t o the sa id mess age the
respondent responded on the same date itself , denouncing
the petitioner ‟s views and stating that the best way forward
was to go sep arate ways and call ed upon the petitioner to
think of the most amicable way to achieve a parting. The
responde nt also suggested some high-level steps that would
normally be taken into consideration when ending a
partn ership.
2.16 Petitioner expressed his a greement to an amic able
solution on parting ways, which was however deliberately
misconstrued and misrepresent ed by t he respondent to ot her
senior members of the Delhi Corporate Firm and partners of
the Delhi Litigati on Firm, as if the petitioner and the
respondent had reach ed an agreement on dissolution of the
Delhi Corporate Firm . The petitioner strongly denied each
such sug gestion and c learly stated that he was only
agreeable to amicably parting ways .
2.17 It is sta ted that on January 06, 2020 respondent
issued a notice to the petitioner fo r termination of the Delhi
Corporate Firm and for dissolving the Mumbai Corporat e
Firm (180 -days‟ notice) inter alia stating that “… both the
partnership deeds, mentioned above, sha ll now st and
terminated on the 90th day ( for Del hi) and 180th day ( for
Mumbai) … ”
2.18 The petitioner immediately responded objecting to
the respondent ‟s misrepresentation and specif ically pointed
out that he had not consented to dissolution of the Delhi
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Corporate Firm, as was sought to be misrepresented by the
respondent. In his communications betw een January 06,
2020 and January 09, 2020 , the petitione r also pointed out to
the respondent, tha t in terms of the Deed, the respondent
could not unilaterally termina te the partnership except by
withdrawin g from it and that the petitioner was a greeable to
the respondent wi thdrawing from the Delhi Corporate Firm .
2.19 It is stated by the pe titioner that under the Deed,
respondent may only issue a notice of t ermination on one or
more of the specif ic grounds mentione d under Clause 8.
Clause 8(a) of the Deed refers to termination on the basis of
a unanimou s agreeme nt between the pa rties, while Clause
8(e) provides f or termination on the basis of withdrawal/
retirement from the partnership. The respondent ‟s notice to
terminate being unila teral in nature, and given that none of
the contingencies in sub-clause s (b) to (d) of Clause 8
(material breach, bankruptcy, death, mental or physical
incapacity) had arisen, or referred to, the respondent ‟s
actions and notice of Janua ry 06, 2020, was noth ing but a
notice of withdrawal / retirement from the Delhi Corpo rate
Firm.
2.20 It is the case o f the petitioner that the conduct of
the respondent was in fact consistent with h is intent and
desire to withdraw from t he Delhi Corporate Firm, which
was eviden t from the several communications sent by the
respondent betwee n July 2019 and till recently. I t is also
stated that in an effort to amicably resolve issues in the
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interest of the L&L Firms, petitioner and members o f the EC
held vario us discussions and the respondent placed several
unrealistic proposals for equity dil ution, which we re not
accepted b y the petitioner or the EC members. Respondent
kept reiterating his intent to pro ceed with unilateral
termination / withdrawal, and to this end, continued to
negotiate the terms of his exit in his communications with
the Pet itione r and wit h the EC . In this backdrop, the
respondent unilaterall y „extended ‟ his notice to terminate the
Partnership Deed by communications issued on April 04,
2020 ( by 60 days), May 28, 2020 (by one month), June 30,
2020 (b y 60 days) and finally on August 30, 2020 up to
October 31, 2020.
2.21 On September 13, 2020, af ter having extended his
purported notices up to October 31, 2020 , on the Corporate
Partners (Whatsapp) Group, the respondent made a proposal
for dilution of 20% of equity and warned of so me str uctural
„rejig‟ in the Del hi Corporate Firm. The respondent
unequivocally conveyed that the „time for negot iation is
over‟, and issued an ultimatum that if the aforesaid propo sal
were not ac ceptable, then the persons disagreeing are free to
leave. Th e respondent ga ve everyone, incl uding the
petitioner, a period of one month to ta ke a decision and
communicated t hat he would no longer be participating in
any partner meetings .
2.22 It is the case of the p etitioner that in the context of
the Deed, each of the c ommunicat ions issued by th e
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respondent seeking to unilaterally te rminate the partnership
with the petitione r, or unilaterally extend the deadlin e of
termination , constitutes a withdrawal fr om the partnership,
as, after 2011, the respondent has no rig ht to oust or e xclude
the petitioner from the Delhi Corporate Firm in an y manner.
2.23 It is also the case the pe titioner that even before
expiry of t he one -month period , the respondent, by way of a
message sent on the Corporate Partners group on October
04, 2020, repres ented to the petitioner and retainer non –
equity partners t hat he proposes to unilaterally induct n ew
partners into the Delhi Corporate Firm.
2.24 It is st ated on October 05, 2020, response was
given by the petitioner pointing out that under the Deed, no
partner can be indu cted without the consent and c oncurrence
of the petitioner. The petitioner furthe r stated that the
proposa l of respond ent is a farce as the proposal menti ons
no criteria, selection method and percentage of equity
dilution, a mong o thers, and is merely an ar tifice to induct
few of his de pendents as partners. The petitioner also
disputed the right of the responde nt to unilate rally induct
partners. The responden t, without disputing the merits,
disputed the contentions of the petitioner , in a me ssage sent
on October 06, 2020. On October 10, 2020, the respondent
informed the petitioner and al l retainers in the Delhi
Corporate Firm that the respondent had inducted t wo
individuals Aniket Sen Gupta and Barish Kumar as partners.
2.25 It is stated by t he petitioner tha t in this light of
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intention of the respondent‟s earlier communications and
given that the respondent was in material breach (falling
within the meaning Cl ause 8(b) of the Deed), which
provided an additional ground for termi nation by the
petitioner ; and al so g iven that the pe riod for amicable
resolution in terms of the Deed had long expired, on October
12, 2020, (bef ore expiry of the period of one month
stipulated in the respondent ‟s communication of September
13, 2020), the petitioner issu ed a notice / letter by email to
the respondent acknowledging and accepting the
respondent ‟s decis ion to leave and withdraw/retire from the
Delhi Corporate Firm
2.26 It is further stated that being the surviving party /
remaining partner und er the Deed and being entitled t o
retain t he name, goodwill, clients, ass ets, employees etc. of
the Delhi Corpora te Firm, the petitio ner went on to
reconstitute the D elhi Corporate Firm and inducted 23
retainer non -equity partners as equity partners of the Delhi
Corporat e Firm. All 24 pe rsons exec uted the new
partnership deed on the same date i.e. October 12, 2020. I t is
also the stated that a pproximately 25% of the eq uity in the
Delhi Corporate Firm has been distributed amongst the
newly inducted equity pa rtners (as an initial di stributi on, on
a tok en basis) and the remaining 42% of the equity is
maintained in a pool for the benefit of, and to be distributed
at a later sta ge amongst present and future partners of the
Delhi Firm. It was also agreed in the ne w deed that fur ther
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equity dilution would take place by March 31, 2021, in
favour of the 23 new partners, based o n objective criteria to
be discussed and agreed between th e partners. The new
partnership deed clearly stipulates that the petitioner ‟s
equity intere st shall be 33%, whic h is his present equi ty
interest .
2.27 It is the case of the petitioner that o n Octobe r 12,
2020, at 22:34 , the respondent sent an email to all retainers
and employees of the L&L Firms, denying that he had
retired from the Delhi Corporate Firm.
2.28 Thereafter , purely as a counter -blast, and without
any foundation, legal right or basis, th e responden t sent an
email to the petitioner on October 13, 2020, purportedly
terminati ng the petitioner’s partnership in the Delhi
Corporate Firm wi th immedi ate effect . There after, it is
stated that o n October 13, 2020 at around 1 2:42 P.M,
respondent sent an email t o all employees and retainers of
the L&L Firms stating tha t “….. the email/ notice sent
yesterday is the proverbial last nail in t he cof fin leavi ng me
no option b ut to terminate Mr. Saraf’ s partnership, which
was done earlie r this morning. Mr. Saraf is n ow stripped of
all authority and standing, and has no auth ority to instruct
you or otherwise to act on behalf of the Firm. No one sh ould
fall into the trap of accep ting any non -existent equi ty, which
he wants to offer to anyon e, and further comp licate
matters.”
2.29 It is av erred by the petitioner that the said n otice by
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respondent to petitioner made various false, vague, baseless
and frivol ous alleg ations each of wh ich were denied by the
petitioner. Moreover, respondent is sta ted to justify
termination on the basis of false allegations of material
breach on the p art of the petitioner purportedly on the basis
of Clauses 7(A) and 8 of th e Deed . The fri volity and lack o f
basis is man ifest from the fact that the respondent had never
alleged breach o n the part of the petitioner, including in his
repeated no tices for termination of the partnership .
2.30 Without prejudice to the petitioner’s p ositio n that
the allegations in the notice are false, it is submitted that th e
said notice is further misconceiv ed, as: (i) prior t o issuance
of such notice, the respondent had already withdrawn/
retired from the partnership; (ii) in any event, none of the
alleg ations fa ll within the meaning of mater ial breach, which
has been spe cifically defined in Clause 8(b ) of th e Deed .
2.31 It is stated that the petitioner had in fact at around
10:25 A.M. sent an email on October 13, 2020 addressed to
the key administr ative employees and offici als, requesting
them not to precipitate matters. Petitioner informed all the
mem bers of the L&L Fir ms that despite the fact that
respondent has c eased to be a partner, respondent ought to
be respected and allowed unhindere d access to the firms t ill
complet ion of winding up of the Mumbai Corporate Firm
and settlement of accounts of the Delhi Corporate Firm with
respect to respondent ‟s entitlements. Petitioner, continuing
with the exercise of management duties that he had bee n
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conduc ting f or the pa st two decades, instructed the
administrative officials to seamlessly discharge their dutie s,
and to not take any action at the instance of either the
petitioner or the respondent, which would be prejudicial to
the other.
2.32 Whereas, it is stated, despit e the fact that the email
IDs, s ervers and other IT infrastructure is common to all the
L&L Firms, and undispu tedly, the petitioner continues to be
a partne r in the Mumbai Corporate Firm and the Delhi
Litigation Firm , the respondent with the aid a nd conniv ance
of the staff terminated and disrupted the access of the
petitioner to the resources of the fi rm such as a ccess to
emails and IT resources , removed the petitioner from the
firm’s website . Respondent has even denied entry of
petitioner in to the firm pre mises and threatened retainers and
employees and the new partners to disassociate with the
petitio ner and coer ced some employees to go on leave.
Further, r espondent wrote emails to large number of clients
with which the petitioner has ongoin g and concluded works
that the petitioner is no l onger a partner of the firms. It is
also stated that the respond ent has seiz ed the petitioner ‟s
laptop / desktop which was k ept in office and is
unauthorizedly accessing t he data and information contained
therein, in flagr ant breach of the provisions of the
Information Technology Act, 2000. The respondent has
unlawfull y taken cont rol of the servers, books, records, data,
bank ac counts to the exclusion of the petitioner. Ther e is
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hence a serious risk of misapp ropria tion, dat a theft and
manipulation of records at the behest of respondent in
furtherance of his mala fide motives . Respo ndent continue d
with such and other irreparably i njurious acts and falsehoods
to the detriment of petitioner’s right to carry on le gal pr actice
and partnersh ip rights.
2.33 It is ave rred that t he respondent inter alia has no
right or aut hority to: (i) prev ent the petitioner or any of the
retainers of the De lhi Corporate Firm from lawfully
accessing the office, or their emails, assets of the Delhi
Corporate Firm etc., (ii) interfere with t he business of the
Delhi Corporate Firm in any mann er, (ii i) to instru ct the
employees, salaried partners, lawyers and employe es of the
Delhi Corporate Firm not to deal with the Petitioner, (iv) use
or retain any of the assets of the Delhi Corporate Firm, or
(v) solicit the clients, employees, retainers et c. of t he Delhi
Corporate Firm. The aforesaid position emanates as
consequenc es of his withdrawal from the partnership, and
especially given that the Delhi Corporate Firm has a lready
been reconstituted. In addi tion, and without prejudice, it is
also averre d, the respondent has no right under the Deed, or
basis to ous t the petitio ner from the Delhi Corporate Firm
and therefore, each of the respondent ‟s subsequ ent acti ons is
illegal. Further, b y blo cking access of the petitioner to his
emails, to the offices, data e tc., the respondent is unlawfully
preventing the petitio ner from serv icing clients, usurping the
clients and business of the petitioner, and is preve nting th e
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petitioner from lawfully carryi ng on with the business of the
Delhi Corporate Firm, despite the f act that under the
Partnership Deed, the petitioner is enti tled to retain the
name, goodwill, assets, clients and employees of the Delhi
Corpor ate Firm. More over, the petitioner owes a duty,
professional and fiduciary, to the clients, so me of whom he
has b een advising for more than a decade. As part of his
profession al duties, the petitioner is expected to be available
to advise and serve his cli ents a t short notice, and the
aforesaid acts on the p art of the respondent would
irreparably d amage and destroy t he client relationships built
by the petitioner painstakingly ove r the year s.
2.34 Further, t he petitioner has been overseeing and
taking decis ions o n financ ial requirements for regular day –
to-day op erations of the said firms, as well as for capital
outlay s, expansion of space, hiring and salaries, in crements
etc. for the D elhi Corporate Firm and the Mumbai Corporate
Firm with the authority to in depend ently op erate the bank
accounts of the Delhi Corpora te Firm and Mumbai
Corporate Firm. Without prejudice to other contentions, it is
averred, the actions of the respondent also seek to drastically
alter the status quo and to wrongfully hold out that the
respondent is a partner of the Delhi Corporate Firm and
misrepresent that the petitioner is not a partner of the same.
2.35 The petitioner has also gone ahead and pointed out
vario us material breaches committed by respondent under
Clause 8B of th e Deed . The said br eaches as allege d in
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short are as follows: –
 Unethical demands for payment mad e by
respondent from o ne of the clients , which resulted
in removal of the L&L Firms from the said cli ent‟s
approved list.
 In reckless di sregard of his duties as a pa rtner , the
responde nt conduct ed firm -wide vi deo conference
call unilaterally s cheduled on September 24, 2020
with a mala fide motive to disclose the discord
within th e partnership and to discredit and defame
the petitioner publicly on fal se grounds even af ter
the petitioner requesting the said meet ing to be
cancelled .
 Invoice s were raised by Luthra pr oprietorship for
legal s ervices on clients of Delhi Corporate Firm
and Mumbai Corporate Firm.
 The r espon dent went ahead and invested in a
competin g busines s whic h is an o nline platform
that provides legal and compliance solutions.
 No objection to the regist ration of the name „L&L
Partners ‟ in the name of the Delhi Corporate F irm,
and insi sted upon its r egistration for the benefit of
the Luthra Propr ietorsh ip as well.
 The domain name www.luthra.com has been
wrongfully held by responde nt in his pers onal
capacity even though the same is the property of
Delhi Corporate Firm and the same was never
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transferred in favou r of the Delhi Corporate Firm
even a fter repeated re quests.
 The respond ent is in wrongful posse ssion of
retainership agreement of both D elhi Corporate
Firm and Mumbai Corporate Firm.
 Ousting the pe titioner from the partnership and
depriving him and oth er pa rtners from ca rrying on
the business of Delhi Corporate Firm cons titute
material breach.
 The unilateral attempt of the respondent t o ind uct
partners without petiti oner‟s consent.
 Respondent ‟s unrealisti c and grossly insufficient
equity dilution proposal s, while threa tening to
dissolve the Delhi Corporate Firm and ma king
unreasonable demands for payment to be made f or
his exi t from th e Del hi Corporate Firm is in bad
faith.
 The respondent also unreasonabl y without the
conse nt of the petition er demanded t he resignation
of a Senior Partner of the Del hi Corporate Firm.
 Respondent unilaterally vetoe d a near u nanimous
decision taken by the th en non -equity retainer
partners of the corpora te practice to disa ssociate
with the Delhi Litigation Firm.
 Respondent malafidely an d in bad faith to
undermine t he authority of the petition er, delayed
the appr aisal process for the ye ar 2019 -20 pleading
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to delays in promotion and b onuses.
 Respond ent even requested certain cl ients service d
by the petitioner and some other partners, to
disassociate with the m, which are prejudicial not
only to the petitioner but also to the firm.
2.36. It is stated that petitione r has a strong prima facie
case as the petitioner is a partner in all the three partnership
firms / L & L F irms. Further , petitioner has a strong prima
facie case as (i) the respondent has ceased to be a partner in
Delhi Corporate Firm but des pite that has breac hed and is
continuing to breach his obligations under th e Indian
Partnership Act, 1932 („Partnership Act‟, for short) and the
Deed (which has an arbitration clause) with the aid and
connivance of th e staff; (ii) under the Partn ership Deed, the
respondent has no right whatso ever to exclude the petitioner
from the Delhi Corporate Firm, after 2011 ; (iii) after
respondent has withdrawn from the Delh i Corporate Firm, the
respondent had no locus or right t o issue the notice of
termina tion dated October 13, 2020; and (iv) subsequen t
acts obstructing the Petitio ner from carrying on with the
business of the Delhi Corpo rate Firm are illegal and without
authority. Similarly, the balance of convenience lies
compl etely in favour of the petitioner and against the
respondent as the petition er took a reasonable st ance an d
instructed the employees of the Delhi (email dated Octo ber
13, 2020) that matters should not be precipitated at the
instance of one or the other unt il matters are resolved. O n
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the other hand, respondent has left no stone unturned in
seeking to comp letely deprive the petitioner of his lawful
rights and interest s in the busi ness. The respondent‟s ac tions
also seek to irreversibly damage the reputation o f the
petitioner an d is likely lead to significant loss of
professional standi ng and goodwill within the p rofession
and additionally the Delhi Corporate Firm havin g been
recons tituted , the respondent is also depriving the petitioner
and the partners of the Delhi Corporate Firm from ac cessing
the offices, their emails, from carrying on th e business of the
Delhi Firm causing irreparable loss and damage to survival
of the Delhi Cor porate Firm as well as its lawyers and staff
members, its reputation and its cl ients.
3. A prelimi nary reply has been duly filed by the respondent
to the pet ition. The stand of responde nt as per the reply is as
follows:
3.1 The petition is no t maintainabl e on four grounds
viz. (i) absence of arbitration clause; (ii) misjoinder of cause
of action; (i ii) misjoinde r of parties and; (iv) nonjoinder of
parties.
3.1 (i ) It is the case of the respondent that the petitioner is
not only seeking preserv ation of his rights but also of th e
new 23 espoused partners, whose names are not even
disclosed. And, in a ny eventuality there is no partnership
deed between the res pondent and the so called 23
partners, which follows that there is no arbitration clause
either.
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3.1 (ii ) It is also the c ase of the respondent that the reliefs
claimed by the petitioner pertains three separate
partnership firms envisaged under three dif ferent
partnership deeds. Th e natures of the deeds are different,
different partners are inv olved in these different
partner ship deeds along with the common partners. Since
in the petition, factual narration only p ertains to the Delhi
Corporate Firm, relie fs, part icularly prayers (f) , (g) and
(l), sought in terms of the other partnership firms, w ithout
any cau se of action being disclosed , the petition is liable
to be dismissed.
3.1 (iii) The actio n of impleading res pondent No s. 2-
7 who are neither signato ries to the Deed nor bound by
the arbitration agreement contained therein , means no
relief can be claimed ag ainst them and the prayers (f), (g)
and (l) are ex facie not maintainable, ma king the present
petition suffer from „multifariousness‟ i. e., misj oinder of
parties an d cause of action.
3.1 (iv) The partners inducted by respondent by
exercising his power unde r Clause 7D of the Partnership
Deed is before the termin ation of the petiti oner (on
October 13, 2020), who being necessary and proper
parties to the petition, are not made parties to the petition.
This, as per respondent makes the p etition no t
maintainable for non -joinder of parties.
3.2 On the conduct of th e petitioner, it is stated by
respondent that the same would clearly make the petition
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liable to be dismis sed and states the following: –
3.2.1 The case of the petitioner that on the very same day
as accepting alleged retirement of respondent, he has
entered into deeds with 23 other salaried part ners.
Without prejudice, it is stated; the conduct clearly r eflects
the malicious and mala fide conduct of the petitioner in
ousti ng the founding and managin g partner much before
the alleged date of retirement. Moreover, the acti vity
could not have been ac hieved within a span of few hours .
3.2.2 The conduct of the petitioner i n disclosing
confid ential information contrary to the interests of the
Delhi Corpo rate Firm and the fact that he has been trying
to create a rift within the firm and the fact that he h as
allegedly, on the same day on which he allegedly
accepted the alleged retirement of the respondent and
distributed the respondent ‟s equity ; all indicate t hat his
acts were totally detrimental to the int erests of the firm
and also the principles of partn ership enunciated under
Section o f the Partnership Act.
3.2.3 The petitioner has filed material s such as detailed
Whatsapp conversations between petitioner and
respondent , various members of the Partners Group of the
L&L Firms, members of the E C, a transcript o f a ZOOM
call with the firm, lists of clients of the respondent as well
as of the L&L Firms , in the present proceedings are
nothi ng but a bre ach of the confidentiality policy of the
L&L Firms and of the privacy of the partners and
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associat es.
3.2.4 The petitioner has also in op en court proceedings
disclosed details of the Delhi C orporate Firm‟s clients he
was servicing prior to his termination and in the pro cess
even disclosed confidential details including p rice
sensitive information concerning public lis ted companies.
In addi tion, financial d etails of the L&L Firm s have also
been divulged which have immediately been picked upon
and reported by the media .
3.2.5 Even though the petitioner cla ims that he has bee n
terminated and has no access to his emails, he has still
managed to n ot only access t hrough hi s sources the
emails sent by the respondent (again in confide nce) to the
Firm and the Clients , but chosen to file them before this
Court. All these communicatio ns are once again private
and confidential.
3.2.6 The respond ent had issued the t ermination letter to
the petitioner at 10.03 AM on Octob er 13, 2020 and t he
reliance placed by the petitione r on his own email sent to
staff members of the firm at 10.25 AM to offer
unhindered ac cess to both parties is nothing but an
attempt to show change of heart after having realised his
folly.
3.2.7 The petitioner , contrary to the Delhi High Court
Mediatio n Rules has sought to file documents exch anged
in mediation and the same was screenshared during the
course of oral arg uments.
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3.2.8 Without discussing with the S enior Leadership of
the firm, the petitioner unil aterally re ferred of foreign
client for pot ential a rbitration to a third party.
3.3 Without prejud ice to the preliminary objections, it
is stated by the responde nt that the petitioner i s neither
seeking status quo ante nor status qu o, but a final relief a t
the interim stage. In other words, the pe titioner is seeking an
entirely ne w state of affairs, where respondent is ousted
from the Delhi Corporate Firm and with the petitioner being
part of the Delhi Corporate F irm, which is in essence in the
nature of a final relief being sou ght by him in the arbitration
and cannot be granted by way of an interim prayer.
3.4 It is the case of respondent that petitioner is acting
in a manner virtually to de stroy the Delhi Corporate Firm
and since i t is a settled law that if there is an obligation not
to do any act or deed agai nst the inte rest of the Firm or other
partne r, then prima facie , the power to expel is implied in
the agree ment. If such an implied powe r is not read into,
then the Clauses casting duties and responsib ilities will be
meaningless . Therefore, if prima facie the power exi sts and
is exercised, the only way for the petitioner is to seek a
declaration that the expul sion is bad in law, which will be
decided at the trial. But it cannot be contended at this sta ge
that exp ulsion is non -est.
3.5 It is the case of r espondent that, in 1990, ye ars
before the petitioner even became a lawyer, respondent
founded Luthra & Luthra Law Off ices and is the sole
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proprietor of the same till date. He also owns the name
„Luthra & Luthra Law Offices ‟. It was only around the yea r
1995 that the petitioner joine d the said propriet orship.
Thereafter, in 1999, respondent inducted him into a
partnership f irm vide the Partnership Deed .
3.6 On the various clauses of the Partnership Deed, i t is
stated by respondent that :
3.6.1 As pe r Clau se 7(A ) of the Partnership Deed all
decisions are required to be taken by a majority of
partners present and voti ng. How ever, in the event of a
disagreement, the decision taken by respondent would be
final and binding on the Delhi Corporate Firm and its
partners. After the year 2010, while responde nt‟s power
to take a final and binding decision was to be limited to
certain critical matters, those matters included
„termination ‟. Hence, the De ed recognizes the
respondent ‟s supreme position when it comes to matters
of termination.
3.6.2 Similarly , as per Clause 7D the induction of new
partners would ordinarily require the unanimous consent
of both respondent and petitioner; however, in the event
of a disagreement betwe en the m on the issue, the Deed
confe rs a right upo n respondent to un ilaterally induct
partners „by giving a sh are from his own percentage
interests ‟ provided that th e new person so inducted would
not have management rights in the Delhi Corporat e Firm .
It is therefore stated that since no sim ilar right is
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conferred upon the petitioner, this s hows the mutual
understa nding between the parties to the Partnership Deed
that respondent was to always have the upper hand in the
Delhi Corporate Firm .
3.6.3 Clause 8 of the Deed specifies that the Delhi
Corporate Firm shall not be a partnership at wi ll and the
Deed may be terminated „only‟ by respondent „and none
other ‟. The said Clause provides for a n otice per iod that
ought to be followed by respondent before termination . In
other words, it is responden t‟s case, the petitioner has no
power of termination under the Deed.
3.6.4 Clause 9 provides that in certain eventualities
including ter mination under Clause 8, the surviving Party
shall continue to be a part of the Firm, „retain all the
assets, offices, e mployees, coun sel, clients etc. ‟ and
„retain and use t he name of the Firm …. and th e goodwill
attached thereto ‟. Therefore, af ter the petitioner‟s
termination, the Delhi Corporate Firm comprising of
respondent and the two equity partners become s entitled
to all a ssets , offices, employees, counsel, clients e tc.
3.6.5 The initial profit -sharing percentage of 75 %
(respondent) a nd 25 % (peti tioner) was modified to
66.66% and 33.33% for respondent and petitioner
respectively on April 01, 2004. Similar modific ation was
done for Mumbai Corpor ate Firm (2004) and the
petitioner was inducted as a 6th partner for Delhi
Litigation Firm (April 21, 201 5).
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3.6.6 On August 04, 2018, even the names of the Delhi
Corporate Firm, Mumbai Corporate Firm and Delhi
Litiga tion Fi rm were change d to „L&L Partners New
Delhi‟, „L&L Part ners Mumbai ‟, and „L&L Part ners
Litigation ‟ respectively .
3.7 It is stated by the respondent that between 2019
and 2020, respondent and petitioner were in talks about
dilution of equity shares held b y the two partner s (petitio ner
and respondent) in Delhi C orporate Firm. Respondent
readily agreed for diluting his equity in order to b ring in
other partners, and propo sed that both respondent and
petitioner should dilute their equity shares proportionatel y as
provid ed in Clause 7D of the Deed . It is also stated by the
respondent that e ven though he was not obliged under the
Deed to do so, respondent agreed to this becau se he realized
the need to expand t he partnership to ensure future growth
and prospects o f the firm, as also to meet the a spirations of
younger p artners who had contributed to the firm‟s growth .
It is stated, respon dent even suggested that he will dilute a
larger portion of his equity than the petitioner (thereby
departing from th e Deed against his own intere sts), provided
that the difference in the extent of dilution is not
unreasonably large.
3.8 However, it is averred by respondent that the
petitioner kept making unreasonable proposals departing
from the Deed, whereunder , responden t would dilu te a hu ge
chun k of his equity while petitioner would dilute virtually
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nothing in comparison. This led t o disagreements between
the respondent and petitio ner. While initially the
disagreeme nts were limited to private conversations betwee n
respon dent and petitioner , the petitioner started behaving i n
the most unprofessional manner and began sharing the
contents of his discussions with respondent on other
Whatsapp chat groups involving Corporate Partne rs and
Senior Partners of the Delhi Corporate Firm.
3.9 It is also stated that the petitioner also began
insul ting and making slanderous statements against
respondent in fro nt of the said Corporate Partners and Senior
Partners, including raising various ki nds of baseless
allegations a gainst respondent. All of t his led to creati on of a
very unpleasant situation whe re the petitioner was clearly
aiming to discredit the responden t to further his own
motives, and which actions were contrary to the larg er
interes ts of the Delhi Corporate F irm. Ultimately ,
respondent r ealized that the petitioner was seeking to oust
him fr om the firm altogether, and for this purpose kept on
indulging in actions to make the position of respondent
untenable, and had been sett ing the b asis for the same over
the la st few years .
3.10 It is also pointed out by the respondent that it was
to make t he position of the L&L Firms in the public domain
untenable that the p etitioner has filed confidential messages
exch anged between the parties, includin g client data, which
were dis cussions never meant t o be public. Furt her, it is
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stated by respondent that t hrough this highly unprofessional
and unethical conduct, the petitione r has demonstrated that
he has only his own i nterest at heart and cares nothing for
the firm and its clients .
3.11 On the allegations of material br eaches b y the
respondent, it is stated by respondent that the very issue of
„material breaches‟ cannot be mad e applicable to him as he
is the primary par tner as per the Deed, who alone can initiate
terminat ion. In other words, it is stated th at the as per Clause
8 of the Deed, material breach as a ground for termination is
not available ag ainst respondent, but only against other
partners including the petitioner.
3.12 Without prejudice it i s also stated that all the
material breaches alleged by the petition er are completely
false and misconceived; which needs to be proved by the
petitioner at trial leading substantive evidence. It is also
stated by responde nt that the all such allegations ma de by
the petitioner in fact a re defamatory and the respondent
reser ves his right to take appropriate action a gainst the
petitioner in this respect.
3.13 On the chronology of events, it is stated by the
respondent as:
3.13.1 On December 04, 2019, respondent told the
petitioner that they should talk and sort out the issues
between them or else amicably part ways.
3.13.2 On December 26, 2019, respondent tol d the
petitioner that the best way forward would be to part
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ways and the petitioner agreed to the same
uneq uivocally.
3.13.3 On December 29, 2019 responde nt stated
in the „Corporate P artners ‟ WhatsApp chat group tha t
he and the petitioner had agreed to dissolv e the Delhi
Corporate F irm. The petitioner immediately denied this .
3.13.4 On January 06, 2020 , respondent sent a
message over „Whats App‟ to the petitio ner stating th at
recent events had pained him and damaged t he very
foundation of the partnership, owing to which he ha d
decided to terminate the partnership of the petitioner.
Accordin gly, respondent informed t he petitioner that the
Deed shall come t o an end within 90 days and the
Mumbai Corporate Firm stands dissolved within 180 days
from the date of the notice .
3.13.5 On January 09, 2020 respondent put to the
petitioner that he had issued the termination notice and
sought the petitioner‟s response if he wanted to fur ther
practice law and compete with respondent, or take a
goodwill payment .
3.13.6 On January 26, 2020 , respondent again
clarified to the petitioner that te rminati on meant that the
petitioner would have to leave the firm.
3.13.7 Ever since t he is suance of the said
termination notice dated January 06 , 2020, it is stated by
the respondent that, from the Whatsapp conversations it
was clear that the respondent ‟s intention was to resolve
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the disputes amicab ly within the firm, failing which the
petitioner would have to exit the firm in pursuance of the
termination notice.
3.13.8 On April 04, 2020 and the reafter on May 28,
2020, respondent, despite many obligatio ns, extended in
good faith the Termination N otice by 60 days.
3.13.9 On June 03, 2020 t he petitioner, inter alia
reiterated to respondent that he co uld consider leaving the
firm if certain condit ions were met . It is stated that the in
the same communic ation, the petitioner falsely stated to
respondent that as per t erms , the Deed allows for
dissolution by mutual consent and he did not give his
consent, but only agreed to the suggestion b eing
discussed further, and even on date there was no mutual
agreeme nt on w ho would leave the firm .
3.13.10 Thereafter, it is stated, on June 14, 2020,
petitio ner stated to respondent that he did not believe the
firm cou ld be saved, and asked responden t to make him
an offer for his (i.e. the petition er‟s) exit.
3.13.11 Further o n June 24, 202 0, petitioner
presented responden t with some o ptions including the
petitioner leavin g the firm and expressed his confidence
that hi gh performing teams and clients would come with
him.
3.13.12 Further on August 30, 2020, the termination
notice was extend ed till October 31, 2020. I t is s tated by
the respondent No. 1 that all t hese extension s were made
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by him bona fide , in the interests of the firm and
repeate dly attempted to amicably resolve the disputes.
3.13.13 There after, on Septemb er 13, 202 0, on
„Corporate Partners‟ (Whats App Gr oup), respond ent
declared that the time for n egotiation wa s over and made
a final proposal concerning the dilution of equity within
the Firm and stated that if the foresaid proposal was not
acceptable, perso ns disagre eing w ere free to leave after
the end o ne month. The refore, it is stated by the
respondent that t he petitioner‟s manipulative spin to his
communi cations dubbing re spondent wished to
„withdraw‟ or „retire‟ from the Delhi Corporate Firm was
totall y contrary to his intention s.
3.13.14 It is stated by respon dent that at the L&L
Firm‟s „townha ll‟ meeting o n September 24, 2020 the
petitioner again tried to present a m isleading picture in
front of the entire firm that respondent had offered to
resign . The respondent immedi ately called hi m out then
and there denyin g any s uch offer an d telling him not to
cherry pick.
3.13.15 At the same meeting respondent informed
the oth er partners that petitioner had omitted to read out
portions of the message where he himself had asked
responde nt for money to leave the firm .
3.13.16 Thereafte r, on October 04, 2020, on the
„Corporate Partners ‟ WhatsApp Group, respondent
announced that he proposes to induct new partners into
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the Delhi Corporate Firm and then accordingly sent an
email dated October 04, 2020 to the members of the firm
intimating them all of thi s inten tion.
3.13.17 To the above stand of the respondent,
petitioner objected on October 05, 2020 the misplaced
ground that as per the Deed, partners cannot be inducted
into the Delhi Corporat e Firm without his (P etitioner‟s)
consent .
3.13.18 October 06, 2020 , respondent den ied the
petitioner‟s baseless statements in view of Clause 7(D ) of
the Deed .
3.13.19 It is stated that on October 10, 2020, as
announced earlier, respondent inducted 2 new e quity
partners namely Aniket Sen Gup ta and Haris h Kumar into
the Delhi Corporate Firm from his own share of equity by
exercising his powers under Clause 7D of the Deed .
3.13.20 It is also stated that the petitioner‟s case is
based on the belied allegation that respondent exp ressed
desire to retire from the firm on January 0 6, 2020 throug h
a notice of withdrawal and it is this offer which the
petiti oner claims to have accepted on October 12, 2020 ,
through his communication . On the other hand, it is s tated
that it was responden t who sent a notice to the petitioner
to terminate his partnersh ip with respondent. And, the
petitioner is merely cherry -picki ng communic ations
between the parties to present a misleading picture.
3.13.21 It is further stated that p ursua nt to this
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attempt to give a false and manipulative spin to the
commun ications of t he respondent, on the same day the
petitioner reached out to a ll emplo yees and retainers of
the L&L Firms , misrepresenting to them that responde nt
had retired and left behind the petitioner as the sole
surviving partner of the Delhi Corporate Firm .
3.13.22 It is also stated that the claim of the
petitioner that he reconstituted the firm on the s ame day
by inducting 2 3 new equity partners is also belied owing
to the fac t that it was on th e evening of Octo ber 12, 2020
after 6:33 pm whe n the respondent was st ated to have
„retired ‟. The petitioner has also overlooked the fact that
even by his own showing, the respondent remained a
partner until midnight on the night of Octo ber 12, 2020
and so no legal inducti on or redistribution o f the
respondent ‟s 66.67% share could have take n place on that
day. Moreover, the petitioner has not even produced the
signed partnership de ed or named the said partners before
this Court, casting h uge doubts over the veracity of the
statements.
3.13.23 Twelve minut es later, on October 12, 2020
the respondent sent an e -mail to the employees and
retainers of the 3 fi rms denying the petitio ner‟s claims
about respondent‟s retirement , repudiating t he purported
resignation. Furth er, it is s tated that the p etitioner has
acted in violation of S ection 9 of the Partnership Act to be
just and faithful to each other.
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3.13.24 On the mornin g of October 13, 2020 at 10.03
A.M. , owing to the petitioner‟s e gregious actions, the
respondent was constraine d to issue a noti ce under
Clauses 7A & 8 of the Deed terminating the petitioner as
partner of the Delhi Corporate Firm with immediate
effect. And it was immediately on receiving the letter of
termination that the petitioner shot out a n email at 10.25
A.M. on Octo ber 13, 2020 to t he supp ort staff of the
Delhi Corporate Firm reiterating the that respondent had
retired but requesting that equal treatmen t be meted out to
both the petitioner and respondent , while the missive
object was the op posite. The petitioner even sought to
prevent any administra tive measures that would follow as
a result of his termination and to usurp the Delhi
Corporate F irm in whi ch respondent has dominant control
in terms of the Deed.
3.13.25 It was under these circumstances that the
respondent, on October 14 , 2020, was const rained to sen d
communications to the clients of the Delhi Corporate
Firm that the petitioner had been denud ed of authority to
represent the Delhi Corporate Firm.
3.13.26 Even thereafter, the petition er was still
determ ined to cause harm to the Delhi Corpor ate Firm.
He was reaching out to clients, employees and retainers
of the Delhi Corporate Firm misrepresenti ng to them that
respon dent had resigned, and that the petitioner was now
the sole surviving partner of the Delhi Corporate Firm.
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Thus, the respo ndent was constrai ned to instruct the staff
of the Delhi Corporate Firm to block the petitioner‟s
access to the Firm‟s offices, IT infrastructur e and his
official e -mail.
3.13.27 On October 15, 2020, a Partners‟ Meeting
was held as scheduled on October 14, 2020 and 34
salaried partners (except 3 -4) attended the meeting. On
the same day , information was sent to the pe titioner that
he shall be pa id a sum of Rs. 16 Cr ores (approx. ) pursuant
to his termination from the Delhi Corp orate Firm .
3.13.28 Surprisingly, on October 15, 2020 itse lf, the
petitioner filed th is petition under Section 9 of the Act of
1996 claiming a ho st of reliefs as prayed for.
3.14 Withou t prejudice , it is stated that the petitioner is
not entitled to any re lief as what is so ught for is neither
status quo a nte nor status quo but rather an unprecedented
and totally illegal state of affairs . It is also stated that a
partnership cannot be ren dered helpless if one partner does
acts which virtually amount to destr uction of the
partnership and then say that o thers have no power to expel
him. It is the respondent‟s case , it is settled law that if there
is an obligation not to do any act or deed a gainst the interest
of the firm or other partner, then prima facie , the power to
expel is implied in the agre ement. If suc h an implied power
is not read then the clauses casting duties and
responsibilities, will be me aningless. If t herefore prima facie
the power exists and is exercised, the only way for the
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petitioner is to se ek a declaration that the expulsion i s bad i n
law, which will b e decided at the trial. But it cannot be
contended at this stage that expulsion is non-est.
3.15 It is averred that t he petitioner is seeking reliefs
which are, in essence , in the nature of a fina l relief to be
sought by him in th e prospe ctive arbitration and cannot be
granted by way of an interim prayer. In fact, i n paragraph 39
of the petitio n, the petitioner admits that the respondent
repudiated his alleged withdrawal from the Delhi Corporate
Firm on October 12, 2020 itse lf. Thus, the case o f the
petitioner that the respondent has withdrawn from the firm is
just his unilateral assertion (and c ontrary to his v ery
pleadings and doc uments) and cannot be taken as truth till
the petitioner seeks a declarati on in this respect an d is ab le
to prove i t at tr ial by leading evidence. This cannot be done
in the present proceedings u nder Section 9 of th e Ac t of
1996 .
3.16 It is also averred that t he petitioner has admitted
that the respondent cannot be terminated f rom the Delhi
Corporate Firm. The only gr ound on which the respondent
ceases to be part of the Delhi Corporate Firm is, if the
respondent chooses to retire or withdraw from the Delh i
Corporate Firm in accordance with Clause 7 E of the Deed.
The reliance plac ed upon Clause 8(b) by the petitioner is
completely misconceived as termination on the gr ound of
„material breach ‟ is only available to responden t. Further, it
is averred that i f the case of the petitioner, that t he
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respondent has „retired ‟ is not prima fa cie sustainable and
therefore, there is no question of the petitioner praying for
the responden t to desist from managing the Delhi Corporate
Firm . On the contrary, it is the petitioner who has been
terminat ed as on October 13, 2020 by the respondent under
Clause 7 and C lause 8 of th e Deed under the powers
conferred therein .
3.17 Without prejudic e, it is stated that even if that the
termination is not in accordance with the Deed, the
petitioner is not entitled to be reinstate d in the Delhi
Corporate Firm, as it is his ow n case t hat he cannot work
with respondent. Consequently, since it is also the
respondent ‟s own case that they cannot fun ction together,
there is no question of the petitioner being permitted to
function in the Delhi Corporate F irm along with respondent.
The only remedy , if at all available to the petitioner, even
assuming the termination is h eld to be bad in law in any
appro priate proceedings, is compensatio n for wrongful
termination .
3.18 On the gran t of injunction, it is stated that a n
injunction cannot b e granted whe re the underl ying contract
is otherwise incapable of specific performance. A contract
for petitioner and respondent to remain and continue as
partners cannot be enforced. The general rul e is that an
agreement to form and ca rry on a partnership would not be
speci fically enforce d and specific performance cannot be
granted where it involves perso nal volition, per sonal service
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or continuing personal relationships between the parties
which the Court cannot supervise.
3.19 It is also stated that th e petitioner ha s not made a
prima facie case as (i) the entire case of the petitioner is
based on the allegation that r espondent has withdrawn /
retired from the firm, which is not the case ; (ii) respondent
had clear ly on August 08, 2020 put all his propos als on the
table and reveale d his final offer, which is indicative of the
fact that he is not reti ring or withdrawing f rom the Delhi
Corporate Firm but is onl y offering dilution of his equity to
sort o ut issues ; (iii) the message of September 13, 2020 is
clear and reveal s respondent‟ s inten tion of resurrecting the
firm; (iv) message on Septembe r 18, 202 0 and
communications /emails from October 4, 2020 to October
10, 202 0 clearly demonstrate respondent ‟s intenti on of
rebuilding the firm and even petitioner has admit ted to t his
as per his September 21 , 2020 message , indicative of the
fact that the petitio ner was aware respondent was
terminating and not retiring; (v) no pow er exist under the
Deed for petitioner to remove the respo ndent and hence the
entire attempt is to misre ad the message s to make out a case
of retirement/withdrawal; (vi i) Moreover, the pe titioner‟s
case can only mean that the minute the respond ent
withdrew from the firm, the firm had to necessari ly stand
dissolv ed, because there was no ot her partner in the firm and
he cannot constitute a sole partnership. Thus , any induct ion
of 23 alleged unnamed partners (contrary t o Section 31 of
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the Partnership Act) as alleged by the petitioner can only be
in relation to a fres h partnership between the petitioner and
23 ot her unnamed p ersons , which has no relation to the L&L
Firms ; (viii) C ondition as pr ovided in Clause 7E or 8 (e) for
retirement/withdrawal has not be en met in the petition; (ix)
as per Clause 8 th e partnership being not at Will, can only
be terminated or dis solved by res pondent by giving notices
as stipulated therein i.e. givin g of 90 days‟ notice and
attempting to amic ably resolve issues within th e said 90
days period, and 90 days commenced on January 06, 2020.
The said 90 days were extended by the responden t time an d
again. However , no amicable resolution was possible and
matters ca me to a head on October 12, 2020. This forced
respondent to exercise powers under Clau se 7A and 8 to
terminate the pa rtnership of the petitioner; (x) termination
letter issued to the petitione r on October 13, 2020 was not
even replied or repudiated by the petiti oner.
3.20 On balance of conven ience , it is stated by the
respondent that : (i) he has the dominant right to the Delhi
Corporate F irm and its management as : (a) as per Clause 3
(ii) th e respondent has grea ter financial rights than the
petitioner ; (b) as per Clause 7A, the respondent has the
binding vote on all critical matters including termination ; (c)
under Clause 7C the responde nt can appraise the work of the
petitioner and not the o ther way around ; (d) under Clause
7D the respondent has the superior right of induction o f new
partners by diluting his own share, without the consent of
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the petitioner ;(e) the respondent holds the ma jority s take in
the Delhi Corporate F irm as it is respon dent who has
devel oped the said firm and brought it to its present level ;
(ii) petitioner in any case, has no right to use the name of the
firm as per Clause 5A unless and until respondent is paid
goodwill as calculated therein and i t is not t he case of th e
petitioner that respondent was paid any goodwill upon his
alleged withdrawal from the firm ; (iii) the actio ns and
conduct of the petitione r demonstrate extreme prejudice
towards not only th e respondent, but also to the firm itself ,
as he ha s disclosed v oluminous confidential chats between
the partners of the firm, which not only relate to internal
discussions b ut also touch upon client relat ed matters, which
are a gross breach of confidentiali ty and the ethical
obligati ons of the petitioner as an advocat e.
3.21 On no irrepara ble inju ry being su ffered by the
petitioner , it is by the respondent that : (i) the subseq uent
events after October 13, 2020 have shown that the
termination of the petitioner has w orked in the interests of
the Delhi Co rporate F irm. A p ublic notice was issued
informing the public a t large a bout termi nation of the
petitioner from the L&L Firms . The clients and em ployees
were a lso du ly informed, r esponsibilities have been
reassigned and work is proceeding s moothly to the
satisfaction clien ts. Not a single client has withdrawn its
business. The website has be en redesigned as well ; (ii) the
respondent has honoured the Deed and has issued a cheque
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for Rs.15,60,68,127/ – (Fifteen Crores, Sixty Lakhs, Sixt y
Eight Thousand, One Hundre d & Twenty Se ven) only,
which is the amount due and payable to the petitioner upon
his termination as per the Deed. If, after preparation of final
accounts , some further amount is found payable to the
petitioner, the n even that will be paid. Thus , the petitioner
will b e proper ly compensated as p er the Deed and no injury
is suffered by him .
4. A rejoinder has also been filed by t he petitioner.
5. Mr. Parag Tri pathi, learned Senior Counsel, appearing on behal f
of the petitioner stated as hi s primary contentio n that master -servant
relationship is alien to partnership . It is submitted by him that it is
settled law , a par tnership i s not a master -servant relatio nship or
relationship of subordination rather it is one of equality , whether one is
a majority or minori ty partner . In this regar d he has relied upon
Regional Director, ESI Corpn. v. Ramanuja Match Industries,
(1985) 1 SCC 218 and Keshavji Ravji & Co. v. CIT, (1990) 2 SCC
231.
5.1. He further stated that n o single partner has a superio r right over
the proper ty brought in to the partner ship firm. The fact that the
partners are equals and there exists no master -servant rel ationshi p is
also supported by a long line of judgments holding that the property of
a par tnership firm, including the goodwill, is jointly ow ned by the
partners, and ea ch partner is entit led to his share upon dissolution of
the firm. In t his regard, relia nce is p laced upon Section 48 of the
Partnership Act and Addanki Narayanappa v. Bhaskara Krishtappa,
(1966) 3 SCR 400 ; CED v. Mrudula Nareshch andra, (1986 ) Supp
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SCC 357 and; CIT v S. Sivapra kasa Mudaliar , (1983 ) 144 ITR 285
(Madras HC ).
5.2 It is submitted b y Mr. T ripathi , the ex pression „ termin ation‟ is
incongruous while dealing with the issue of a partner leaving the firm
as it relates to a ma ster servant relationship and therefore „terminat ion‟
has relevance only in the context of terminatio n of the Deed and n ot
that of a partner. In so far as partner is concerned, the appropriate
expression is „expulsion‟ and the same has been duly recognized under
Sectio n 33 of the Partnership Act. He went on to submit that as per
the said Sect ion, specific pr ovision in the contract/deed is required for
expu lsion of a partner and such a contractual power demands exercise
by means of demo nstrable good faith i rrespective o f the power
conferred in the contract/deed. In support of his contention, Mr .
Tripathi has r elied upon Dr. S. V el Arvind v. Dr. Radhakrishnan ,
(2018 ) 4 Mad LJ 468 and Mahendra Tha kkar v. Yogendra Thakkar ,
2008 SCC Onl ine Bom 772 .
5.3 Mr. Tripa thi submitted that the Section 3 3 is in fact a specific
statutory manifestation of the general duty of good faith th at the
partners have towards each other by virtue of Section 9 of the
Partne rship Act. Thus, the duty of good fait h imposed by the said
Section is absolu te and not subject to any partnership deed as opposed
to many other rights / obligat ions of the partner s as specified under the
said Act. He also submitted that this duty is to be applied in the
performance of the par tnership deed and also in the dissoluti on of the
partnersh ip or removal of a partner, more so in light of the onerous
conseque nces that flow fro m expulsion of a partner. Addit ionally, he
also relied upo n the Seventh Repor t of the Law Commission of India
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(1957) to submit that there is a second c ondition precedent of
principles of natural justice to be exercised to the right of exp ulsion .
5.4 On Sect ion 9 of the Partnership Act , it is submitted by him that
it cast general duties on the partners to act in good faith and recognises
fiduciary relatio nship . The aspect of fiduciary duty heightens all the
more , when one group has a clear majority vis-à-vis the minority akin
to operatio n and management. In this regard he has drawn the a ttention
of this Court to Sect ion 12 of the Partnership Act as well a s Lindley &
Banks on Partnership, 20th Edition, Para 16-01/Page 11 5/CV II . The
latter reads as under:
“The ut most good faith is due fr om every member of a
partnership towards every other member; and if any
dispute a rise between partner touchin g any trans action
by which one seeks to benefit himself at the expense of
the firm, he will be req uired to show, not only tha t he
has law on his si de, but that his conduct will bear to be
tried by the highest standard of honour. ”

5.5 Mr. Tripathi also su bmitted that the respondent‟s t heory of the
Deed bearing an overall intent of „dominant partner‟ is of no relevanc e
in ascertaining the existence of the power to expel. In other words, it is
his submission in view of the terms of the Deed and S ection 33 of the
Partners hip Act; the respondent had no power to take the actions that
he took o n October 13, 2020 . In support of his submission, he stated
that Section 33 envisages a genera l rule and imposes a prohibition in
the expulsion o f a partner in a partnershi p firm, and t he exception to
the rule stipulates express provision in the c ontract/d eed and good
faith. The expulsion clause, if any, as per the con tract/deed needs to
strictly c onstrued as stated in Pollock & Mulla, The Indian
Partnership Ac t, 8th Edn., Page 176 . Mr T ripathi further ed this
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submission by stating that the responde nt has failed to answer / make
out the requ irements of Section 33 of the Partnership Act.
5.6. On the c ourt reinstating under this petition the last uncon tested
status q uo, Mr. Trip athi su bmitte d that the legali ty of the induction of
the 23 new partners by the petitioner is separate and distinct fr om and
has no bearing on the p urported expulsion of the peti tioner by
respondent; the actions by petitioner and the respondent both requir ing
examinati on on merits. But the attempt made by the respondent is to
conflate the two arguments in absence of any v alid defence. It is also
submi tted by him that during argume nts none of the grounds of
alleged „material breach ‟ as alleged in the termina tion no tice v iz., of
having rec eived kickbacks in cash from a client who is being
investigated by CBI, h ave been even referred to. To the contrary, an
attempt has been made to discr edit the Petitioner and make personal
and scathi ng attacks on i rrelevant an d extra neous grounds. This is all
the more important in light of the strict construction given to expulsio n
clauses an d the statutorily mandated dut y of good faith with which
such a p ower, where it is held to have been conferred, is to be
exerc ised.
5.7 In furthe rance, Mr. Tripathi has drawn the attention of this
Court to 3 possi ble scenarios to validate his co ntention fo r granting the
last unconteste d status quo. The scenarios are rep roduced as under:
Scenario 1: Respondent stands retired and Petitioner
constit uted/r econstituted the partnership with 23 other partners on the
basis of a new partnership deed – status quo a s of 12.10.2020. These
actions have not been challenged, much less s tayed by any judicial
authority. As such, t hese actions co ntinue to re main va lid.
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Scenario 2: Even assuming that the Respondent has not
retired/ withdrawn from the partnership, the Petitio ner is entitled to
continue to function as a partner of the firm since the alleged
expulsion / termination of h is partnership by th e Respo ndent i s void
and of no legal effect whatsoever .
Scenario 3: Assuming that the Respondent validly
expelled/term inated the petitioner from the partn ership (which is
clearly not the case), in such a situation the partnership firm stands
dissolve d on the exp ulsion of one partner in a two -partner firm, since,
as argued below, the in duction of the alleged two partners is ill egal
and even if held to be val id, they are transferees of the r espondent‟s
interest, with no authority to manag e or conduc t the business o f the
Firm (s ection 29 of the Partnership Act).In such a case, until
dissol ution is completed, Petitioner has the righ t to continue asper
section 47 of the Partnership Act. The only alternative w ould be for
appointment of an admi nistrator/rece iver to overs ee diss olutio n
5.8 In support of his second scenario, Mr. Tripathi has reli ed upon
Pollock and Mulla, The Indian Partn ership Act, 8thEdn, pg . 176,
which reads as under:
“An irregular expulsion is w holly without effect; it is like a
conviction reached witho ut juri sdicti on. The partner whom the
majority purport s to excel does not c ease to be a partner, and
his proper remedy is to claim reinstatement in his right, not to
sue for damages which, since he has not ceased to be a partner,
he cannot have sustained.”
5.9 On the s tand taken by the respondent that the Deed gives him
right to unilaterally induct new partners and induct ed two partners on
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October 10, 2020, it is stated by Mr. Tripathi that Section 30(1 ) of the
Partnership Act contemplates that in the absen ce of a n expr ess
provision in the partnership deed, a new partner can only be admitted
with the consent of all the exi sting p artners. Further in ter ms of the
Partnership Deed, it is submitted by him th at no unilateral right is
granted to the re spondent und er the Deed t o induct new partners
(Reference: Clause 7D). And, also, respo ndent lacks the power to
unilaterally induc t new p artners when admittedly on October 10, 2020
petitioner was a partner and no consent was obtained from him.
Furthermore, Clause 7D a pplies only w hen there is a disagreement
between the petitioner and respond ent. Mr. Tripathi submitted that
even the n ames of the partners to be inducted were never
communicated to the petitioner, whic h is clear from the e -mails dated
October 0 4, 2010 and October 05, 2 010.
5.10 According to Mr. Tripathi, the effect of the alleged expulsion of
the petitioner, is that the p artners hip came to an end. On the falsity of
the case of the respondent and the sam e being an afterthought, it is
stated by Mr . Tripathi t hat the purpo rted order of
termination/expulsion of the petitioner by respo ndent neither refers to
the view/consent of the so -called two new inducte es nor is it marked to
the new so -called inductees. E qually significant is tha t that it is not
even the case of the Respo ndent that on October 1 0, 2020, whether
with or without the consent o f the petitioner, a new Partnership Deed
was drawn up and/or much less signed and executed . The stand of
during the course of ora l submissions on b ehalf o f the Responden t, a
vague referen ce was made to the fact that the two so -called inductees
had signed a Deed of Adherence which document ha s not even been
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referred to in the Respondent‟s pleadings much less produced or relied
upon by the Respondent . It was pointed out that ind uction of t he so-
called „partners ‟ is, at best, in line with Section 29 of the Partnership
Act, wherein a partner is p ermitted to assign his inte rest in favour of a
third party. He pointed out that such an assignee of economic in teres t
will have no managem ent role to p lay and certainly none without th e
consent of the petitioner.
5.11 On the terms of the Partn ership Deed, it is submitted by Mr.
Tripathi that as per Clause 7(A) , respond ent is not empowe red to expe l
the petitioner . He submitted that the entire Notice dated October 13,
2020 has refere nce to only two provisions viz., Clause 7(A) and
Clause 8. According to him Clause 7 deals with decision making of
the firm and provide s the general rule of ma jority of partners and
natura lly in the continued scenar io of two partners unanimously. In
the e vent of disagreement, if there are more than two partners,
obviou sly th e majo rity will prevail whether it contains respondent or
not. If ther e are only two partners, even for the sake of a rgument that
the respondent will have th e final say, it cannot excee d the matters set
out in Clause 7(A). He vehemently submitted that there exists a clear
limitation on this authority of Respondent referre d to as a „Veto ‟
power which is to be found in Cla use 7(A) (3rd para) which r eads as
„issues that have been agreed to b etween the parties including
contents of this deed cannot be subseque ntly re opened by RKL under
the VETO powers ‟.
5.12 Further, as per Clause 7A, the issues on which the decision of
respondent will be final and bin ding are: „ termination, performance
review of partners……. removal of any constituent of the firm (other
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than par tners) ‟. The termination here refers to the preceding words in
the clause, na mely, amalgamation, me rgers, etc. Accord ing to him, t o
read „termin ation‟ as inc luding expulsion of petitione r, will run
counter to the last entry and will render the more specifi c entry as
redundant and otiose. Even otherwise, the expression „termin ation of
petitioner ‟ is inappropriate and grot esque to describe expulsion of a
partner . He submitted that this termination is not a reference to
termination of a partner or termination of petitioner; rather it is to the
„termination/dissolution of the firm ‟ as specifi ed in Clause 8. This is
clear from a perusal of the partnersh ip deed . More over, Clause 7A
specifically interdicts the respondent from using his alleged powers to
confer a d isprop ortionate benefit to himself and from participating in a
decision whe n he would be „directly or indirectly ‟ interested in the
decision , which gets squar ely attracted in this case.
5.13 On the respondent ‟s stand that „termination ‟ has to take colour
from th e su bsequent words „Performance review of partners ‟, he
submitted, if that be so , then it obv iously cannot mean termination of
the Petitio ner, as perfor mance review of the Petition er is separately
provided in Clause 7C. Therefore, if performance revi ew can not
pertain to the Petitioner, termination equally cannot pertain to the
Petitio ner. In terms of Clause 7A, t he ultimate test according to him is
Sectio n 33 of the Partnership Act.
5.14 He has also relied upon Clause 5A (second para), which reads as
„if MS is asked to leave the firm ‟, to submit that, what has been
envisaged therein is the only par t of the Deed whic h contemplates the
responde nt asking peti tioner to leave. And, this w as subject to a testing
period of four and a half years under specifie d cause viz. misconduct
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under section 7(iv), then arguab ly Petitioner is not entitled to any
goodwi ll, otherwise Peti tioner is entitled to 50% o f the entitled value
of goodwill.
5.15 On Clause 7(C) it is stated that the same underscores the
importance of t he tes ting period i.e., the first ten years of the firm‟s
life and the period beyond th e first ten years of the firm‟ s life. Clause
7(C) makes i t clear that d uring the first ten years, respondent had
authority to reduce the percentage interest of Petitione r subj ect to a
cap of 5% in a year. After the said period, Respondent could only
impose a token penalty upon p etition er. In other words, it is his
submission that the nature of the right s of the parties changed with
efflux of time. The major timelines were the testing period of four and
a half years, thereaft er a consolidation period which vari ed betwee n
first ten years and the period thereafter . According to h im, that there is
no re ference to termination. This is solely because termination is not
contemplat ed beyond the testing period of four and a half yea rs.
5.16 Mr. Tripathi also submitted that the e xpression
„termination/dissolution ‟ used in C lause 8 refers to the
termination/dis solution of the deed and therefore the Delhi Co rporate
Firm . This according to him is becaus e the partn ership is not at will,
therefore, no party can dissolve the firm without cau se. Secondly, „the
deed may be terminate d or dissolved only by RKL ‟. Thus, the
expression „te rminated‟ is in the context of dissolving or terminating
the deed and not te rminating a partn er or a party. He also stated that
the confusion sought to be created by the respondent needs to rejected
in view of (a) to (e) of Clause 8; which provides the bas is of
termination of the Deed. The consequences of what ma y happen if the
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requiremen ts of sub-clauses (a) to (e) of Clause 8 are fulfilled is the
possible termination of the Partnership D eed and nothing else.
Procedur ally, there is also a subst antive limitation on the exercise of
this power to terminate/dissolve of the firm which is in the proviso to
Clause 8 namely that before issuing the termination notic e of 90 days,
there wo uld be a pr ior period of 90 days to try a n amicably resolve the
dispute. Moreover, Clause 8(b) is not in the context of the expulsion of
a party/partner but in th e context of a „for cause
termination/dissolution of the deed ‟.
5.17 Insofar as Clause 9 is co ncerned, Mr . Tripathi state d that it
provides for „termination / disso lution / retirement / withdraw al /
death ‟ by referring to Clause 6 (successors of a pa rtner), Clause 7(E)
(retirement) and Clause 8 (termination and dissolution). Clause 9A(c)
refer s to the surviving p arty or the firm and/or t he firm compensating
the terminated/retirin g/withdrawing and the heirs of the deceased
party. This is the only pl ace in the contract wh ere the expression
„terminated ‟ is used in the context of a party. According to him, t his
expres sion has meaning only in the context of the second para of
Clause 5( A) as explained . This is made clear by Clause 9A(c)(i) when
it states that such a party shall be paid „a sum equivalent to the
goodwill, as calculated pursuant and subj ect to Clause 5 ‟. Clearly,
Clau se 9 of the De ed has nothing to do with any power of expulsion,
nor d oes it confer any such power. It only deals with the consequences
of e ither termination or d issolution of the deed or the
retirement/withdrawal/death of a partner. Rath er this also reinfo rces
the arg ument of the petitioner that there is no power of expulsi on in
the deed. Clause 10 of the Deed refers to the retirement, temporary
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withdraw al or termination of a party for any of the reasons referred to
in Clause 8. However, on Clause 11 .2 it i s stated by M r. Tripathi that
the word terminate is in the contest of the agreeme nt like for instance
dissolution and for expulsion, the expression use d is „if any party …..is
asked to leave the firm ‟. Thus, to read into termination, expulsion
would be inconsistent with the scheme , drift and tenor of the
Partnership Deed and the law of partnership .
5.18 Without prejudice, Mr. Tripa thi contend ed that the al leged
termination noti ces are in viola tion of the Partnership Act and Clause
8 of the Deed. This h e says so by relying upon the N otice dated
January 6, 2020 and other WhatsApp messages of the respondent . It is
submitted by the Mr. Tripathi that the respond ent was clear in all hi s
communications that he is only refer ring to the dissolution of the
partner ship and not termin ation/expul sion of the petitioner from the
Firm. The said communicati ons read as under:
a. The notice of January 6, 2020 was issued expre ssly on the
basis of the communications from December 26, 2019 onwards.
On December 26, 2019 , the Respon dent‟s messag e was: “ The
best way forward is Dissolve the Partnership”
b. On December 29, 2019 , the Responde nt said “since we have
agreed to dissolution , let” go to next steps”.
c. April 04, 2020 the Respo ndent while extending his notice
of06.01.2020 state d that the aut omatic “dis solution of the fir m”
was about to get triggered.
d. May 28, 2020 – the Respondent again extended the
“dissolution of the firm .”
e. June 30, 2020 – the Respondent says that he sees littl e scope
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of being able to reconcile things and move forward a nd he is
thinkin g of the best way f orward – until then again extends
“dissolu tion of the firm”.
f. August 30, 2020 – the Respondent again e xtends dissolution
notice up to October 31, 2020 .
5.19 Moreover, in v iew of the above communication, acc ording to
him the letter dated October 13 , 2020 issued by th e respondent is not
but a knee -jerk reaction to the petitioner‟s let ter dated October 12,
2020 ac cepting respondent‟s retirement.
5.20 Mr. Tripathi states even as suming that the Clause 8 refers to
termination o f a partner , compliance of t he notice period un der the
said Clause is mandatory. The re spondent in its reply has
catego rically averred an d during the oral submissions it was argued on
behalf of respondent that th e notice dated January 6, 202 0 was the
relevant notice and since then more t han 270 days have p assed and
therefore no further notic e was required. According to Mr. Tripathi
this arg ument needs to be rejected for the reason that the respondent ‟s
notice was a notice under Clause 8 (a) and not under Cl ause 8 (b) as
argued on behalf of the r espondent. Clause 8(a) cannot take effect in
the absenc e of an unanimous agreement and there was no unanimous
approval for dissolution from the petitioner (reference to whatsapp
messages between petition er and respon dent on Dece mber 26, 2019
and December 2 9, 2019, page 98, 9 9 and 106 of Volume 1 /
documents) . Therefore, he stated that if th ere is no un animity (in
which context alone according to him the period for amicable
resol ution was long over) then the only cons equence coll ateral
termination is withdr awal from the firm, which the petitioner accepted
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on October 12, 2020.
5.21 Mr. Tripat hi stated th at the respondent has failed to show the
procedure specified in Clause 8 was f ollowed and the condition
precedent for exercise of power under Clause 8 is iss uance of two
separa te notices (a) first notice under proviso to Clause 8, after which
the parties w ill try to amicably resolve the disputes for a period of 90
days; and (b) seco nd notice after the said a micable resol ution fails
which notice is for a period of 90 days. Accor ding to him, the proviso
to Clause 8 makes it clear that the first n otice has to be issued upon the
occurrence of events specified in Clause 8(a) to 8(d). No such event
has been speci fied in the n otice dated January 6, 2020. And for thi s
reason alone, the said notice ought not to be construed as a valid first
notice of ter mination the reby triggering the commencement of the first
90 day s period. Further, the no tice dated October 13, 2 020 does not
even refer an y of the aforesaid earlier no tices that it purpo rts to be in
continuation of and at the best the notice dated Octobe r 10, 2020 can
be contemplated as the first notice under Clause 8.
5.22 Without prejudice , he submitte d that even if notice da ted
January 6, 20 20 is considered as the first notice , the October 13, 2020
letter (emai l) in so far as it purports to be the second notice is invalid
and i llegal as it comes to effect immediately as opposed to adhering to
mandatory 90 days pe riod specifie d in Clause 8. H e also states , the
extension dated August 30, 2020 cl early states that the deadline under
the dissolution notice has been exten ded till October 31, 2020 which
period can be shortened by issuance of a 7 days‟ not ice and even th is 7
days‟ ad vance notice has been done away with, which clearly shows
that the mala fide intent of the respondent. Moreover, without
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prejudice he went on to state that the alleged two new partners are not
even copied / addressed in the purported t ermination notice dat ed
October 13, 20 20 which is also in violation of Clause 8 .
5.23 That apart, he submitte d that the notice dated October 13, 2020
does not specify a ny material bre ach by the petitioner and none of the
conditions as per Clause 8 is met / sp ecified and the on ly allegation
which falls in this category is with regard to kickbacks being tak en
from a firm which is currently under CBI investigation and does not
provide ade quate details for the petitioner to even issue a reply to. Mr.
Tripathi , further submitte d that the perusal of the said lette r in fact
pertains to respondent being di spleased with petit ioner conduct and the
tone and tenor of the said termination letter resonates a ma ster-servant
relationship. Therefore, according to Mr. Tripathi the c onsequen ces of
termination as specified in Cla use 9 will only apply if the action is
taken by the responde nt in terms of provisions of the partnership deed
including Clauses 6, 7E or 8 as the case may be or for bona fide and
greatest common advantage as ma ndated u nder Section 9 of the
Partnership Act; none of these have been satisfied in the present case.
5.24 In fact, he vehemently contended it is the respondent who had to
defend the cont ents of the alleged termination letter dated October 13,
2020 and th ere has not been a whisper in the oral argumen ts on behalf
of the respondent to justify or substa ntiate the allegati ons made out in
the said letter.
5.25 He further submitt ed that the notice of Jan uary 6, 2020 was a
notice under Clause 8 (a) of the Deed and not und er Clause 8(b). In
this regard he st ated that the petitioner has agreed for termination and
thus the respondent using his authority under Clause 8 served the
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termination notice which is evident from the communication of
respondent on January 26 , 2020 , whe rein he stated as “Please get it
straight, you agreed for termination of the partnership and th us, I,
using my exclusive authority to terminate the partnership, di d so under
clause 8 .” He stated that the extending notices also followed the same
premise . Ho weve r, the petitioner never gave his consent to the
termination in accordanc e with Clause 8(a) . Neither, according to Mr.
Tripathi, is the notice under Clause 8(b) as the facts on which t he
respondent based his allegations are vague , without any m aterial a nd
not found presence in the Notice d ated January 6, 2020. In other
words, M r. Tripathi state d that the respondent put forth a vague stand
on the clause under whic h the Notice d ated Janua ry 6, 2020 was issue d
and from the Whatsapp messages dated D ecember 2 9, 2019, January
9, 2020 and January 26, 2020 are all messages intended to f oist an
agreement upon the petitioner as to the dissolution. Moreover, Mr.
Tripathi sta ted that if th ere was a genuine case of material breach it
would have been the easie st thing allege and the petitioner did not
have to insist that there was unanimous ag reement.
5.26 Mr. Tripathi also stated that the reliance placed by the
respondent upo n the use of t he word „may‟ in the proviso to Clause 8
to contend that notice for ami cable re solut ion was not mandatory is
not ten able as the later part of the same sent ence states that „and the
notice aforementioned , as provided above, shall be issued only after
the Pa rties are unable to amicably resolve the issue…. ‟ making the
use of the word „may‟ in the said Clause mandatory.
5.27 On the nature of expulsion clause in the Deed, it is stated by Mr.
Tripa thi that the same i s punitive in nature and therefo re has not be en
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exercised in a bona fide manner . In this regard, he has relied upon the
Judgm ent of the Chancery Division in Blisset v. Daniel , (1853) 10
Hare 493 . This judgment has been s tated with approval by the Apex
Court Needle Industries India v. Ne edle Industries Newey (India
Holding Ltd.) , 1981 SCC 333 . Moreover, the expulsion clause has to
be complied and interpreted stric tly. Therefore, it is his submission
that the reference to „termination ‟ in Clause 7A is that of termination
of the D eed and cannot be interpreted to mean terminati on of
petitioner .
5.28 It is further submi tted by Mr. Tr ipathi , on a demurrer, that the
grounds in the le tter dated October 13, 2020 (email) levelled against
the petitioner does not afford grounds for expulsion and the only
remedy for the respondent was dissolution of the Delh i Corporate Fir m
and t hat as per Se ction 47 of the Partnership Act till the winding up of
the affairs of the firm each partner has the right to participate in the
business . He also went on to submi t that the in a two-partner
partnership, expulsion of one partner would automatic ally lead to
dissolution by relying upon the Apex Court judgme nt in Erach F .D.
Mehta v. Minoo F .D. Mehta, 1970 (2) SCC 724 .
6. Mr. Arvin d Nigam, Senior Counsel, also ap pearing on behalf of
the petitioner, submitted additionally that the petitioner has pr oprieta ry
rights in the Delhi Corporate Firm which cannot be light ly interf ered
with, as he is a partner and an owner of the said firm . His rights are
well recognised under th e Part nership Act and exclusion of a partner
from the firm amounts to expropriation of his proprietary interests. In
this regard he has relied upon Sections 4, 8 and 14 the Pa rtnership Act.
And also, on Regional Director, ESI Corpn . (supra) , Addanki
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Narayanappa (supra) , CED v. Mrudula Nares hchandra (supra) and;
CIT v S. Sivaprakasa Mud aliar (supra) .
6.1 By furth er relying upo n the various provisions the Partnership
Act, it is stated by him that (a) the statute itself st ipulat es a duty o f
good faith in dealings amongst partners [Section 9]; (b) a living
partner ma y be excluded from the fi rm only by re tirement [Sect ion
32], expulsio n [Sectio n 33], or insolvency [Section 34]; (c) strict
conditions are laid down for expulsion of a par tner; (d) In all other
circumstances, where partners a re unable to wo rk together,
irresp ective of the reason f or inability of partners to work together, the
only recourse is dissolution. Dissolution can be initiated either by
notice (where the partner ship i s at will), by agreement between all the
partners, or by instituting a suit for dissolu tion. According to him , the
grounds for a suit for dissolution under Section 44 of the Partnership
Act include delinquency of a partner. Thus, even where a pa rtner is
believed to be guilty of misconduct, it is not ope n to the other partners
to simply exclude him from the busine ss, and a sui t for dissoluti on has
to be necessarily fi led. Even after the dissolution of the firm, under
Section 47 of the Partnership Act, the authority of each partner to bind
the firm, and t he other mutual rights and obligat ions of the partners,
contin ue notwithsta nding the disso lution, so f ar as may be n ecessary to
wind up the affairs of the firm and to complete transactions begun bu t
unfinished at the time of the dissolution. This provision is not subject
to any contract be tween the partners. Therefor e, even durin g the
process o f dissolutio n, a partner h as a statutorily conferred right to
continue to be part of the partnership busine ss.
6.2 He also sta ted that these principles are of utmost importance as
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a partnership is dis tinct from an ordinary contr act as althou gh the
partners hip is often called a contract it is more accurately a
relationship that arises from a contrac t (Reference: Lindl ey & Banks
on Partnership , 20th Edn., 2-17, page 21; and also , Section 5 of the
Partnership Act .)
6.3 Mr. Nigam wen t on to state that the case pu t forth by the
respondent i s belied not only in law but also on facts. He submitted
that respon dent has also argued ad nauseum about how it was the
respondent that brought all the goodwill an d clients to the firm; that it
was the responden t who has been generous i n inducting the Pet itioner
into the firm etc. The respondent‟s Counsel s also sought to d eride the
petitioner by conten ding that the petitioner may be executing the
mandates, but it is the respondent who brought the cli ents. Acco rding
to him, the sa id stand needs to rejected a s the respondent‟s Counsels‟
by placing reliance on Clause 5 have stated that the entire goodwill of
the Delhi Corporate F irm has been brought in by respondent at the
same time fai led to address why same Clause, provides that after 5
years, if the respo ndent leaves, the said firm he would not be entitled
to retain the clients. He also emph asised on the first line of Clause 5 A
of the Deed which reads as , “the Parties hereto agree that RKL and
L&L hav e, over a long period of time, developed considerable
goodwill ”; where L& L is the Proprietor ship. In essence, the term
„L&L ‟ was included becau se respondent was a constituent of the
proprietorship from 1997 –1999.
6.4 It is also stated by Mr. Nigam that th e name of the Delhi
Corporate Firm is no longer „Luthra & Luthra‟ as the name was
changed to „L&L Partners, New Delhi‟; which according to him was
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the first step towards prof essionalising the firm. It is also stated that
the petitioner and respondent have also set up a n LLP, which is o wned
by the respondent and the petitioner i n the ratio of 66.6 7% and
33.33%, respectively in the name and style o f „Lex & Lega l LLP‟. In
other w ords, according to him the firm -name is only the name under
which the business is carried on.
6.5 On the reliefs sought by the petitioner, it is submitted by M r.
Nigam that t he same is not barred by the Specific Relief Act , 1963
(„SRA ‟, for short) or any other law for that m atter. The primary relief
seeking stay on the illegal act of th e respondent in term inating his
partnership in th e partnership firm „L&L Partners, New Delhi ‟/ Delhi
Corporate Firm and in expropriating the partnership pro perty for his
own exclu sive benefit ( for e .g. Clients, lawyers, employees, physical
assets, bank acc ounts, client receiv ables etc). He also stated th at the
remaining reliefs are largely ancill ary to this relief of a stay and an
interlocutory prohibitory in juncti on to prohibit th e respondent f rom
interfering with the petitioner‟s rights as a partner of th e firm.
6.6 In furth erance, he stated that the we ll-settled remedy of a
partner, who has bee n wr ongfully expell ed is to claim reinstatement
(Reference: Poll ock & Mulla on the In dia Partnershi p Act, 8thedn.).
He has also relied on the judgment of Dr. S. V el Arvind (supra),
wherein the Madras High Court while holding the expulsion to be
invalid in law, set aside t he order declining interim relief (sought by
the ex pelled partner to exclude the o thers from management of the
firm) and declared that the petitione r has right t o pa rticipate in the
administrati on of the firm ; similar to the argument and relief sought by
the petitioner. Anchoring on the said position of law, he state d it is no
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answer th at the petitioner may have a right to claim compensation ,
even if the expulsion is found to be wrongful. The que stion that arises
is whether an interim inj unction would be gr anted on the well –
established tests of prima facie case, balance of convenience an d
irreparable injury and under the circumstances there is no other relief
that could effectively protect the rig hts of the petitioner. Reliance is
also pla ced on a Bombay Hig h Court judgment in Champsey Bhimji
& Co. v. Jamna Flour Mills Co. Ltd. , AIR 1914 Bom 195, wherein
the Court observed that if the courts had no powe r to grant an
interl ocutory injunction it would b e in power of a party to cause
insufferable inconvenience and grave injury to another during the
whole time that would elapse betw een the commis sion of the wrongful
act and the hearing of the suit filed to r emedy the wro ng and redress
the injury.
6.7 Mr. Nigam stated that the Supreme Court has als o in fact in the
judgment of Dorab Cawasji Warden v. Comi Sorab Warden & Ors .,
(1990) 2 SCC 11 7, inter -alia held as under:
(a) an interlocutory mandatory injunctio n would be gr anted
where th e defendant attempts to steal a march over the plaintiff;
(b) in grantin g an interim mandat ory injunction, what the court
had to determi ne is whether there is a fair and sub stantial
question to be decided as to the rights of the parties, and whether
the na ture and difficulty of the qu estions is such that it was
proper to grant such an injunction until the questions are decided.
6.8 On the stand of the responden t that specifi c relief cannot be
granted to the petitioner in view of Section 41 (e ) of the SRA , as it is
subm itted by Nigam that the respondent has fail ed to identify whic h
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contract or which contractual obligation the peti tioner is seeking
specific perf ormance of. Rather, the respondent has created an
imaginary case for the petitione r and has then dealt with its
submissions. Further, h e also stated that the SRA does not operate to
disentitle the petitioner from seeking perf ormance of his rights under
the Partnership Act (Reference: Section 3 of the SRA ). On similar
lines the Apex Co urt i n Premier Automobi les Ltd. v. Kamleka r
Shantaram Wadke, (1976) 1 SCC 496, on Section 38 (1) of the SRA
had inter alia observed that a perpetual injunc tion may be granted to
the plaintiff to prevent the bre ach of an obligation existing in his
favour irrespe ctive of the fact whether the obligation arises at common
law, under a contract or under a special statute and that Sectio n 38(3)
provides for grant o f an injunction when the act of the defendant
invades, or threatens to invade the pla intiff‟s right to, or enjoyment of
propert y.
6.9 Mr. Nigam, a dditionally on the jurisdiction of this Court to
grant interim relie f, submitted t hat while the disputes and d ifferences
have arisen pursuant to the Deed , the injunction sought is primarily to
(i) protec t the petitio ner‟s sta tutory rights as a partner, protect his right
to, and enjoyment of partnership pro perty ; and (ii) to enforce the
obligations of the responden t in common law and equity that have
been d efined under the Partnership Act, and not any spec ific
obligati on of the respondent under t he partnership contract. This Court
has the jurisdiction to gra nt this relief to protect the Petitioner‟s rights
and enfor ce the respondent‟s obligations. He has als o pointed to a
judgment of this Court in Suresh Ku mar Sanghi & Ors. v. Amrit
Kumar Sanghi & Sons , 1983 (4) DRJ 18 6, wherein the Court had
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specifically rejected th e con tention that a n injunction cannot be
granted to preven t the breach of a contract in the context o f a
partnership.
6.10 In fact, he stated t hat the relie f that the petiti oner is seeking
ought to be distinguished from the performance of a contract; as
primar ily he is seek ing enforcement of a statutory right con ferred on a
partner under the Partnership A ct as per Section 33 which prohibi ts
expul sion of a par tner without comp liance of mandatory requirements
of that provision and secondly, a partnership c ontract leads to a
relationship between partners which is dis tinct from the contract itself.
6.11 Withou t prejudice to the above, it is st ated by Mr. Nigam tha t
the relief soug ht by the petitione r is not barred even under Section 41
(e) of the SRA , as provision s barring specific performances in cases
where compensat ion is adequate relief have been specifically deleted.
He als o stated that the legal consequences where a deed is term inated
and the Delhi Corporate Firm is dissolved are accounts have to be
settled amo ngst the partn ers and the status of a partner is not affected,
which is clearly distinct from the termination of a contrac t. Thus, the
principle that a terminated contra ct cannot be restor ed in exercise of
powers under Section 9 of th e Act o f 1996 has no bearing in the facts
of the presen t case, on the relie f sought by a partner claiming to be
wrongfully expelled. Moreo ver, t he respondent‟s a rgument tha t a
terminated contract cannot be revi ved under a Section 9 petition and
that under Section 14 of the SRA , a determinable c ontract cannot be
specifically enfor ced is also misconceived for the reason that it is the
respondent‟s specific case that the Deed has not bee n terminated.
6.12 On the respondent‟s stand that the Cour t granting an injunction
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woul d amount to th e Court requiring the Court to run the affairs o f the
law firm, it is stated that i s nothing more tha n an argument of
prejudice.
6.13 Mr. Nigam, on the sub missions of Mr.Trip athi that the „equity
partners‟ induct ed by the respondent are not p artners of the firm,
additionally submitted , Clause 7D, which clearly provides that
partners can only be inducted with the unanimous consent of bot h the
petition er and t he respondent , is i n tune with Section 31(1) of the
Partn ership Act. The underlying rat ionale of this rule is also based on
agency – every partner of the firm is an agent of every other partner and
can bind other partners and the firm through his ac tions. I t stands to
reason that a person would never make another person his agent and
create b inding obligat ions for him and the wider firm, unless he has
full faith in the person sought to b e admitted as a p artner. Only for this
reason, wit hout consent o f all th e pa rtners, an outs ider cannot be
admitted to the partner ship. This view , according to him, has been
appro ved by the Division Bench of this Co urt in the judgment o f
Additional Commissioner of Income -Tax v. Sunder Lal Banwar i Lal ,
(1985) 156 ITR 617 , where in it stated that the foundation of the
partnership is mutual confiden ce and for this reason the introduction is
by agreement. He also stated on the second compo nent of Clause 7D
of the Deed that the induction havi ng not been agreed to by the
petitioner, the nominee of the respondent would only be entitled to
receive a porti on of the profits from respondent‟s percentage interest
from the accrue d profits of respond ent after finalisation of profit and
loss account for each accounting year. The losses w ould have to be
contributed by respondent. The nominees will also not have an y rights
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in the management of the Delhi Corporate Firm. He submitted th at
such a nomi nee do es not become a partner of the Delhi Corporate Firm
as this would be contr ary to the fir st pa rt of the said C lause and
Section 31 of the Partnership Act.
6.14 It is furth er submitted by him that this unilateral act of the
respondent whereby the nominee beco mes entitled t o receive a portion
of the accrued profits from respondent‟ s percentage i nterest , is at best
a right created in favour of the third -party under Section 29 o f the
Partnership A ct. Section 29 of the Partnership Act falls under Chapter
IV of the Act, which is titled as „Relations of Partners to Third Parties‟
and not under Chapter V, which i s titled as „Incoming and Outgoing
Partners‟ . It is importa nt to note th at Section 31 of th e Act, which
provides for induction of new partners, falls under Cha pter V. Such
beneficiaries of economic interest are reco gnised as third parties in
relation to pa rtners under the law of partnership. In support of h is
contention, he ha s relied upon a judgment of the Patna High Court in
Ram Prasad Singh v. Shivanandan Misra , AIR 1963 P at 149 ,
wherei n the Court inter alia held that that assign ment of the in terest in
a partnership do es not ipso facto entitle the transferee to become a
partner in the fir m and that i f a person has been inducted with the
consent of all partners, h e is merely a trans feree of inter est with very
limite d rights, and is only entitled to claim a share of the profit to
which the transferring partner is o therwise entitled to.
6.15 Mr. Niga m als o submitted th at the third component of Clause
7D provides that if the respondent‟ s nominee has been a part of the
Delhi Corporate Firm for five c ontinuous years, such person may be
admitted to the partnership with m anagement rights that have been
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unanimously agreed upon. It does not p rovide that such person can be
admitted to the benefits of partnersh ip unilaterall y by the respondent.
According to him, t his component is an extension of the second
component, which req uires unanimous consent for induction of new
partne rs. Sin ce the petitioner did not grant his agreement (but
expressly opposed it), the al leged partners are mere individual s who
are tran sferees of economic interest under the second compone nt. In
law, even for being admitted to the benefits of partnership, the conse nt
of all partners is required, and this is not subject to a contract to the
contrary; Argue ndo, a person admitt ed to the bene fits of partnership
(which is under chapter IV „Relatio ns of Partners to Third Parties‟), is
clearly not a partner. Secti on 30 of th e Partne rship Act, provides that
minors c an be admitted to the benefits of a partnership, with the
consent of all partners for the time being.
6.16 Mr. Nigam on demurrer, submitte d that at best , the two alleged
partners are partners of a sub -partnership with respondent , which sub –
partnership is separate, distinct and i ndependent of the partnership
firm, L&L Partn ers, New Delhi , between petitioner and responden t.
This conce pt of a sub -partnership has been recognised by a Ful l Bench
of the Supr eme Court in CIT v. B. Posetty & Co. , (1996) 11 SCC 11 ,
wherein the Court held that the sub-partnership is a distinct and
different firm. It is a one recognised by law an d it is not a p artnership
with the main firm. It will not have th e effect of making the partners in
the sub -partnership, partners of the main firm.
6.17. Therefore, in substan ce on the inductio n of the new equ ity
partners, Mr. Nigam submitted that when th e Respondent „terminated ‟
the petitioner on 13.10.2020 (assuming that such c ourse of action is
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permissible), the Delhi Corporate Firm, being a two -member
partnership, automatically d issolved. No provision in th e partnership
deed can override this position in law. The Fir m, under no
circumstances, could have continued to the exclusion o f the petitioner,
if his termination is valid (which is vehe mently disputed). He also
submitted that the view tha t any form of ex it of a partne r from a two –
member partnership will resultin g an automatic dissolution of the
Firm, has been approved on numerou s occasions by the Supreme
Court. Further, he stated, this p osition is valid even if th e partnership
deed provide s otherwise. In such a case, u ntil dissolution is completed,
the Petitioner h as the right to continue as partner under Section 47 of
the Partne rship Act t ill the winding up of the Firm is complete. The
Court may appoint an adminis trator/receive r to oversee dissolution.
Further, during the dissolution process, the Respondent cannot
appropriate joint properties of the partnership for his sole benef it.
6.18 To buttres s the same, he has relied upon a Supreme Court
judgment in the case of CIT v. Seth Govindram S ugar Mills, (1965) 3
SCR 488 , wherein the Supreme Court hel d that if one of t he only two
partners in a firm dies, the firm a utomaticall y comes to end. If
pursuant to the wishes of the deceased partner or the agr eement
between the parties, the heir of the d eceased partner replaces him i n
the partnership with the su rviving partner, t hen that would constitute a
new partnership. In fact, Mr. Nigam po ints out that the respondent has
admitted to this position in reply at paragraph 4 8 at page 23, where
respondent stated if he ret ired on Octobe r 12, 2020, the firm stands
automatically disso lved.
6.19 Rebutting the stand of the responden t Mr. Nigam submitte d that
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respondent‟s argument that the prayers of the petitioner are contrary to
Section 41 read with Section 14 of the SRA is al so relevant in this
context, as it fails to consider that the Petitioner is not merely seeking
an enforcement of his stat utory r ight unde r Section 33 of the
Partnership Act (and right to continue as a partner u nder the
Partnership Deed), bu t is in fact als o seeking to e nforce his statutory
rights unde r Section 47 of the Partnership Act. Because the Firm is
only a two-member firm and the necess ary and automatic consequence
of expulsion of o ne partne r is dissoluti on. Under Section 47, the
actions of a partner of a firm tha t has been dissolved can bind anoth er
partner i n relation to transactions that have begun but r emain
unfinished at the time of the dissolution .
6.20 Mr. Nigam rebutting the stand tak en by the resp ondent that the
conduct of the petitioner does not entitle h im for any relief as prayed
for in the petition , stated that the petitioner has never conducted in a
manner tha t would disentit le him from claiming equitable relief. He
also stated t hat even thoug h the respondent has repeatedl y alleged that
the petitioner has leaked confidential information to the pres s as well
as made a part of the Court pleadings is concerned, th e respondent has
nowhere placed anything on record in support of his al legation other
than his own speculations. In fact, it was th e respondent w ho had on
various occasions posted public comme nts about the disputes that exist
between himsel f and the petiti oner on equity dilution, even by issuing
an unilateral stateme nt.
6.21 It is also s tated by Mr. Nigam that the pe titioner had in fact
during th e „townhall ‟ conducted by Zoom on Sep tember 24, 2020 had
repeatedly warned the respondent that th e discussions co uld make
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their way to the press. He has pointed out the rele vant excerp ts of the
Town hall meeting in support of h is contention. He also stated that it
was respondent himself who h ad no obje ction in bringing the
discussion regarding equity dilution before a larger fora and insisted
upon sharing the entire details r egarding th e same with th e entire
„Corporate Partners Group ‟. Wherea s the petition er was always
diligent and gave pruden ce to kee ping discussions and information
private.
6.22 The claim that con fidential information was made part of the
documents filed in the Court , according to Mr. Nigam , is without meri t
as there is no breach of con fidentiality. There is no provision of law
whic h supports the claim of the respondent. The Whatsapp messages
are fi led owing to its importance as evidence , as bulk of the
communications b etween the sal ary partners and also the EC for the
L&L Firm s are carr ied out via Whatsapp. In fact, the respondent
himself has relied on these messages and eve n sent formal notices of
dissolution of partnership deed on January 6, 2020 by me ans of
Whatsapp messages. Mr. Nigam to cement th e submission has rel ied
upon a Sup reme Court Judgm ent in the case of Ambalal Sara bhai v.
KS Infraspace, 2020 5 SCC 410 , where in the Court has clearly
recognized the evidentiary value of Whatsapp messa ges and relied
upon it to establish the existence of a cont ract between the parties in a
Suit for Specific Pe rformance.
6.23 Moreover, Mr. Nigam also went on to state that the assert ion
about the conduct of the petitioner „unbecoming of a lawyer ‟ during
the co urse of oral arguments is also without any merit as the said
phrase i n the definiti on of „material bre ach‟ under Clause 8 (b) of th e
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partnership deed has been used s pecifically in t he context of applicable
Code of Conduct. Therefore, the usage of unb ecomi ng of a l awyer
cannot be given nebulous and overarchi ng meaning.
6.24 On the acce ptance of notice of withdrawal of respondent by the
petitioner vide its communica tion dated Octob er 12, 2020 is not in bad
faith, as according to Mr. Nigam , the same is prim arily bec ause
respondent has not chosen to seek any p rotection from t he same and in
any case as per the Partnership Act, if a part ner seeks to put an end to
the par tnership there a re only two options, (1) retirement and (2)
dissolution. Clause 7E and Clau se 8 of t he partnership deed reflects
retirement and termination / di ssolution resp ectively.
6.25 Therefore, in the absence of requisites under sub -cluse (b), (c )
and (d) to Cla use 8, the firm can only be dissolved either under Clause
8(a), i.e., u nanim ous agree ment or under Clause 8 (e) pertaining to
retirement or withdr awal. Thus, i t is stated by Mr. Niga m that since it
is not the case of the respondent that petitioner withdrew f rom the
firm, respondent could not dissolve the firm on that ground and
therefore, th e only option for the respondent to unilat erally terminate
the partnersh ip deed was to withdraw from the firm in accordan ce with
the Clause 7E.
6.26 Mr. Nigam also stated that the respondent was trying to put to
an end the partnership by firs t unanimously seeking an agreement
between the parties t o dissolve the firm which was refuted by the
petition er. In this regard, he has drawn the attention of this Court to
communication s exchanged between the petitioner and respondent
amongst themselves as well as the co mmunications by both of them in
the Seni or Partners Gro up on December 29, 2019. Additionally, the
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Whatsapp messages exch anged between the parties on Janua ry 6,
2020, Janua ry 7, 2020, April 4, 2020, May 28, 2020, June 29, 2020,
June 30, 2020 and August 30, 2020 ; transcripts of the „townhal l‟
meeting on Zoom (at Page 694 Volume-4) as well as message of one
of the partners on the E C on February 21, 2020 (at Page 330, Volume –
2). Relying on these communication, Mr. Nigam stated tha t it was
respo ndent who was unwilling to work with the petitioner and who
expre ssed his intent to leave the Delhi Corporate F irm.
6.27 Mr. Nigam has also adopted the argument o f Mr. Tripathi on the
nature of relief sought as well as on the pe titioner establishing a prima
facie case and having a balance of convenience in his favour and on
suffering irreparable loss and in jury if reliefs prayed for are n ot
granted.
6.28 On the mi sjoinder and non -joinder objections raised on behalf
of the respondent during the cours e of ora l argu ments, it is stated by
Mr. Nigam that in additi on to an oral s tatement being made restricting
the present petition to Delhi Corp orate Firm a statement was also
made at para graph 4 of the rejoinder. He also stated that the two
partners allege d to hav e been inducted by the respondent are neither
necessa ry nor proper p arties as it i s the petitioner‟s c onsistent case that
they are not partners of the firm under the partnership deed and are
transferees of respondent‟s interest in terms of Section 29 of th e
Partnership Act. Moreover, the alleg ed partners are not parties to the
arbitrati on agreement between the petitioner and the responde nt.
Similarly , on the non -joinder of 23 othe r partners with whom the
petitioner has constituted / re -constituted t he firm are pa rtners under a
separate partners hip contract wi th no relations hip with the r espondent
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and no rel ief is sought in respect of them .
7. Mr. Pramod Nair, lea rned counsel also appearing on behalf of
the petitioner in addition to the submissions made by Mr. Tr ipathi and
Mr. Nigam has at the outset stated t hat his submiss ions would be
limited to giving a summary of the factual backgroun d in which the
current disp ute has arise n. According to him, the respondent has
sought to create a false and deep ly malic ious n arrative about the
petitioner to distract from his illegal actions. Accordi ng to him, there
are two primary assets for a law fir m viz. (1) the people who w orked
at the firm and (2) the clients they service . And the best law firms are
the one that a ttract the best and bright est lawyers and thereby pro vide
high quali ty of service and legal assistance to the clients. Conversely,
he stated if a firm is not able to attract and r etain high quality talent,
best and bright lawyers leave the firm forc ing the client s to look for
alternative options.
7.1 Mr. N air state d, retaining good qu ality lawyers has bee n a
problem for the Delhi Corpor ate Firm for a number of ye ars now.
Whilst it had 200+ lawyers, it had only two equity partners leaving the
young bright lawyer s with no stake in the partnership or any real say
in the man agement of the firm, which was a si mply a n unsustainable
model comp ared to other law firms run across the wo rld / country.
7.2 To address this issue by broad basing the equity of the fir m,
discussions had been happening between the petitio ner and the
respondent for ye ars together . All attempts for effectively
implem enting the same was stonewa lled by the respo ndent, leaving the
salaried partners, dissatisfied and frustrated.
7.3 He submi tted, this res ulted in a spate of senior level depart ures,
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plunging the firm into a real crisis . By drawing the attention of the
Court to various Whatsapp mes sages exchanged b etween the petitioner
and the respondent particularly on July 8, 2019, July 9, 2 019, July 10,
2019, July 21, 2019, December 4, 2019, December 5, 201 9, December
6, 2019, January 21, 2020, May 3, 2020 , June 3, 2020 , August 11,
2020, August 1 2, 2020 ; he state d that the petitioner‟s only focus was
to professionalize the firm and never to oust the respondent herein.
7.4 Mr. Nair submitted that in fact, a vast majority of the other
salaried partners of the firm suppor ted the petitioner‟s effort s to reform
and professionalize the firm. This he say s, by referring to
communications exchanged on the Corporate Partners‟ Group, which ,
according to him, are relev ant to gauge t he frustration of young
lawyers and high -performin g partners with lack of com mitment of
respon dent in performing such urgently needed reform. In particular,
he ref ers to mes sages in the Corporate Partners Group by certain
partners on July 31 , 2020, August 1, 2020. Mr. Nai r further stated that
the fight was always in the context o f differences bet ween the parties
to professionalize the firm and the various equity pr oposals su bmitted
by respondent was never found acceptable by t he members of t he EC.
Repeat edly respondent used to call upon the petitioners and the E C to
work out the numbers that would be paid to him since his proposals
were not acce pted. The respondent also dan gled the threat of
dissolution of the firm , having is sued a dissol ution notice whi le
negotiating for acceptance of his equity dissol ution prop osals or exit
plan.
7.5 Mr. Nair also submitted in detail the variou s proposals put forth
by the respondent and rejected by the E C members as according to
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them t hose were nothing b ut self -servin g proposals completely
contrary to market s tandard s. The stand taken by the respondent that it
was the petitioner who was unw illing to dilute equity proportionally is
belied as the proportionate equity dilution was never th e issue and in
fact respondent hi mself acknowledged in his proposals that hi s equit y
dilution should be greater. Mr. Nair has in particular drawn the
attenti on to certain communications exchanged in the E C Whatsapp
group by various partne rs in the firm at Pag e nos. 330, 331 , 362, 364,
365, 385, 3 90, 395 and 398 o f Volume 2, Page nos. 44 4, 445, 446, 450
and 451 of Volume -3.
7.6 Being unable to muster support, it is stated by Mr.Nair , the
respondent parallell y was calling upon the petitione r to indicate the
amount that the pe titioner would pay him for retiring from the firm.
He also stat ed that it was in this regard that the dissolu tion notices
were being extended from time to time to basically coerce everyon e
into either giving the respond ent huge payout as hi s equity diluti on
proposals w ere not f inding acceptance . In this regard, he ha s drawn
the attention of this Court to Whatsap p messages exc hanged between
the petitioner and respondent on January 16, 2020 , January 21, 2020,
January 26, 2020 and May 28, 2020 . He also refe rred to
commun ications exchanged by memb ers of the Executive Com mittee /
corporate partners in the Whatsapp gr oup on April 2 5, 2020, July 29,
2020 , September 18, 2020 to buttress his submi ssion that even the
Executive Co mmittee members en -block expressed d issatisfaction that
how the respondent t hreatened dissolution an d gave non -serious
proposals.
7.7 In addition to adopting t he arguments made by Mr. Tripathi and
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Mr. Nigam on prima facie case and balance of convenience a nd
irreparable injury being suffered by the petiti oner, Mr. Nair state d that
the removal of the peti tioner from the Delhi Corporate Firm is not in
accordance wi th the provisions of the deed and applicable law which
establish es a prima facie case in his fav our.
7.8 On the bal ance of conveni ence in favour of order ing restoration
of the status qu o ante failing which irreparable injury will be cause d to
the petitio ner and other stakeholders of the partnership firm , it is stated
by Mr. Nair that unlike the re spondent the petitione r played a hand s-on
role in t he day -to-day management of the firm in addition to servicing
the clients. It is undisputed th at the petitio ner has been completely
blocked fr om accessing his e -mails and co nfidential data en trusted to
him by the clients and i n fact even pre vented from en tering t he
premises of th e Delhi Corporate Firm o n inst ructions from res pondent .
This has virtu ally prevented the petitioner from servicing client s in on –
going matters person ally supervised by him. In ad dition , the petitioner
being a partner of Delhi Corpo rate Firm since 1999 , longst anding
clients expect him to personally attend to their work which is also
prevented.
7.9 It is stated by Mr. Nair that currently the Delhi Corpor ate Firm
is bein g unilaterally managed by the respond ent and if the petitio ner is
not allowe d access to the Delhi Co rporate Firm assets, his clients and
since the re exist a dis pute as to who is the surviving partner, there is
an imminent risk that th e resp ondent may dispo se of the assets of the
firm or act t o the detrimen t of tho se cli ents who ar e brought to the
Delhi f irm by the petitioner. This would in turn res ult in irrepar able
damage to the interest of the clients as well as on the revenue and
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goodwill of the Delhi C orporate Firm. It is, therefore, in t he interest of
both p arties as well as the lawyers, clients an d employees of Delhi
Corporate Firm that the status quo ante as it existed prior to October
12, 2020 is restored. He has also disting uished the judgments r elied
upon by the respondent .
8. Dr. A bhishek Manu S inghvi and Mr. Neeraj Kishan Kaul,
learned S enior Counsel s appearing on behalf of the respondent
(„Counsels for the respondent ‟, for short) have raised a preliminary
objecti on on to the mai ntainability of the present petition. This, they
say so owi ng to (a ) non-joinder of necessary parties; (b) non-existence
of arbitration agre ement with the 23 persons purportedly inducted by
the petitioner; (c) reliefs sought pe rtains to firm s other than th e Delhi
Corporate Firm and; (d) mis -joinder of partie s.
8.1 On the primary groun d of non -joinder of necessary part ies, it is
stated by Counsels for the respondent that the respondent has
admittedly inducted two partners in exercise of his rig hts under Cla use
7D of the Deed. This was pursuant to his announce ment (email) on
October 4, 2 020 that he genuinely intends to e xpand the equity
partnership and woul d as a first step induct new partners on a certain
criterion . It was also stated by the respo ndent in the said email that if
the step/sugges tion was not acce ptable to the petitioner, th en he would
induct the persons as equity partners by parting with his own equity
alone.
8.2 Howeve r, the petitioner r efused to go with the plan and
communicated the same vide email date d October 05, 2020.
Subsequently, responden t inducted two new equit y partners and the
same was announced to the entire f irm vide email dated October 10,
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2020. It is stated by Counsels for the respondent that the petitioner was
aware of these even ts and have in fact admitted the same in the
petition. Moreover, it is stated by them that this decision has not be en
challenged by the peti tioner and the said two partners continue to be
the equity partners of the Delhi Corporate Firm. And, accor ding to
Counsels for the respondent , any decision in the prese nt Section 9
petition under the Act of 1996 would material ly affect the rights of the
two new equity partners and therefore a re necessary and proper parties
to the presen t proceedings. It is further subm itted by them , the plea of
the petitioner that the Delhi Co rporate Firm stood dis solved on the
termination of the p etitioner is entirely false , in law and on facts; as
Clause 7D of Deed provides the power to respondent to induct
partners parting with in his equity , if the petitioner does not agree to
the indu ction of new p artners . Thus, respondent having inducted new
partners under Clause 7D, pri or to the term ination of the petitioner, the
Delhi Corporate Firm survives. In this regard they have relied upon t he
relevant portion of the said clause which reads as unde r:
“…such new perso n shall not have any rights in the
manag ement of the Firm. However, if any such
person has been a part of the Firm for a continu ous
period of five (5) years or has practiced law f or
seven years such person may also be admitted to
the ben efits of partnershi p with management
rights . The extent of management rights would need
to be unanimo usly agreed by all the parties.”

8.3 Further, Dr. Singhvi and Mr. Kaul stated that the Deed
contemplates two ty pes of equity partnerships, i.e., part nership with
manag ement righ ts and th at without it. The question about the extent
of management righ ts will be joi ntly decided by the petitioner and the
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respondent and till such time the new inductees sh all remain as the
equity partners without management rights.
8.4 On the plea of the petitioner that the induction of the new
partners can only be a sub -partnership, i t is submitted by the Counsels
for the respondent that it was only during the course of r ebuttal
submissions that the p etitioner raised this p lea and the s ame never
formed part of the wri tten pleadings. Eve n otherwise according to
them , a sub -partnership by respondent partin g with his equ ity is not
one which is contemplated u nder the Deed in w hich case the Deed
would not have contempla ted granti ng rights to m anage the Delh i
Corporate Firm. They also went on state that the reli ance placed by the
petitioner on Section 31 of the Partnership Act is belied owing to the
fact the said provision contem plates and is „subject to contract
between the partie s‟ and t he who le Section is on the induction of
partners with th e consent of other partners. In other words , they justif y
the right of the respondent t o induct partn ers unilaterally under Clause
7D.
8.5 On the non -existence of arbitration agreement with th e 23
purported ly inducted pa rtners by the petitioner, it is stat ed by Counsels
for the respondent that there is no privity of contract between the
respondent and the alleged 23 partne rs of the Delh i Corp orate Firm.
As per the petit ion, the petitioner has c laimed relief for himself as well
as for the other 23 new equity p artners and no relief can be g ranted to
protect them in present Section 9 proceeding s as there exist no
arbitration agre ement between the respondent and these 23 person s.
They also stated t hat the petiti oner in his re joinder has alter ed his stand
by stati ng as follows:
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“It is submitted t hat reconstitution of the partnership firm
and the introduction of the 23 partners is n ot germane to
the present proceedings.”

This according to the Counsels for the respondent is nothing but
resorting to contrary stan ds in the petition and rejoinder or orally
altering what has b een put down in wri ting in the pleadings when the
petitioner realizes untena bility of h is arguments a nd the same should
not be pe rmitted by thi s Court.
8.6 Even otherwise, Dr. Singhvi and Mr. K aul submitted that the
petitioner has no right to induct any person as a pa rtner under the Deed
without the consent of respondent who is t he managing partner.
Without prejudic e, they also st ated that if t he respondent had retired,
the Delhi Corporate F irm would have stood dissolved and hence there
is no question of inducting new partners into the said firm.
8.7 The Counsel s for the respon dent submitted that the petition is in
fact not maint ainable for th e reliefs soug ht also pertains to firms other
than the Delhi Corporate Firm. In particular, they have drawn the
attent ion of the Court to prayers (f), (g) and (l) which accor ding to
them relate to Delhi Litigation Firm and Mumbai Corporate F irm and
there being three different firms (L & L Firms) , includin g the Delhi
Corp orate Fir m, are governed by three different agreeme nts. The
nature of partnership and the par tners of the L& L F irms are different
which extends to the cause of action a nd ri ghts under the different
deeds.
8.8 On the misjo inder of parti es, Counsels for the respondent stated
that the petitioner has included certain employees of the Delh i
Corporate Firm who are neither part ners of the L& L Fir ms nor parties
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to the agreement a nd when a n argument objectin g to the same is
raised , a mere oral request was sought on behalf of the petition er to
delete these p arties, which accor ding to them is not tenable.
8.9 As a second limb of their argument, Counsels for the respondent
stated th at the petitio ner is no t entitled to seek a stay because he has
prayed for the grant of a new status quo which cannot be granted by
this Court in a petition under Section 9 o f the A ct of 1996 . In
partic ular, they have drawn the attention of this Court to prayer s (b),
(c), (d), (e), (l) and (m) to contend, the petitione r in addition to seeking
a stay on termination has sought for prayers which are cumulative in
nature and the same amounts to ousting the respondent from the Delhi
Corpora te Firm. Therefore , according to D r. Singhvi and Mr. Kaul the
prayer sou ght is neithe r status quo nor status quo ante , but totally a
new state of affairs which are also in the nature of final relief. In
support of their submissi on, they have relied upon the judgment in the
case of Nandan Pictures Ltd v . Art Pictures Ltd ., 1956 SCC OnL ine
Cal 36 , wherein the Calcutta High Court held that if at all a mandatory
injunction is granted, i t should be to restore the status quo (if justified
in the facts of the ca se) and not to create a new state o f things. He also
relied on Sama y Singh v. M/s . Hindustan Petroleum Corporation
Ltd, 2012 SCC OnLine All 1253 , wherein it was held , reliefs which
cannot be granted as final reliefs cannot be granted as interim reliefs
either.
8.10 It is stat ed by Counsels for the respo ndent that whe n confronted
with this argument, the petitioner has once again altered its stand
during the course of oral submissions and sought to pra y that he is
only seeking a stay on termination. The s ame according to them
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cannot be permi tted as (i) th is is not a cas e where petitioner has sought
altern ate relief and is now choosing to press one over the other , rather
the prayers made are cumulative; (ii) the basis of the pe tition is that
the firm continu es with petitioner and 23 new partne rs and therefo re
the petitioner doing a complete volte-face and s eeking to contend that
he wants to merely stand on his termination ; (iii) petitioner states that
no amicable resolution is p ossible and admits that he agre ed to parting
of ways ; (iv) it is t he petitione r‟s case that the respondent has retired
and in any event continuance of respondent is not in interest of the
firm; and ( v) the petitioner is di stributed the equity of the responden t
to 23 new persons. This being the cas e of the pet itioner , oral request
made on his behalf for limiting the interim relie f to bring him back
into the firm and work with the respondent while disputes are resolved
through arbitration is wholly inconsist ent with each other.
8.11 In support of their second limb , they also state d that no interim
relief can be granted in view of Sec tion 41 (e) of the SRA . Counsels
for the respondent stated that the said Section stipulates, an injunction
cannot b e granted to prevent the breach of contract wh ich would not
be specificall y enforced. Wi thout prejudic e to the fact that termination
was not in breach of t he Deed, it is stated that in the present case, the
injunction of stay on termination so ught by the petitione r cannot be
granted if the Court w ould not otherwise grant specific performance o f
the Deed.
8.12 In furth erance they stated that as per Section 14(d) of the SRA ,
a contract which is by nature determinable cannot be specifically
enforced and in the prese nt case Clause 7A (1) and Clause 8 read w ith
Clause s 5, 9 and 10 ma ke it amply clear that the Deed is termin able.
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Reliance has been placed on the following
1. Rajasthan Breweries Ltd. v. The Stroh Brewery
Company, AIR 2000 Delhi 450,

2. Turnaround Logis tics (P ) Ltd v. Jet Airways
(India) Ltd. & Ors. , MANU/DE/8741/2006

3. M/s Bharat Catering Corporation v. I ndian
Railway Catering & Touris m Corp. Ltd., 2009
SCC OnLineDel 1606

4. Indian Railway Catering & Touris m Corp. Ltd. v.
Cox & Kings India Ltd. , (2012 ) 186 DLT 552
(DB)

8.13 Dr. Singhvi and Mr. Kaul by relying upon Section 1 4 (b) of the
SRA also submitted tha t a contract requiring the performance of a
continuous duty wh ich the Court will not be abl e to supervise cannot
be specifically enforced. In the present case, according to them, the
partnership requires the tw o parties to work together and run the firm
requir ing the co operation and performance of continuous duties and
the Court cannot be called upo n to supervise such continuous actions
in day-to-day performance of duties. In this regard, he has relied upon
the Judgments of this Court in Indian Railway Catering & Touris m
Corp. Ltd. (supra) ; Hejian Solidkey Petroleum Machinery Co. Ltd. v.
Indian Oil Co rporation, 2015 SCC OnLine Del 10770 .
8.14 They have also drawn the attention of this Court to Section 14
(c) of the SRA where t he performance of the contract depends on the
personal qualifications and volition of the partie s, it c anno t be
specifical ly enforced. He stated that both p arties have made it clear
that th ey cannot work with each other as both of them have contended
that continuance of the other party is not in the be st inte rests of the
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firm. This being the mutual case, the Court should no t make the
parties to work with eac h other. Moreover, a partner is the agent of
other partners and att empting to bring back the petit ioner as a partner
would force the respondent to also treat the petitioner as his agent and
the respond ent will have to be bound by the petitioner‟s action. This
cannot be done when there i s no volition to work with each oth er. In
support of his submissi on, he has relied upon Judgments of Delhi and
Bombay High Courts in Marriott International Inc. v. Ansa l Ho tels
Ltd., 1999 SCC OnLine 716 and Ramchandra Lalb hai & Anr. v.
Chinubhai Lalbhai, AIR 1944 Bom 76.
8.15 Section 16 (b) o f the SRA has also been reli ed upon by the
Counsels for the respondent to state tha t specific performance w ill not
be granted in favou r of a person who viola tes essential term s or acts in
variance of the c ontract. Acco rding to them the petitioner has on
various occasio ns offered to l eave the firm ; consented to parting ways,
breached the deed himself by purport ing to retir e the responden t
(which is not permitted u nder the deed), and thereafter gone ahead and
distributed t he equity of the respondent to 23 other persons in
complete contr avention to the very terms of the de ed which he seeks to
enforce by seeking a stay of term ination. In su pport of their
contention , the y have relied upon the judgments of this Court in
Rajeev Mehra v. Sudhir Kuma r Sachdev, 200 9 (109) DRJ 84 and
J.L. Gugnan i (HUF) v. O.P. Arora, 2011 SCC OnLine Del 4221 .
8.16 Counsels for the respondent also subm itted that in the present
case, the petitioner h as all throughout acted i n bad faith contrary to the
correspondence exchanged between the par ties and even purported to
retire the respondent which was not only contrary to the record but
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also not pe rmissible under the deed. In this regard, they have drawn
the attention of th e Court to the letter (email) dated October 12, 2020
issued by the petitione r wherein the petiti oner state d that the
retirement of the respondent was w.e.f from the said date. In the
rejoinde r to the prese nt petition, the petitioner sta tes that the retirement
of the respondent relates b ack to the respondent ‟s communications
withou t clearly spec ifying the date . This , according to Counsels for
the respondent , is nothing but contrad iction in the claims of the
petitioner. The reason for thi s contradiction is stated to be the repl y of
the respondent to the October 12, 2020 letter of the pet itioner wherein
the respon dent categoric ally stated that induction of new partners by
petitioner alone was not possible as respondent was als o a partner ti ll
then. Moreover, the stand of the pet itioner that the ma terial breaches
committed by the responden t under Clause 8 (b) entit les him to
terminate the Deed with the respondent is also clearly falla cious , as
Clause 8 of the d eed clearly entitl es the respon dent to terminate the
Deed. Therefore, according to them, the petitioner in tot ally self –
contradictor y fashion conte nds on one hand that if the terminat ion of
the pet itioner is to be accepted, the Delhi Corporate F irm would s tand
dissolved and its assets cannot be approp riated till proper dissolution is
effected whereas on the other hand, the petitioner d oes not
acknowl edge that if indeed the respondent stood retired from the date
of his communicatio n, the Delhi Corp orate F irm shoul d be dissolved
and he cou ld not have distributed the equity of the respondent to the
alleged 23 partners . These actions / cont radictory stand s taken by the
petitioner , according to Counsels for the respondent attracts Section
41(i) of the SRA which s tipulates that no injunction will be granted in
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favour of a person whose contract disentitle such relief. In this regard,
he has re lied upon the judgment of the Supreme Court in Gujarat
Bottling Co. Ltd. v. Coca Cola Co., (1995 ) 5 SCC 545 .
8.17 They also st ated that the p etitio ner will not s uffer any
irreparable loss of damage if the interim relief is not granted as he
would be entitl ed to claim of damages if the petitioner‟s termination is
found to be bad i n law and the petitioner is within his right to pra ctice
the pro fessio n of law durin g the pendency of the disputes. He would
not be however entitled to use the firms name, poach the retainer s of
the firm or clients of the firm and neither is he entitled to any goodwill
payment in terms of Clause 5, 9 and 8 . In any eve nt, according to Dr.
Singhvi and Mr. Kaul , the issue about goodwill may be agitated by the
petitioner in arbitration proceedings.
8.18 As a third limb of their submission s, Counsels for the
responden t, on the facts of the case , have stated th at the responde nt has
not retired or withdrawn from the Delhi Co rporate F irm. To establish
this contention , they have drawn the attention of th is Court to
communications betwe en the petitioner and the respondent that all
throughout , the respondent ‟s action was of termi nating the petitioner
from the partner ship and himself continuing with the Delhi Corporate
Firm . In particular, they relied upon the notice to terminate the
partnership issued on January 6, 2020 , which according to them,
clearly call s for termination of De lhi Corporate Firm and dissolution
of Mumbai Corporate Firm and clearly proceeds on the basis t hat the
petitioner h as acceded to t he termination of partnership.
Communication between the parties on January 9, 2020 , January 12,
2020 (wherein the petitioner admits that the respondent had written
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about the terminati ng the partnership he had agreed ), January 26, 2020
(whe rein the respon dent refers to the misconduct of the petitioner etc.
and specificall y makes it clear that respondent is exercis ing its right to
terminate the partnership with petitioner and he will contin ue with the
firm), May 4, 2020, August 8, 2020 (where in the petition er makes it
clear that all offers are on the table and in order to i nduct more equity
persons he will dilu te 20% of its equity an d the petitioner is also
bound to dilute prop ortionately un der the deed ), September 1 3, 2020
(wherein the respon dent‟s intentio n of rebutting the firm and those
who do not agree with him are free to leave the firm were made clear).
The communication on Sep tember 13, 2020 as stated above has been
construed rightly by the petitioner as is ev ident from paragraph 43 of
the petition.
8.19 Counsels for the respondent has also state d that the petition er
tried to present a misleading pi cture that the respondent had offered to
retire during the „Townhal l‟ meeting on September 24, 2020. This was
vehemently objected by the r espondent and th e other partne rs of the
Delhi Litigation Firm. They have also relied upon the communicat ion
betwe en th e parties on October 4,2020 and October 10, 2020 to st ate
that the r espondent had made his int ention clear to broad base the
equity partne rship. Moreover, it is submitte d, that the petitioner
himself had admitted in the pet ition that the resp ondent ex tende d the
90 d ays termination notice from time to time on four differ ent
occasions. A reading of these various communications makes it clear
that the responde nt had ma de clear his intention to not retire before the
age of 75 as well as his various plans to dil ute the equity to suggest
that there is no qu estion of resp ondent withdrawing or retiring from
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the firm. In fact, it is submitted by the Counsels for the respondent
that even the petitioner understood the corresp ondences to mean that
that the re sponden t is terminating the petitioner and the same has been
admitted in various paragrap hs of the petition (35 & 43). The October
12, 2020 letter issued by the pe titioner is nothing but a deliberate
misconstru ction of the correspondence excha nged between the pa rties.
8.20 Counsels for the respondent also made it clear that the
respondent has not withdrawn or retired from the firm and the
allegatio n that the respon dent had indicated / said that he will re tire is
nothing b ut the petitioner picking a few m essages of the responde nt
out of context to put wholly untenable twist to the respondent‟s
intention. By relying upon communications between the par ties on
January 7 , 2020, January 12, 2020, January 16, 202 0, Counsels for the
respondent contend that the co mmunicatio ns clearl y do not reveal the
respondent ‟s intention to retire and the perusal of the entire
communications of said dates clearly reveals t he same as agains t the
petitioner interpretation by merely reading parts of it.
8.21 As the fourth h ead of their arguments , Counsels for the
respondent have stated that the re spondent has power under the Deed
to terminate the petitioner. In this regard , they stated that a read ing of
all the Clause s of the Deed including Clause 5 which talks about
„Leaving Amo unt‟ clearly stat es that in the title of the clause , it is
„Conside ration for Non-Compete‟, contemplates respondent asking the
petitioner to leave the Delhi Corporat e Firm. The relevant clause
which has been relied upon by them has been reproduced as u nder:
“Howe ver during this period if MS is asked to leave
the Firm otherwise tha n for misconduct un der Clause
7(iv) below, he shall be entitled to be paid for
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goodwill , (as stipulat ed below), to the extent of fifty
percent of the entitled value thereof.”

8.22 Simila rly, Clause 7A of the deed which deals with the „Decision
Making ‟, while dealing with the right of the respondent to render final
and bind ing decision , speci fically stipulat es that this power extends to
„……termina tion, performance review of par tners…. ‟. This also
according to Counsels for the respondent clearly contemplates that the
responde nt has the right to take final and binding decisio ns including
termin ation of partners. The petitione r has in fact admitted t hat the
respondent has right to terminate u nder Clause 7 A of the Deed (page
588 / Docs. V ol. 3). He a lso relied upon Clause 8 of the Deed which
grants the respondent the right to te rminate or dissolve the partnership.
Dr. Singhvi and Mr. Kaul went on to sub mit that termination of Deed
stands apart f rom dissolution and whene ver any party to a partnership
deed leaves the firm for any reason, the said partnership deed stands
terminated and a fresh reconst itution has to take place , making
termination of Deed not equivalent to di ssolution of a firm. Counsels
for the respondent also stated that Clause 8 (b), (c), (d) and (e) of the
Deed which talk s about termination o f the Deed due to a par ty
breaching terms or being dec lared bankrupt or d ying etc. make it clear
that Clause 8 is not just for dis solution bu t also for reconsti tution of
the Deed on any partner being terminated, leaving or dying etc. They
further state d that mate rial breach or b ankruptcy of an ind ividual was
obvious ly not intended to result in the disso lution of the firm but only
the partner con cerned being termina ted. Further, they also took a id of
Clause 9 , 10 and 11.12 to state that termination of a partner under
Clause 8 is fortified by the sa id Clauses. In any event acc ording to
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them, the petitioner admitted that the respondent has power t o
terminate under Clause 8 as per his pleading at Pa ra 29 of the petition.
8.23 They in fact, vehemently contended that the argument of the
petitioner in rejoinder that there is only pow er to dissolve and not to
terminate a party and that the deed only t alks of deed being terminated
is ex-facie false. Rather, he stated that the reading of the deed as a
whole and also usage of various of phrases like “termi nated party”
makes it clear that there is power to terminate under the deed. The
content ion of the p etitioner that the respondent has no power to
terminate is, according to Dr. Singhvi and Mr. Kaul , contrary to the
petitioner‟s s tand in the prese nt petitio n as well as the correspondence
exchanged .
8.24 They also submi tted that even assuming without adm itting that
there is no explicit power, there i s clearly an implied power to
terminate and, in this regard , he relied upon the judgment o f the
Bomba y High C ourt in the case of Kunda Madhuka r Shety e v. Shaila
Subrao Shetye & Ors. , 2015 SCC Onlin e Bom. 8 28.
8.25 The fifth su bmission of Dr. Singhvi and Mr. Kaul, on the notice
period for termina tion, is that nowhere in this petition the petit ioner
has stated that a notice as required under Clause 8 of the partnership
deed has not been provide d. No r does the pe titioner raise the issue of
two ninety -day notices contemplated und er the said Cl ause and on the
contrary claim ed that the notice perio d is over. In this regard, they
stated that the petitioner himself in his various correspondences
includin g the one on Octobe r 12, 2020 refers to the notice of January
6, 2020 and its various e xtensions „as notice to t erminate ‟. In fact, the
petitioner does not understand it to be a notice to amicably reso lve or
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as a pre -cursor to the notice to terminate. According to Counsels for
the respondent , the p etitioner rather state d that the period of 90 days is
over and does not r efer to any further 90 days ‟ notice period but seeks
to rely upon the expiry of notice period to contend that he has accepted
the retirement of the respondent (in view of document at Page 6,
Volume -I). They stated that in paragraph 1. 10 and paragraph 28 of the
petition, the petitioner ad mits that January 6 , 2020 is the 90 -day notice
of termination and it was for the first time in the rejoinder that he took
a plea that two notices of 90 days were requ ired to be given under the
deed and the same has n ot been complied with. However, even in the
rejoinder , he admitted that attempts for amicable resolut ion went on
for months and therefore it is s ubmitted, notice needed for re solutio n is
complied with.
8.26 On Clause 8 notice, it is submitted by Counsels for the
respondent that the s aid Clause only contemplates one 90 days ‟ notice
and Clause mentioned in proviso to Clause 8 uses the word “may ”
making it o ptional. Contrasted wi th the word “shall” used in the
beginning o f the C lause, it is apparent that the notice was issued to
resolve t he dispute s wa s optional. In this regard, it is submitted that
notice dated January 6, 2020 read with subsequent c orrespon dence is
the notice of 90 days as referred to in Clause 8 for ter mination and the
said notice at paragraph 5 stated that “and in any event admi ttedly no
further n otice for termination needs to be given” . The notice also
refers to discussions the pa rties ha ve had previously and that no
amicable reso lution could be arrive d at, making it clear that the period
of amicable resolution was over. Despite this or the next 2 70 days, till
October 13, 2020 respondent gave more than ample opportunities to
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the pe titioner to sort out the issue s. It is also submit ted by Dr. Singhvi
and Mr. Kaul that the said notice had also referred to the conduct of
the petitio ner and other var ious issues . Eventually, through subsequent
correspondence the respondent made it clear that he is terminating the
petitioner under his pow er under the de ed and a perusal of the said
correspondence also make it clear that the petitioner wa s also aware of
the reasons for termination. To buttress his submission, they have
relied upon a judgment of the Chance ry Division Co urt of Appeals in
the case of Green v. H owell, (1910 ) 1 Ch. 49 4, wherein the Court
inter alia held that where the notice to termin ate did not give reasons
for terminating a partner, the same is not to the prejudice of the other
party as t hey wer e aware of the circumstances and the Court did not
strike down the notice for want of particulars. In the present case,
according to Counsels for the res pondent , the conte ntion of the
petitioner that the notice did not furnish particulars is entirel y false, as
a notice refers to the disputes and issues between the parties. Without
prejudice , it is also submitted that in the even t it is found that there
was def iciency in pro viding notice as contemplated under Clause 8 the
same entitle s the petitioner to damages, if any, suffered as a
conseque nce thereof.
8.27 Further as their sixth submission, D r. Singhvi and Mr. Kaul,
justifie s the ter mination of the pet itioner. In this rega rd, they have
relied upon the various Whatsapp communications exchanged bet ween
the parties on D ecember 28, 2019, Dece mber 6, 2019, January 1,
2020, January 7, 2020, January 16 , 2020 , January 26, 2020, March 14,
2020 . Communications e xchanged in the Whatsapp gro up in the
executive partners on May 4, 2020, communications exchange d in the
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corporate pa rtners Whatsapp group on July 23, 2020, August 8, 2020,
August 24, 2020. In an open communication petitioner even went on
to seek an appra isal from the respondent whi ch is clearly barred as per
Clause 7 C of Deed. They pointed out that on September 23, 2020, the
respondent rep lied on the corporate partnersh ip group that he ha s proof
against various allegations and false ma licious campaigns . They also
pointe d out that the petitioner has given false information in his
Linked in profile and even went on t o accept one of his Whatsapp
communication with respondent on May 15, 2020 about his conduct
being rude.
8.28 According t o Counsels for the respondent the abo ve
communicati ons which revealed facts about the conduct of the
petitioner , very well explain t he circumstances un der whi ch the
respondent was constrained to terminate t he petitioner. Fur ther, even
as per Section 9 of the Partnership Act , partners must ac t in good fait h
towards each other and there should be mutual trust and confid ence;
which is la cking in the petiti oner‟s conduct. Dr. Singhvi and Mr. Kaul
also stated that lot of ne w averments were ma de in the rejoinde r such
as responden t was not willing to di lute his equity etc. which are false.
8.29 Counsels for the respondent , thus stated that t he on the basis of
their submissions, it is clear t hat the respondent has not retired from
the Delhi Corpo rate Firm and in fact has t he power t o terminate the
petitioner under the Deed, which h e has ri ghtly exercise d. On the
aspect of the Partnership Act, they again reiterated that the provisions
under the said Act are subject to the contract between the parties and
therefo re the Deed should be g iven priority. In this regard, he has
anchored his s ubmission on a judgment of this Court in M/s Bhagwan
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Dass Khanna Jewellers v. Bhag wan Das Khanna Jewellers P vt. Ltd. ,
2012 SCC Online Del 6129, wherein , the Court inter -alia held that t he
relation between the partners in the partnership is a contractual one
and the same has bee n recognized b y the Partnership Act under
Section 42. Similar ly, he has also relied on Bombay High Court
judgment in Veena Nalin Merchant v. Laljee G odhoo & C o., 2015
SCC Online Bom 2034.
8.30 Thus, they submitted that the Deed grants the responde nt greater
powers than the petitioner, which is in fact permissi ble in law and the
rights of the parties are s trictly to be governed by the Partnership
Deed. They also reiterated the cont radictory nature of the arguments
put forth on behalf of the petitio ner and also s tated that pending the
decision of the arbitral tri bunal, the respondent contin ues as partner
with the two new inductees and the petitioner should not be granted
the interim reliefs as prayed for.
9. It is also stated on behalf of the respondent that a new plea was
raised during argument s in rejoinder th at L&L in the name of the firm
stands for „Lex and Legal ‟. The submission made for the first-time
during rejo inder arguments and not on affidav it, is factually i ncorrect.
The origin of „L&L ‟ is traceable and an acronym to „Luthra & Luthra ‟
which name belongs to the respondent , in every s ense possi ble. It is
also commonly understood within the legal fraternity and in the
business ci rcles, that L&L Partners is the respondent‟s law firm being
based on his name Rajiv K. Luthra.
FINDNGS/CONCLUSION:
10. Having heard the learned counsel for the parties and peruse d the
record, at th e outset I may st ate that the part ies we re relegated to
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mediation process to be conducted by Mr. Sr iram Panchu , Senior
Advocate vide order dated October 16, 2020. The mediation process
did not bear an y fruits and the co unsels for the par ties agreed that the
Court may finally hear the petition as noted in the order dated
November 02, 2 020. I may also state , on November 02, 2020 the
statement of Mr. Parag Tripat hi was recorded o n beha lf of the
petitioner that he shall delete the respondent Nos.2 to 7 f rom the array
of parties . An amended memo of pa rties has been file d by the
petitione r wherein respondent , Rajiv K. Luthra , is the only sole
responde nt. His statement was also record ed on November 12, 2020
on beha lf of the petitioner that he shall not press the relief s at f, g & l
of the petition. So, it follows that the remaining reliefs have only been
prayed again st Rajiv K. Luthra , the sol e responde nt.
11. For c onvenience , where ever referenc e is made to the
submission s of Mr. Tripathi, Mr. Nigam (Senior Counsels) and Mr.
Nair, hereinafter , they s hall be referred as „Counsels for the
petitioner ‟.
12. The first prayer in the petit ion is for stayin g the email dated
October 13, 2020 of the respondent termin ating the petitioner from
partnership of th e Delhi Corporate Fi rm. The other reliefs are for
direction s against the respondent restraining him from interferin g
directly or indirectly with the manag ement and / or partici pating in th e
affairs of the Delh i Corporate Firm and that he should handover t he
assets of the said firm which are in his possession.
13. I have alrea dy noted the case set up by the petitioner in this
petition. To sum u p, his case in t he petition is that, he along with
respo ndent were partner s in the Delhi Co rporate F irm. On October 12,
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2020 , 23 news partners were inducted in the Delhi Corporate F irm by
the petitioner . The responde nt having withdrawn himself from the
Delhi Corpor ate Firm, should be restrained from interfering with the
right of the petitioner to conduct the business of the Delhi Corporate
Firm.
14. It is the conced ed case of t he part ies that they have constituted
the Delhi Co rporate F irm after executing a written partnership deed
dated March 31, 199 9. Originally the Delhi Corporate F irm was
constitute d in th e name of Luthra & Luthra Law Offic es, New Delhi
but pursu ant to an amendment executed to the Deed on August 04,
2018 the name of the said firm was changed to L&L Partners, New
Delhi. Initially, the p rofit and loss share of the petitioner and the
respo ndent was 25% and 75% respectively . By way of an am endment
to the Deed executed on April 01, 2004 the sh ares were changed to
33.33% and 66.67% . Before the partnership of the parties was formed
in the year 1999 , responde nt was doing legal practi ce through a sole
proprietorship concern by the name Luthra & Luthra La w Offices.
The petitioner who joined legal p ractic e in the year 1995 joined the
respondent as a retaine r lawyer . It is a fact that thereafter two more
firms were form ed viz. Delhi Litigation Fir m and Mumbai Corporate
Firm , wherein the parties h erein among others are also pa rtners.
15. The case of the petitioner as con tended by his Counsel s is that if
the respondent intends to leave the Delhi Co rporate F irm at any time
and retain its name , he needs to exercis e his option within 12 years
from the effective date (April 01, 199 9) i.e., March 31, 2011 . After,
March 31, 2011, t he respondent on leaving the Delhi Corporate Firm
shall have no right to retain its name and that th e same shall continue
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to be used by the remaining partners o f the Delhi Corporate Firm.
Also, the cli ents, assets, employees and goodwill w ere to be r etained
by the petitioner . Some of the relevant Clauses of the Deed on which
reliance was placed by the l earned counsel s for the parties are
reprodu ced as under :
“5.A. LEAVING AMOUNT (Not i n ca se of Death;
Consid eratio n for Non -Compete) .

The Pa rties hereto agree that RKL & L&L have, over a long
period of time, developed considerable goodwill and after
the Effective Date, the Firm would also de velop g oodwill for
itself and the name i.e. Luth ra & Luthra Law Offices ,
licensed to and used by the Fir m. It is therefore agreed that
upon any of the Party (ies) leaving the Firm, on account of
retirement pursuant to Section 7E or otherwise and not due
to death, a certain value of the goodwill sha ll hav e accrued
and be payabl e to such Party. In this regard it is agreed
that a leaving amo unt shall be payable to the leavin g
Party(ies) as follows:
For Party(ies), oth er than RKL leaving the Firm, on or
before October 31, 2003, such Party( ies) shall not be
entitled to any value to wards goodwill. However, during
this period if MS is asked to leave the Firm otherwise than
for m isconduct under Clause 7 (iv) below, he shall be
entitled to be paid for goodwill, (as stipulat ed below), to the
extent of fifty percent of the entitled value thereof.
For Party(ies), other that RKL, leaving the Firm after
Octob er 31, 20 03, such Party(ies) shall be paid a value of
the goodwill (as stipulate d below), to the extent of hundred
percent of the entitled value
thereof.
(i) If RKL chooses to leave the F irm at any time and
does not practice law, he shall at his optio n be paid
the full value of goodwi ll as stipulated below. It is
agreed and und erstood between the Parties that if
RKL exercise t he option of being paid for goodwill
then in consideration of the payment for goodwill to
RKL, RKL unequivocally and uncondition ally
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agrees to renounce his right , title and interest in the
Firm and the name “Luthr a & Luthra Law Offices
New Delhi ”; “Luthra & Luthra Law Offices ” which
would thereaf ter vest with the remai ning partners of
the Firm.
In the event RKL wishes to leave the Firm and retain the
name of the Firm he would need to exercise his option
within 12 years (twelve ) from the Effective Date. If RKL
exercises this option dur ing the firs t four and a half years
from the Effective Date, he shall be required to compensate
MS for the full value of goodwill. Ho wever, if RKL exercises
this option after fo ur and a half years from the Effectiv e
Date but be fore 12 years then RKL shall be required to pay
MS five (5) times the value of the goodwill pursu ant to
Section 5 of this Deed a nd MS shall retain all the existin g
clients of the Firm. RKL shall not be perm itted to exercise
this option after the exp iry of 12 years. It is agreed between
the Partie s that after making pay ment for goodwill under
this para graph (1) RKL shall not be boun d by non compete
obligation pursua nt to Section 10 and (II) Name User
Agreemen t shall stand expunged .
RKL may leave the Firm for any reason whatsoever and if
he exercise s the option of leaving without taking payment
for goodw ill, then RKL may continue to p racti ce Law,
however, the Name Luthra & Luthra Law Offices will
continue to be used by remaining partners under the Name
User Ag reement.
It is agreed that value of goodw ill shall be computed a s follows:
Value of goodwill pay able to MS
in case MS leaves t he Firm
15% of the TO of the Firm.
“TO” shall mean the average of
the Turnove r of th e· Firm in the
past or subsequent three
financial years (financial year to
mean April 1 of a year to March
31 of the subsequent year),
which ever is higher. The value
shall Initially be calculated on
the ba sis of the past three
finan cial years and be paid
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within 6 months from the date
when MS decide s to leave the
Firm. There after, upon
completion of the subseque nt
three financial years, the val ue
of goodwill shall be re-
calculate d. In the event the
amount ar rived at after such re-
calculation is more t han tha t
paid to MS, the Firm shall be
required to pay the difference
within 6 months from the date of
such re-calculation.

Value of goodwill paya ble to RKL
In case RKL leaves t he Fi rm

45% of the TO of the Firm .
“TO” shall mean the average of
the Turnove r of th e Firm in the
past or subsequent three
financial years (financial year to
mean April 1 of a year to March
31 of the subsequent year),
whiche ver is higher. The value
shall initially be calculated on
the basis of the past three
financial years and be paid
within 6 months from the date
when RKL decid es to leave the
Firm. Thereafter, upon
comple tion of the subsequ ent
three financial years, the va lue
of goodwill shall be calculated.
In the event the amount arrived
at after such re-calculation is
more tha n that paid to RKL, the
Firm shall be required to pay the
difference within 6 months from
the date of such re-calculation.

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For clarificatory purpo ses, the TO shall mean the tota l ave rage
Turnover for the concern ed years not the average Turnover.
After pay ment of the above stated amounts MS shall have no further
claims re Goodwill payment on eit her RKL or the Firm . Likewise ,
RKL shall have no further claims re Goodwill pa yment on MS.
The Parties hereby agree that in the event the goodwill of the Firm is
sold to any third party, as a going concern or otherw ise, at any time
prior to or after Octobe r 1, 2003, RKL and MS s hall be entitled to a
share in the sale value in the ratio of th eir r espective percentage
interest in the Firm, after the settlement of the ac count.

B. LEAVING AMOUNT (In case of Death) .

The Parties hereto agree that RKL & L&L have , over a long period of
time, developed considerable goodwill and after t he Effective Date,
the Firm would also develop goodwill for itself and the name i.e.
Luthr a & Luthra Law Offices, licensed to and used by the Firm. It is
therefore agreed that upon an y of the Party(ies) leaving the Firm, due
to death, a certain value of the goodwill shall ha ve accrued and be
payable to heirs of such Party.
In this regard it is agreed that heirs of RKL and MS would be
provided with two Options, Option -I and Option -II. The heirs of RKL
and MS would be require d to choose one of these options :
It is agreed t hat the value of goodwill shall be computed as follows:

OPTION -I

Value of goodwill payable to MS‟s
heirs in case of MS ‟s deat h

30% of the TO of the Firm.
“TO” shall mean the average of
the Turnover of the firm in the just
or subsequent three financial
years (financial year to mean
April 1 of a year to March 31 of
the subsequent year) , whichever is
higher. The value shall initially be
calculated on the basis of the past
three financial year s and be paid
in three (3) equal annual
instalments. The first instal ment
shall become payable within 30
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days from the death. There after,
upon compl etion of the subsequent
three financial years, the value of
goodwill shall be recalcu lated. In
the event th e amount arrived at
after such re-calculation is more
than that paid to the heirs of MS,
the Firm shall be required to pay
the difference within 6 months
from the date of such re-
calculation.

Value of goodwill payable to RKL ‟s
heirs in case RKL ‟s death

90% of the TO of the Firm.
“TO” shall mean the average
Turnover of th e Firm in the past
or subsequ ent three financial
years (financial year to mean
April 1 -of a year to March 31 of
the subseq uent year), whichever is
higher. The value shall initially
be calculated on the basis of the
past three financial years and be
paid in three (3) equal annual
instalments . The first instalment
shall become payab le within 30
days from the death. There after,
upon completion of the subsequent
three financial years, the v alue of
goodwill shall be re-calculated.

OPTION -II
The heirs of RKL and MS shall be paid annual 5 % and 1.67%
respec tively of the annual Turno ver.

7. A. DECISION -MAKING .
1. N otwiths tanding an ything contained in this Deed, all
materi al decisions to be taken after due deliberation and
though effective consultation, the inten t being to arrive at
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decision s which are in the best interest of the Firm . Subje ct
to stricter requirements provided in thi s Deed, all
decisions shall be taken by vote of majority of part ners
present and voting. In the event of dissagreement the
decision of RKL shall be final and bin ding on the Firm and
its Partners. However, after 2 010 the light of RKL to
rende r final and bi nding decisions shall be confined to the
following matters.
Investments, setting up of new firms or branches wherein
RKL and MS are partners in the ratio of 3:1:1 ,
amalg amation, merger or collaboration in a ny form with
other reputed internati onal law firms , termination,
performance review of part ners, all information p ertaining
to the Firm to third pa rties, removal of any constitue nt of
the Firm (other than partner s). Notwithstanding anything
to the contrar y, any decision for the merger, amalgamation
or co llaboration of the Firm with any any Indi an law firms
or individ uals would require the approval o f both RKL and
MS.
It is agreed and understood between the Partie s that any
Party who is directly or indirect ly inte rested in a certain
decision being taken, s uch Party shall whilst such decision
is being considered refrain from parti cipating in the
decisi on making process.
Furthermore , all issues that have been agreed to between
the Parties, including the conte nts of this Deed, cannot be
subsequently re -opened by RKL under the veto powers. The
veto r ights, contemplated in this deed, ar e rights granted in
person only and shal l not be as signe d by RKL to his
successors an d/or any other/third parties. RKL cannot
exercise the veto powers to confer any dis -proportion ate
benefits to himself, either directly or indirectly.

B. xxx xxx xxx

C. Performance Appraisals.

It is unconditionally and irrevocably agreed that RKL m ay from
time to time, at intervals of not le ss than one year appraise the
performance of M S. It is further unconditionally and
irrevoc ably agreed that on ly RKL shall have the right to
apprai se MS ‟s performance and if in h is op inion he is found
wanting in any way, he shall have the following right:
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(i) During the first ten years of the Firm, RKL ca n reduce
for a maximum period of one year , the percentage
intere st of MS subject to a maximum cap of 5% in a
year.
(ii) and ther eafter RKL can impose only a t oken penalty. It
is agreed between the Parties t hat MS cannot appraise
the performance of RKL. It is further clarified that MS
cannot quest ion the utilisation of time b y RKL .

D. Induction of New Partners.

vi. In the event it is deemed necessary and feasible to
induct new partners in the Firm , the same shall requi re the
unanimous consent of RKL and MS . In the event of an
induction being agr eed upon, the percentag e interest that is
allocated to s uch new partner shall initially be only a nominal
percentage and shall be contri buted by reducing the existin g
perce ntage interest of the Parties, pro -rata. It is further agreed
that if RKL and MS do not agree upon the indu ction of a new
partner, RKL may e lect to nominate someone, who w ill be
entitled to receive a porti on of his profits, which would have
accrued to RKL, by g iving a share from his own percentage
interest, provided however, such new person shalt not have any
rights in the managem ent of the Firm. However, if any such
person has been a part of the Firm for a contin ous period of five
(5) years, or prac tised l aw fo r seven years such person may
also be admitted to the benefits of partnership w ith management
rights. The extent of manage ment rights w ould need to be
unanimously agreed b y all the Parties.

E. RETIRE MENT.

A. RKL shall retire from the Firm whe n he ha s attai ned the
the age of 80 years , MS shal l retire from the Firm when he have
attained the age of 75 years . RKL and MS m ay be required to
take pre -mature retirement when they are not in position to
contin ue as a partner due to mental incapacity whi ch lead s to a
situation where such party is unfit to practice the profession of
law.
Subje ct to the clauses of th is Deed, a retiring Party( ies) sh all
strictly comply with the pr ovisi ons of Article 10 hereof and any
breach thereof shall provide a right to the Firm to se ek
damages from the retiring Party . In case of retirement, the
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retiring part ner shall have the righ t to be paid for goodwill
pursuan t to Section 5.

8. TERMINATIO N / D ISSOLUTION.

This shall not b e a partnership at will and the Deed may be
termina ted or di ssolved only by RKL and none other , by
giving a ninety (90) days
written no tice to the other Parti es, only upon the following
a. If all the Parties unanimously ag ree t o terminate or
dissolve the D eed;
b. Material Breach (as defined hereinaf ter) of terms by
any party ;
c. If a Party has been declared bankrupt, insolvent, or
looses of the right to practic e the profession of law;
d. The d eath or physical/ mental incapa city of a Party
which leads to a s ituation where such a Party is unfit
to prac tice the profess ion of law;
e. A Party seeks retir ement, withdrawal pursuant to
Section 7

Prov ided, however, that upon the occurrence of any of th e
aforesaid events, RKL may issue a notice to the others and
thereafter parties shall put in their best effor ts to try and
amicably resolve the issues and the notice of termination, as
provided above, shall be issued only a fter the Parties are
unable to am icably resolve the issue, inspi te of best efforts,
over a period of ninety (90) days, from the date of issuan ce of
a written notice.
Materi al Breach, as used i n Article 8(a) shall mean, any of the
following situations:
(i). Where a Party engages in providi ng legal advice .and
assistance to third party(ies), other than t hrough the
Firm, for material consideration, subjec t to this
Agreement ;
(ii). Where a Party re ceives any monies, or material.
considera tion in any other form, from a client of. the
Firm, for legal services, except as permi tted under this
Agreement. Where a Party engages in any business or
vocation, other than the a ctivities of th e Firm, as a full
time occupation.
(iii). Where a Party enga ges in an activity whic h is
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unbecoming of a lawyer, or is not permissible for a
lawyer, as p er applicable code of conduct for the
profession.

9. CONSEQUENCES OF TE RMINATI ON /
DISSOL UTION / RETIREMENT / WITHDRAWAL /
DEATH.
A. In the situations enumerated in 6 , 7E & 8, the
following shall apply:
a. The survivin g Party , including the Party is suing the
notice shall continue to be a part of the Firm and
retain all the assets, o ffices, emp loyees, counsel,
clients etc.;
b. The surviving Party shall continue to r etain and use
the name of the Firm (in terms of the lice nse
agreement) and the goodwill attached thereto;
c. The survivi ng Party and/or the Firm shall compensate
the termi nated/retiri ng/withdrawing and the heirs of
the deceased Party as follows:
i. Pay a sum equivalent to perc entage interest of the
good will, as calculated pursuant and subject to Article
5. It is clearly un derstood between the Parties that no
goodwil l shall be paid to any Party
retiring/withdrawing/ exiting from the Firm to car ry on
the le gal practice in another law Firm or to provide
legal , services in the employment of any other
organisation.
ii. Pay a sum towards the share in the assets, in propor tion
to the percent age interest, which, for moveab le assets,
shall be calcu lated as the boo k value of the as sets a nd
for immovable assets shall be calculated as cost of
acquisiti on pl us the gain from indexation i n terms of the
index for capital gains as published by th e Gove rnment
of India.
iii. Finalise the accounts and pa y the balance outstand ing
as on the date of t ermination, however, all monies d ue
but not received shall be pa id on receipt by the Firm.
However if MS leaves the Firm on his violation befo re
Octo ber 1, 2003 monies due but recievable shall not be
paid.
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It is further agreed that t he surviving Parties an d/or the Firm
shall make best eff orts to make the payments, as a fores aid, at
the earliest possible but shall make the necessary payments
no later tha n six months from the date of such terminat ion,
withdrawal, retirement. The recipien t shall be entitled to
receive an interest calculated at the prime lending rate of the
State Bank of India plus 5 %, for the period of delay beyond
six months. ”

16. Having noted some o f the Clauses of the Deed, it may be stated
that the learned Counse ls for the respondent have taken an objection
on the maintain ability of the petition on the ground of non -joinder /
mis-joinde r / non -existence of arbitration agreement / relief s sought
with regard to firm s other than Delhi Corporate Firm. Insofar as the
pleas other than non -joinder of necessary parties are concern ed, the
same may not sustain as of toda y in view of the st atement of M r.
Tripathi record ed by this Court on November 02, 2020 w herein he has
deleted the respond ent Nos.2 to 7 from the array of parties including
the reliefs at (f) (g) and (l) . In so far as the p lea of non-joinder of
parties is concerned , I intend to deal with the same in the later part o f
the judgement when I shall deal with the pleas of the petition er and the
respondent that they have inducted 23 and 2 part ners in the firm
respectively .
STATUS OF PARTNERS:
17. Submiss ions h ave been made by the Counsel s for t he
respondent that; (i) the respondent has the domi nant right to the firm
and its management ; (ii) he has gr eat financial right than the
petitioner ; (iii) the respondent has binding vo te on a ll critical matters ;
(iv) the respondent can apprise the work of the petitioner and not the
other way ; (v) the respo ndent holds majority stake in the firm etc. In
other wor ds, it was the ende avour o f the Counsel s for the respondent
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to submit that the above cumulatively vest s a power in the respondent
to terminate the petitioner from the Delhi Corp orate F irm.
18. The learned Counsels fo r the petitioner have contested the
aforesa id position by stating that a partnership firm is no t a legal
entity . A partner acts as an agent of the other and the relations hip
between partners is not that of a master and servant or employee ,
which concept involves an element of subordination , but tha t of
equality .
19. I agree wit h the subm ission of learned Counsels for the
petitioner that partners in the firm stand on equal footing . One partner
acts as an agen t of the other (s). Together they cons titute a fi rm. The
partnership per se is not a distin ct legal entity . The Su preme Court in
the case of Kesavji Ravji and Co. & Ors. (supra) has by referri ng to
its earlier judgment in th e case of Regional Director , Emplo yees State
Insuran ce Corporation (supra) , wherein the Court dealt with the
question whet her there could be a relationship of master and servant
between a firm on one hand and its partners on the o ther indicated that
under t he law of partnership there can b e no such relati onship as it
would lead to th e anomalous position of the sa me person bei ng, both
master and the servant . The Suprem e Cour t in Kesav ji Ravji and Co.
& Ors. (supra) has observ ed as under:
“21. In Regional Director Employees State Insurance
Corporatio n, Trichur v. Ramanuja Watch Indust ries:
(1985) 2 SCR 119 : AIR 1985 SC 278 thi s Court dealing
with the q uestion whether the re coul d be a relationship of
master and serva nt between a firm on the one hand and its
partners on the other, indicated th at under t he law of
partnership there can be no such relationship as it would
lead to th e anomalous position of th e same person being
both t he master and the servant . The followin g
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observat ions of Justice Mathew in Ellis v. Joseph Ellis and
Co. (1905) 1 KB 324 were referred to with approval: (SCC
p. 224, para 7: SCR p.126)
“The argument on be half of the applicant in t his
appeal appears to invo lve a legal impossibility,
namely, that the same pe rson can occupy the
position o f being both master and servant, em ployer
and employed.
22. And observed (SCC p . 221 , para 4: S CR p. 123)
“…A partnershi p firm is not a legal enti ty. This
Court in C hampara n Cane Concern v. State of
Bihar : AIR 1 963 SC 1737, pointed out that in a
partnership each partner acts as an agent of the
other. The position of a partner qua t he firm is thus
not that of a master and a servant or employee
which concept involves an elemen t of subordination
but that of equality . The partne rship busine ss
belongs to the partners and each one of them is an
owner the reof…”(SCC p. 224, para 9: S CR p. 127).”
(Emphasis supplied )

20. So, the partnership property vests i n all partners and in that
sense every partner has an inter est in the assets , however, the extent of
interest held by a par tner is irrelevant as he cont inues to be the owner
of his inter est in the firm. This I say so, in view of t he judgment of the
Apex Co urt in Addank i Nara yanappa and Ors. (supra) , wherein by
relying u pon Section 48 of the Partners hip Act , it was held as under:
“4. ………From a p erusal of th ese provisions it would be
abunda ntly clear that whatever may be the charact er of the
property which i s brought in by the partne rs when t he
partnership is formed or whic h may be a cquired in the
course of the business of the partnership it becom es the
prope rty of the firm and what a partne r is entitled to is his
share of profits, i f any, accruing, to the pa rtnership from
the realisa tion of t his property, and upon dissoluti on of the
partnership to a share in the money representing the value
of the property. No doubt, since a firm has no lega l
existence, the partnership property will vest in all the
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partners a nd in that sense ev ery par tner has an interest in
the property of t he partner ship. During the subsistence of
the partnership, however, no part ner can deal with any
portion of the property as his own. Nor can he assign his
interest in a specific item of the partnership proper ty to
anyone. Hi s right is to obtain such profit s, if any, as fall to
his share from time to time and upon the dissolution of the
firm to a share in the assets of the f irm which remain after
satisfying the liabi lities set out in clause (a) an d sub-
clauses (i), (i i) and (iii) o f clause(b) of s. 48. It ha s been
stated in Lindley on Partnership, 12th ed. at p. 375 :
“What is meant by the shar e of a partner is his
proportion of the partnership assets after they have
been all realised and conve rted into money, an d all
the partnershi p debts and liabilities have been paid
and discharged. This it is, and this only which on the
death of a partner pa sses to his representatives, or
to a legatee of his share ……………… …. and which on
this ban kruptcy passes to h is trus tee.”

21. Even in Lindley & Banks on Partnership , 20th Edition at 3-07,
page 44 , under the heading Status and Lia bility of a Partner , the
following has been s tated :
“Also central to an understanding of the law of
partnership is t he dual capacity in whic h a partner acts
i.e. both as a princ ipal and an ag ent. Lord Lindley
explained:
“As a principal [a member of an ord inary
partnership] is bound by what he does h imself and
by what has co -partners do on be half of the firm,
provided t hey keep within the limits of their
authority : as an agent, h e binds them b y what he
does for the firm, provided he keeps within t he limits
of his authority .”

22. Moreover , it is settled position of law that in the ma tter of
sharing the profits , the partn ers can agree to sh are the profits in any
manner they like but still t hey c ontinue to be partner s working as
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agents for each other , which in no way confer a dominant legal status
on the partner drawing a higher interest (Ref: K.D. Kamath and Co. v.
CIT, 19 71 (2) S CC 873 ).
23. Similarly, it is also a settled law, in view of Sectio n 4 of the
Partnership Act, it is open to two par tners to allow the business of the
partnersh ip to be conducte d by one of the partners (Ref: Pratibha
Rani v. Suraj Kumar , AIR 1985 S C 628). Merely, th e fac t that the
control of the business is kept with one partn er and that he has certain
extra rights as a major partner does not in any sense negat e the
partnership (Ref: In Re: Ambalal Sarabhai , AIR 1924 Bom 182). In
other words , no pa rtner has a domin ant status even if one partner has
extra rights and/or hig her financial stake.
24. Having said that the learned Counsel s for the respondent have
made reference to Clau ses 7A, 7C and 7D in support of th eir
submi ssion that the respondent has dominant right s in the partne rship
to ju stify his action of terminati ng the part nersh ip of the petitioner .
The said pro vision s shall be considered and dealt wit h in the later part
of the judgment wh en I shall deal with the con tention s of the parties in
support of their res pecti ve stan d on the impugned action.
SCOPE OF PETITION UNDER SECTION 9 OF THE ACT OF
1996 :
25. It is the case of the petitioner that in term s of WhatsApp
message d ated January 06 , 2020 , the responden t had expresse d hims elf
to withdraw from the partne rship by giving a 90 days ‟ notice and
which no tice period (though according to petitioner not permi ssible )
was extended by th e respondent on four occasio ns finally leadin g to
issuance of email dated October 12, 20 20 by the petitio ner.
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26. On t he other hand, the case of the respo ndent is that it was
notice of termination of the partnership of the petitioner . Suffice to
state, the parti es are at variance with regard to the nature of the
communication dated January 06, 2020. In any cas e, it is the issuan ce
of the email dated October 13, 2020 whereb y the respon dent has, in
purported exercis e of powers under Clauses 7A & 8 of the Deed ,
terminated the peti tioner from the partnersh ip, which triggered the
filing of the present petition . Thou gh no challenge is made to
communic ation dated October 12, 2020 by the respondent , the issue
that needs to be d ecided in this petiti on under Section 9 of the Act of
1996 is, pending adjudication of the disputes betwee n the partie s
whether the petitioner is entitled to the re liefs as prayed for in this
petition.
27. A plea has b een tak en by the Counsel s for the respondent that
the prayer „e‟ as sought for by the petitioner is in the natur e of a final
relief and the same , not being a prayer for status quo / status qu o ante
but a new state of affairs , the same cannot be granted by this Court. In
this regard, I may st ate that the power of the Court to exercise its
jurisdiction under Section 9 of the Act, 1996 is well settled by a
judgment of a coordin ate Bench of t his C ourt in Ashok Kumar v. SBI
Officers Association , 2013 (3) Arb LR 246 (Del) and also by this
Court in Jaguar Overse as L td. v. Seagull Maritime Agencies Pv t.
Ltd., OMP( I)(COMM ) 183/2020 decided on Au gust 06, 2020 ,
wherein the scope of Sect ion 9 of the Act of 1996 was delineated in
the follo wing manner:
“33. That apart it is a sett led position of law, that u nder section
9 of the Act of 1996 , the Court has a wide discretion to mould
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the r elief fo r safeguarding the rights o f the parties in o ther
word s under se ction 9 of the A ct of 199 6, the c ourt has the
discretion to pass an interim order of protec tion as may be just
and convenie nt when the court arrives at a finding t hat the
rights of the party a re going to be adversely af fected pending
the arbitration. In th is regard I may refer to the judg ment of a
coord inate bench of this court in the case of Ashok Kumar v.
SBI O fficers Associ ation 2013 (3) Arb LR 246 (Del) / 2013
SCC OnLine 1631 wherein in this court has hel d as under:
“57. There is a nother reason which persuades me to
reject wh ich is t he limited scope of Section 9 of the Act.
The mere reading of Section 9 of the Act would r eveal
that the pow er of the court under Section 9 can be
exercised pr ior to or duri ng the pend ency of the arbitra l
proceeding o r eve n after passing t he award but befo re
enforcement to protect or preserve or sa le of any good,
amount, or property or thing or any other interim
measure as may appear to court just and co nvenient . The
said ord ers of inte rim measures under Section 9 are
aimed at safeguarding the right s of a p arty to the
arbitration agreement pending t he arbitration or its
enfor cement so that no pr ejudice can be cau sed to the
said party on account of pendenc y of the proceedings.
However, th e said orders of in terim protecti on ar e not
passed on t he mere a sking wh en there exists no possibility
of safeguard ing any private right of th e party.
58. It is t rue that this cour t has power to pass in terim
order of interi m protec tion if it app ears to th e court as
“just and convenient”. The w ordings just and convenien t
provid e wide discretion to the court to mould the interim
relief for safegua rding the rights of the parties. But t he
said discretion has to be exercised judi ciously and not
capric iously or in an arbitrary mann er. I agree wi th Mr .
Sandeep Sethi, learned S enior co unsel appearing on
behalf of the respondent s, that the sho w cause noti ce
issued by the res pondents is not li able to be stayed unde r
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the scheme of Secti on 9 of the Act as the petitione rs
instead of giving the explanati on in the meeting or
following the pres cribed procedure have approached the
Court.
******** **** **** ***** ***
60. Applying the said principle of law to section 9, it can
be said that the courts d iscretion to p ass the inter im
protection ord er as just and conv enient can be exe rcised
when the c ourt arrives at the finding that the rights of the
party a re going to be affected pending the arbitration or
prior to enforcement which needs protectio n in the
interim which makes it jus t and convenient to pass the
order.”

28. During the rejoinder submiss ions the Counsel s for petitioner
have stated that this petit ion has been primaril y filed s eeking urgent
interim relief of seeking stay of email Octobe r 13, 2020 , leaving final
adjudi cation as to the effect and nature o f the comm unication s dated
October 12 , 2020 and October 13, 2020 in the prospecti ve arbitration
proceedings .
29. Noting t he position of law in Ashok Kumar (supra ) and Jaguar
Overseas L td. (supra) it can be stated that this Court may not
necessarily consider the prayer s in the manner made by t he petitioner
in this petition but on a finding of prima facie case, irreparable injury
and balance of conv enience grant , pending adjudication of the dis putes
in the pr ospecti ve arbitrat ion proceedings betwe en the petition er and
respo ndent, such reliefs as deem appropri ate.
30. It is also a settled law , the Court while exercising power under
Section 9 of the Act of 1996 can interpret the provisions of th e
contract to come to a prima facie conclusion . In this regard, I may
refer t o the judgment of a Coordi nate Bench of this Court in the case
of KSL and Industries Ltd. vs. Natio nal Textiles Corporation Ltd. ,
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2012 (3) ArbLR 470(Delhi) , wherein it was he ld as under:
61. The scope o f enquiry in these proc eedings is limited to the
examinati on of the issu es raised by the parties only at a prima
facie stag e. The court while exercising its jurisdic tion under
Section 9 o f the Act does not finally determine any issue of fact
or of law, whi ch fall wi thin the juri sdiction of the Arbitr al
Tribunal t o determine. T he interpretation of the terms of the
Contract/MOU, as also the determination of the scope of the
Contract/MOU woul d eventually, and finally, fall for
determinat ion of the Arbitral Tri bunal. The court while dealing
with a petitio n under Secti on 9 of the Ac t applies the same
principle as a re applicable to t he determination of an
applica tion under O rder 39 Rules 1 & 2 of the CPC in a
pending suit. Thus, the ex aminat ion of the submission o f the
parties, as well as the terms of the MO U, would be m ade only to
assess the strength of the petition er’s case on a pri ma facie
basis, and any observ ation made d uring the course of su ch
evaluation would, obviously, not be b inding either on the parties
or the Arb itral Tribuna l, which has the juris diction to de termine
all su ch issues of fact and law indepen dently, without, i n any
manner being influenced by any obser vation that may be mad e
in the present order. ”

TERMINATION OF THE PARTNERSHIP OF THE
PETITIONER :
31. On the termin ation of the petitioner from the partnersh ip it is the
submission of the Counsel s for the petitioner that the respondent has
no po wer to take action which he took vide the email on October 1 3,
2020 . According to them, the expression „termination ‟ is incong ruous
while dealing with th e issue of a partner leaving the firm as it relates to
a master -servant relationship and therefore the wor d „termi nation ‟ has
relev ance only in the context of t ermina tion of the partnership deed .
32. I have a lready repro duced abov e Clauses 7A and 8 of the Deed.
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Clause 8 of the Deed contempl ates the D eed being t erminat ed /
dissolved. Whereas , Clause 7A is under the headi ng „DECISION –
MAKING ‟, i.e., decision making power s of the partners. No dou bt, it
refers to the word „termination ‟ but whethe r the same r efers to
termina tion of the petitioner , is the q uestio n. The submission of
Counsels for petitioner is that the word „terminatio n‟ in thi s Clause
refers to amalgamati on, mergers etc. On the other hand, the plea of the
Counsel s for the respondent is that the wor d „termination ‟ has to take
colour from the su bsequent word s „performance review of partners ‟.
33. Prima facie as per the initial part of the first p aragrap h of Clause
7A, amal gamation, merger or collaborati on in any form with other
repute d international law firms , ter mination, performance review of
partners , post the year 2010 , confers a right on the respondent to
rende r final and binding decision on investment s / setting of n ew firms
or branches / am algamation / merger or colla boration i n any f irm wit h
other repu ted i nternational law f irms / termination / performance
review o f all partners / removal of any constituent of the firm but in
contrast the later part, Notwithstanding anything to the contrary, any
decision for the merger, amalgam ation or collaboration of the Firm
with any any Indian law firms or individuals wo uld require the
approval of both RKL and MS, stipulates that any decision for the
merger, amalgamat ion or colla boration of the firm wit h any Indian la w
firm or individuals require the approv al of responden t/RKL and
petitioner/ MS. When the later part of Clause 7A contemplates
approval of respondent/ RKL and petitioner/ MS in t he decision -making
process , then earlier par t of Clause 7A cannot be const rued to mean
the power of the respondent/ RKL to termin ate petitione r/MS. I also
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note, as per Clause 10B , power vests with both the petitioner and the
respondent to take decision with regard amalgamation , merger ,
collab oration and buy-out of the firm by thi rd parties . This clause
appears to be at variance with the initial limb of Claus e 7A. Be tha t as
it may, w hen a vital decision with regard to buy-out of firm requires
the concurrence of both the petitioner and the respondent , it cannot be
construed that „termination ‟ under Clause 7A would mean the grant of
power on respon dent to terminate the petit ioner from partner ship
which has come into existe nce on the execution o f the Deed b y both
the petitioner and the respond ent. Clause 10B of the deed reads as
under :
“10B. All, decisions with res pect to amalgamations,
mergers , collaborations, but -out etc. shall be taken by
RKL and MS. In the event, RKL and M S decide to sell the
Firm to any thir d party, notwithstanding anything to the
contr ary, the consideration rece ived from su ch sale shall
be sh ared in the ration of the perc entage inter est of the
Parties in the Firm, after the set tlement of accounts. ”

34. Further, the subm ission of the Counsel s for respondent to relate
the p ower of perfor mance review of partne rs by respondent in Clause
7A to me an the power to terminate the petitioner is not appea ling as
Clause 7C separately provid es for performance appraisal of
petitioner/ MS by respondent/ RKL. If the performance of
petitioner/ MS, is found wanting , after expir y of t en years o f firm, then
it can only entail impositio n of pen alty on petitioner /MS. Thus, in any
case performance apprais al of petitioner /MS cannot lead to
termination . Prima facie , the only purpose I see for the existence of
the word „termi nation‟ and word s „performanc e review ‟ in Clause 7A,
is for the termination and performance review of equity partners who
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could be inducted by the respondent within his equity / share . The fact
that C lause 7 A does not contemplate termination of the petitioner as a
partner is also indi cative from a readi ng of Clause 9 of the Deed which
prescribes the consequence s of termi nation/dissolution/ retirement /
withd rawal / death , otherwise it wou ld have mentioned / prescribed
Clau se 7A as well .
35. Even otherwise , the Partnersh ip A ct (unde r Sectio n 33 )
conte mplates only expul sion and not termination of a partne r, that too
in good fait h. In Leigh v. Crescent Square Limited , 80 Ohio A pp. 3d
231, it has been held by the Court s of appeals o f Ohio that “Generally
relations between part ners are governed by the terms of the
partnership agreement , provi ded such terms ar e not in conflict with
the statute ”. The ter mination of partner not being contempla ted, the
termination in Clause 7A cannot be t hat of the petit ioner. It is also
held in the afor esaid judgment that “Courts may not imply additional
terms in a contra ct or agreeme nt w here none clearly exist s”.
Admittedly , there is no Clause in the Deed for expulsion as well . In
the absence of such a Clause even expulsion of the petitioner could not
have bee n effec ted.
36. It was the submission of the learned Counsel s for the petitione r
that petitioner ‟s termination from the partnership is not in good fa ith.
Prima f acie, I agree with such a submission for the reasons viz. (i) the
termination was effected by invokin g pro visions which do not
conte mplate termination of the petitioner as a par tner; (ii) the
termination was e ffected immediate ly after the issuanc e of email dated
October 12, 2 020 b y the petitioner acknowledging the decision of
respo ndent to withdraw / retire from the firm; (iii) no challenge is
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made b y the respondent to the email dated October 12, 2020; (iv) in
the absence of a challenge to ema il dated Octob er 12, 2020 , the
respondent prima fac ie could not ha ve issued the email dated October
13, 2020 ; and (v ) the respondent resorted to the termin ation of the
petitioner from partnership and not di ssolution / termination of Deed
as contemplated under the notice/communication dated January 06,
2020 .
37. Learne d Counsels for the petitioner are justified in rel ying upon
the judgment of the Madras High Cou rt in Dr. S. Vel Arvind (supra)
wherein the C ourt deliberating upon Section 33 of the Partnershi p Act
held that witho ut express provision or good faith , partners cannot be
expelled . The relevant paragraphs read as under:
“12. The only is sue to be decided i n this matter is whether one
of the partners has got a right to exp el one other partner on
the g round of allegation of misappropriat ion and whether the
first res ponden t can solely claim right ov er the Hospital.
13. To decide t he above is sue, it is relevant to extract Section
33 of the Indian Partners hip Act:
“33. Expulsio n of a partner: –
(1) A Partne r may not be expelled from a firm by any majority
of the partners , save in the exer cise in good fa ith of powers
conferred by contr act between the partners.
(2) The provisions of sub -sections (2), (3) and ( 4) of Section 32
shall apply to an expelled partner as if he were a retired
partner.”
14. Section 33(1) of the India n Partn ership Act i s
unambiguously clear that part ners cannot be e xpelled eve n by
majority of p artners. Partners can be removed or expelled
only in exercise of goo d faith of powers conferred by contract
between partners. The ab ove proposition that the rela tionshi p
between th e partners in a partnership is that of principa l to
agent for one another is confirmed by a plethora of cases
decided by various High Courts.
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15. Therefore, in the absence of explicit provisions in the
contra ct agreed to between the part ners re garding expu lsion
of partne rs, only remedy available to the disgruntle d partners
is taki ng recourse to Section 44 of the Indian Partn ership Act
for dissolut ion to be ordered by the Cou rt on a suit of the
partner and they cannot dismiss or expel the other p artner.
16. Even assuming t hat the appellan ts h ave committe d
malpracti ce, the Arbitrator alone has to decide the dispute
according to law and therefore, the expulsion of the appellants
by the first respondent is erroneou s. In this regard, it is
relevant to extract bel ow Paragraph No s. 34 to 36, 40 and 41
of the de cision of t he Calcutta High C ourt in Santiram
Mullick v. Hiranmony Bagechi reported in (1991) 2 C ALLT
399 HC.
“34. I have car efully considered the submissions ma de by
both the parties. It is an adm itted fact t hat even though in
the earlier Arbitration agre ement there was a specific
provision for expulsion of partners, no such pr ovision has
been made i n the agreement dated 1st April 1987 by
which the partner ship f irm was reconstituted and the
petiti oner and the Respondent nos . 1, 2 and 3 have
become partners on the re constitution of th e partnership
business. The partnership agreem ent in Clause 13
provi des that retirement or a deat h of a partner will not
ipso facto operate as a dissolution of th e firm and the
remaining/survivin g partners shall continue the
profession wi th or without any other partner or partners.
Clause 12 provides that on retirement of a partner being
incapable of carrying on profession or in the ev ent of a
death of a partner a goodwi ll shall be raised and the
value thereof sha ll be computed o r arrived at on 2 years
purchase price and the last three years average, n et
profits of the firm , and the net profits for thi s purpose as
computed in terms of C lause 12 shall be paid to the
retiri ng o r deceas ed partner. The only provision
regarding the exp ulsion of a partner is conta ined in
Section 33 of the Partnership Act and Section 33 as
already been referred to in the above , does not
contemplate expulsion of a partner unless the terms of
agree ment of the partnership fir m confer upon the
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majority of the partners to do so and that too such power
has to be exercised in good -faith. Therefore, the law of
the land is that a partne r may be expelled from a firm by
the majority of the partners and in go od-faith if the terms
of pa rtnership confer such power, othe rwise not.
Admittedly terms of partnership did not confer such
power to th e partners to expel an y partner from the firm.
Howe ver, the Partnership Act does not m ake the partners
without any r emedy when any of the partners co mmits
breach of t he p artnership a greement. The remedy is in
Section 44 of the Partnership Act. If a partner commits
breach of the agreement then under Clause (d) of Section
44 at the suit of a partner, the court may dissolv e the
partnership firm.
35. I am unable to accept the contention o f Mr. Gupt a
that the court h as power in a similar circumstances in
case of breach of agreement o f partnership by a partner
to order his expulsion. The Partnersh ip Act does not
confer such po wer up on the court . If under the agreement
a major ity of the partn ers expell ed a partner then the
partner who has been so expelled or the ma jority of the
partners expelling the partner may ap proach the court
either to chall enge or to uphold the action of e xpulsi on
and in su ch a case the c ourt will have to decide the issu e.
If the court finds that t he partnership agreement
conferred such power to the majority of the partners to
expel a partner, it has still to consider as to whe ther the
same was done in good faith or not. But if the partner ship
agreement do es not provide f or expulsi on, no partner can
approach the court seeking relief for expelli ng a partner
from the partnership business on the a llegation that the
concerned partne r had committed the breach of the
partnership ag reement.
36. It is true that the partnership agr eement may either
expressly or by implication provide the provision
regard ing expulsion. It is a lso true that a partnership
agreement may be varied by subsequen tly to incorporate
the provisi on of expulsion if originally in the agreement
there w as no such p ower. But there is nothing t o show
save and except that in the statement o f facts before the
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Arbitrators the partners for the first time asked the
arbitrators t o exercise the power of expuls ion that there
was no contract ei ther express or i mplied that the
partners o f the present part nership business at any time
agreed that the m ajority of the partner s would be
competent to expel a partner. On behalf of the
respon dents, it is submitted that in the s tatement of the
claim of th e petitioner befo re the Arbitrator s he soug ht
for the expulsi on of the Respondent no. 2 and the
Respondent nos. 1, 2 and 3 sought for the expulsion of the
petitioner before the Arbitrators and there -fore the
Arbitrators wer e clot hed with the jurisdiction t o expel a
partner on coming to the finding that he committed the
breach of the partnership agreement. The r elief was
sought for b efore the arbitrators in thei r separate
statements of claim that the partners themselves no do ubt
but the partie s were not at a d idem on the que stion of
expulsio n. But ea ch of them made se parate allegations
against each other and soug ht for expulsion of a
particular partner. The petit ioner sought for expulsion of
the R espondent no. 2 and the respon dents sought for
expulsion of the petitioner.
40. In that view of t he matter , I am convinced t hat even if
in the statements of claim the par tners demanded
expulsi on of the partners committing breach of the
agreement, the arbit rators who are to decide the d ispute s
according to law and are bound to follow a nd comply the
law definite ly committed an er ror of law by ordering
expulsion of the petiti oner when under the la w a partner
cannot be expelle d unless there is a specific agreem ent
between the parties author ising such expulsi on of a
partner by majority of t he partners. Ther efore, th at part
of the awa rd of the majority of the arbitrators ordering
expulsion of the peti tioner being an error apparen t on the
face of the award being co ntrary to law is liable to be set
aside. The arb itrators have a lso committed mis cond uct in
law by ordering expulsion when un der the law the
arbitrators could not expel a partner in the absence of
such sanction of expulsio n in the partnership agreement
and when Section 33 of the Partner ship A ct only
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authorised expulsio n. When the partn ership agreement
empowers the majority of th e partners to expel a partner.
41. In the peti tion, however, the pet itioner has also
challenged t he money award, I find from the awa rd that
the arbitrators on own admis sion of the petitioner abou t
the realisation of the amount of Rs. 68,8 00/- by earning
made from the other parties which was in violati on of the
partnership agreement directed the said a mount to be
returned to the firm wi thin 30 days from the date of the
award has been passed by the majority of the a rbitrators.
But I do not f ind any error appa rent on the face of the
award. I have already indicated that Section 16(b) of the
Partnership Act provides that if a partner carries on a
business of the same nat ure an d is competi ng with the
firm he shall accoun t for the payment received by him in
that bu siness. Therefore, there was definite sanction in
the law for the ma jority of the arbitrators pas sing that
money award. That money a ward is severable from the
other par t of the awa rd, namely, the expulsion of the
petitioner. Ther efore, ev en if that part of the award
regarding expulsion is set aside by this court, the money
award can be upheld as the s aid award is in accordance
with law and there is no error apparen t on t he face of t he
award to jus tify setting asid e of the money aw ard made
by the majority of the arbitrators.”
17. In the present case, th ere is no explicit pro vision regarding
expulsion of partners and in my considered opin ion, the only
remedy available to the disgruntle d partners is t aking recourse
to Section 44 of th e Indian Partnership Act, f or dissolution to
be ordered by the Court on a suit of the partner a nd they
cannot dismiss or exp el the other partner. The petitione rs have
got all the rights to partic ipate in the administration .”
(Emphas is Supplied.)

38. The plea o f the Counsel s for the respondent that even if there is
no explicit power , there is an implied power to terminate the
partnership of the petitioner is also not appealing. Firstly , the statute
i.e., the Partnershi p Act do not con template termina tion of a partner.
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Such a provision can neither ex pressly nor impliedly be read in the
statute nor in the Deed. What is contem plated under the Partnership
Act is expulsion of a partne r under Section 33 , but in good faith of
powers stipulat ed in the partner ship deed. No such power of expulsion
is also stipulated. The re liance has been placed by the Counse ls on the
judgment of t he Bombay High Court in the case of Kunda Madhuka r
Shety e (supra) in support of their contention th at impli ed power of
expulsion can be read into a Deed and Sectio n 33 does not bar
expulsio n. Suffice to state that the said jud gment has to b e read in the
facts of that case wher ein clause 12 and 18 of the partnership deed
therein contemplate s the following:
“Clause 12; each partner shall;
Each (i) be just and faithfu l to the others; (ii) devote his
/ her time and a ttention to the partner ship business ; (iii)
render true and correct accoun ts of the partnership
business to the others on demand at all tim es
Clause 18
No part ners shall do a ny act d eed o r thing wher eby the
interes t of the firm and / or the other partner may be
jeopardised.”
39. The Court t herein aft er perusing the said clause s and Section 33
of the Partnership Act held as under:
“34. ……………………These clauses cast a responsibili ty on
the par tner not to do any act or deed against the interest of
the Firm or o ther partne r and to see that the othe r partners
are not affected. Having c ast this obligation there must be
some way that it can be enforce d. It is the contenti on of Mr.
Lotli kar that these clauses ar e only reiteration of a general
law, and t here is nothin g specific about these clauses. Even
that position is accepted, the questi on still remains is
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whether a Majority can be rendered helpless i f one partner
does ac ts which virtua lly amou nt to destruction of the
partnershi p.
xxx xxx xxx

36. In the presen t case the Majority is of the opinion that the
plaintiff’s stand will lead to destruction of the Firm and
consequently the Mine. If the Maj ority is correct, the n it
cannot be that pla intiff takes step s to virtually des troy the
firm and then s ay that others have no po wer to expel her. If
such an ob ligation is cast, then prima fac ie, the power to
expel is implied in the agreement. If such an im plied power
is not re ad then the cla uses cas ting duties and
responsibilities, w ill be meaningless. If t herefore prima
facie the power exists and is exerci sed, the only way for the
plaintiff i s to seek a declaration that the expulsion is bad in
law, which w ill be decided at the trial. But it cannot b e
contended at th is stage that expu lsion is non est .”

40. In the said ca se there were more than two partners and the facts
which fell for consider ation of the High Court reveal s that the p artner
so exp elled was taking steps virtu ally to destroy the firm and its asset s
and the Court on a prima facie conclusi on held tha t there is an implied
powe r to read into the aforesaid clauses in the partnership deed ,
casting obligatio n on the partners a responsibility not to do any act
against the in terest of th e firm or other partner s, an implied power to
expel a partner by a majority decision in good faith for the benefit of
the firm . On the contrary in the case in hand , the parties (petitioner
and resp ondent) are the only two partners with managem ent rights i.e.
to take dec ision s (though no right to termin ate the partnership of the
petitioner exists under Clause 7A ) and an implied po wer (even an
express power) cannot be read into the Deed consisting of two partners
as such a powe r is susceptible for an i llegal use / use for extraneous
reasons to obviate dissolution / termination of Deed.
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41. Even otherwise the very exercise of power by the respondent by
invoking Clause s 7A and 8 togethe r is uns ustainable. By exercising
power under Clause 7A the respon dent has terminated the partnershi p
of the petitioner in the Delhi Corporate F irm. Whereas power under
Clause 8 is for termination of the Deed / dissolution . The termination
of a p artner is different from terminating the Deed / dissolution as both
have different consequen ces, the later on e entailing actio n un der
Section 46 of the Partnership Act. In fact, Clause 8 having been
invoked by the respondent it can be s aid that the impugned action is
for termination of deed / disso lution which would entail the
continuance of the pe titioner till the winding u p of the affairs of the
firm in terms of the Section 47 of the Partnersh ip Act .
42. A plea was take n by the Counsels for the respondent that t he
petitioner has at page 588 of the Index 4 Volume of the petitioner ‟s
document s (Wha tsApp chats between corporate partners ) admitted that
the respondent has the right to t erminate the petitioner ‟s partnership . I
have seen the document at pa ge 588 and per used the message sent by
the petitioner . No such conclusio n can be drawn theref rom, at least it
cannot be inferred that the petitioner has stated that the respondent has
the right to terminate the petitioner . This is clear, when petiti oner has
stated as under:
“….. Post 2010 all decisions had t o be take n by us
unanimously post d eliber ation and consulta tions and only
on limited matter you have a casting vote such as
termination or review future equity par tners that as copted
by us to the deed s ubsequently. This c asting votes however
does no t app ly to higher and firing of salari ed partn ers of
the firm wh o have a retainership arrangement with the
firm and are neither consequents nor employees of the
firm.”

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43. Similarly , a refer ence to paragraph 29 of the petiti on has b een
made by the Counsel s for the respondent for a simi lar argument that
the petitioner has admitted that the respondent has power to terminate
under Clause 8 of the Deed. The averments made in said paragraph
have been r ead out of conte xt by the couns els for the respondent . In
this p ara the peti tioner has only stated that “the re spond ent ma y issue
a notice of termination on o ne or more of the specific grounds
mentioned in Clause 8 the reof”, which is the reproduction of the said
provision . The express pr ovision of Clause 8 cannot be ov erloo ked. In
other words, t he petitioner has not stated that the respondent can
terminat e him from the partnership by invoking Clause 8.
44. The decision to terminate has been taken by the respon dent
alone a s the two partners alle ged to have been inducte d by the
respondent had no managemen t rights as no concurrence was given by
the petitioner . It also depi cts that the respondent was an interest ed
party and being an interest ed party , the respondent could not have
taken such an action in view of the express provision in secon d
paragraph to Clause 7A (as reproduced above) and action being in
violation of the same cannot be said t o be bona fide in na ture.
45. Even otherwise, the so-called termination having serious
punitive consequences , such a power needs to exist expressly in a
partnership deed for be ing exe rcised strictissimi juris and bonafidel y
(Ref: Blisset (supra) ; re A Solicitors ’ Arbitration , (1962 ) 1 W.L.R.
353).
46. A plea has been taken by learned Counsel s for the petitioner ,
even the exercise of the power under Clause 8 of the Deed has to be
exerci sed by giving two notices for 90 days each, first one for
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amicably re solving the issue (s) and on failure to resolve the is sue(s)
resulting in the issuance of the second notice for t ermina tion of the
Deed.
47. The said Clause mandates issuance of two notices , first one
being a written notice of 90 days upon occurrence of any of the events
specified in sub -clauses (a) to (e) of Clause 8 of the Deed. This 90
days‟ notice is to enable the pa rties amicably re solve the issue , which
forms subject matter of the noti ce. It is on f ailure to resolve the issues
amica bly by the partners that results in the issuance of second 90 day s‟
notice that too for terminati on of Deed / dissoluti on.
48. The ple a of Couns els for respondent is that in the proviso to
Clause 8 the pr esence of the word „may‟ is to mean the issuance of the
second notice is not obligatory . I am not i n ag reement with this
submission made by t he Counsel s. It is a settled law that words in an
agreement / contract should be given a natural and ordinary meanin g.
In fac t, it is the un derstanding of the respondent himself that two 90
days‟ notice have to be issued under Clause 8 . This is clea r from his
own condu ct, on him issuing email date d October 15, 2020 , wherein
he has computed th e payment , to be made to th e petitioner pursuant to
the impug ned email dated October 13, 2020, to include salary fo r three
months in lieu of the 90 days ‟ notice period.
49. It is also the submission of Couns els for the respond ent that the
petitioner has admitted in the rejoind er that attempts for amicable
resolution w ent on fo r months and the notice needed f or resolution is
complete. Thi s submission is also n ot appealing for two reasons ;
firstly, the notice dated January 06, 20 20 was for terminat ion of Deed,
which notice is differ ent from termination of petition er from
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partnership purported ly on mate rial breaches. The attempt s to
amicably resolve can be said to be fo r termination of Deed and, not for
terminati on of the petitione r from pa rtnership . Secondly , when th e
grounds for te rminat ion are with serious allegations, which do not
form part of notice dated January 06, 2020 , like taking kick back s
from a party who is unde r inves tigation by the CBI , constitutin g
material breach o f the terms as per the Deed, it was obl igatory on the
part of the respondent to have given an opp ortunity to the petition er to
reply to the same , as such a termination would cast a stigma on the
petitioner . In this regard, t he Counsels for the petitioner are justified in
relying upon the judgment of Chanchery Division in Blisset (supra)
wherein it was inter alia held that the partner who is sought to be
expelled fr om a pa rtnership sho uld h ave some in timation of t he cause
of complaint and an opp ortunity of m eeting the case all eged against
him and th e charges sh ould be substantia ted in a reasonable manner.
This vi ew has been also followed in Nemi Das v. Kunj B ehari, AIR
1928 Oudh 424 . The relevant portion reads as under:
“10. The law, as we understand it, ap plicable to the
facts is that the person (charged should have reasonable
notice of the charges proposed to be brought against
him, that he should hive a reasonable opportunity of
defending himself and that the charges sh ould be
substantiated in a reasonabl e manner. The learn ed trial
Judge has laid great stress upon the decision in
Labouchere v. Earl of Wharncliffe [1880] 13 Ch. D.
346. The learned Counsel for the plaintiff respondent
has addressed us at length upon the la w. It appears to us
to be summarized reasonably in the finding which we
have already given and we find nothing in Amir Begam
v. Bader -ud-din Husain A.I.R. 1914 P.C. 105, or
Mohamed Kalim -ud-din v. Stewart [1920] 47 Cal. 623
which carries the law any furthe r…….”
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50. The Cou nsels for the respondent have relie d upon the Chancery
Division judgment in Green v. Howe ll (supra) in support of th eir
submission that no notice need be issue d disclosing to the partner the
causes of complai nt against him or g ive him an opportunity of b eing
heard in his defence. I am unabl e to ag ree with the proposition as
advanced , as discl osing reasons f or termination (in this case) would
have been in compliance of the principles of natur al justice and also
enable the petitione r to answer precisely the allegations level led
against hi m. As noted above no notice was issued to t he peti tioner
before issuing the impugned email dated October 13, 2020 . Even the
respondent has not produced in these proceedings , document s /
evidence prima facie justifying the allegations , consti tuting m aterial
breach, against the petitioner which form the subject matter of the
email dated October 13, 2020 .
51. Reliance was also place d on Bhagwan Das s Khanna Jewell ers
(supra) and Veena Nalin Merchant (supra) by the Counsel s for the
responden t in support of their contentions that the respondent has the
power to terminate the petitioner from th e par tnership in terms of the
binding and sacrosanc t nature of the partner ship deed entered in to
between the par ties. In view of my conclusi on above in paragraphs 36,
40 & 41 , the said judgmen ts are clearly distinguishable.
STATUS OF EQUITY PARTNERS INDUCTED BY THE
PARTIES:
52. The learned Counsels for the peti tioner have also without
prejudice , faulted the impugned communication dated October 13,
2020 on t he ground that the same has not been copied to the alleg ed
two partners sa id to have been ind ucted by the respondent . In th is
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regard, I m ay state th at in fact it is the case of both the parties that they
have indu cted 23 (by petitioner) and 2 (by the respondent ) partners in
the firm , while disputing inter -se the other party‟s power to induct
partners without their appr oval. In any cas e, I find no document has
been produced in support of their respectiv e stand s i.e., no document
evidencing the name , accept ance of such offer by such partners,
partnership deed etc. In fact, based on such a stand the pet itioner ‟s
case is tha t with acceptance of the withdraw al / retiremen t of the
respondent by the petitioner from the Delhi Corporate F irm, in view of
email dated Octob er 12, 2020 and with the induction of 23 partner s,
the Delh i Corporate F irm continue s to exi st / survive and ha d not been
dissolved. Similar is the pl ea of t he respondent that even on
termination of the petitioner , the Delh i Corporate F irm continue s to
exist / survi ve with the alleged two partners induc ted by the
respondent on Octobe r 10, 2020 and had not bee n dissolved. I have
seriou s doubt on the stand of the parties, for the reason that the
induction of partners could have only taken place with the approval of
the ot her partner . It is the case of the parties here , no approval was
taken by the opposite part y for the induction of respectiv e partners by
them . In the absence of any approval , no induction of partner could
have bee n made. So, it follows o n acceptance of withdrawal /
retirement of the respond ent by the petitioner in terms of email dated
October 1 2, 2020 or termination of partnership of the petitioner vide
email dated October 13, 2020 by the respondent , the partnershi p stood
dissolved.
53. I may a lso state th at the Couns els for the respondent had relied
upon communicati ons / emails dated October 04, 2020 and October
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10, 20 20 to contend that the respondent had informed the petitioner
about his decision to induct two partners in the Delhi Corp orate Firm
to justify their induction . This plea is also without meri t as the
induction of the alleged two part ners i s with in the equity of the
respondent without management rights. On a readi ng of Clause 7D , it
is cle ar that induc tion of partners with management rights have to be
necessarily with the concurrence of the pe titioner , which has not been
obtained as is clear from the email dated October 05, 2020 of th e
petitioner . A plea has been taken by the Counsel s for the peti tioner
that equity part icipati on would not render the two persons as partne rs
of the fir m rather they would be transferees of the respondent ‟s
interest in the firm in view Section 29 of the P artners hip Act . In other
words, it is only a sub-partnership between the respondent and the
alleged t wo partners , who are n ot the partners of the Delhi Corporate
Firm. Section 29 of the Partne rship Act reads as under:
“29. Rights of transferee or a partn er’s interest
(1) A transfer by a par tner of his int erest in the firm, either
absolute or by mort gage, or by the cre ation by him of a
chan ge on such interes t, doe s not e ntitle the transf eree,
during the continuance o f the firm, to interfere in the
condu ct of the business , or to require accoun ts, or to inspe ct
the books of the firm, but entitles the tr ansfer ee only to
receive the share of pro fits of the transf erring partne r, and
the transf eree shall accept the account of profits a greed to
by the partners.
(2) If the firm i s disso lved or if the transferring pa rtner
ceases to be a partner, the transferee is ent itled as agai nst
the remaining part ners to receive th e shar e of th e assets of
the f irm t o which the transferring partner is e ntitled, and,
for the pur pose of ascertaini ng that share, to an a ccount as
from the date of the dissolution. ”

54. On a readi ng of Section 29 of the Partnership A ct, it is clear that
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a tran sferee has a very limite d right under Sect ion 29 (1). The main
partnership and the sub-partnership for the purpose of law are distinct
and different entitie s. Even where a partner trans fers h is interest in the
firm t he transfer or does not cease to be come a partner nor does the
transferee beco me a partn er in the firm . (Ref: Sunku Munuswami
Chettiar v . Sunku Narasimhal u Chettiar and Ors. ; 1958 2 MLJ 233 ).
In this r egard, the Counsel s for the petitioner are justifi ed in r elying
upon the Apex Court judgment in the case of CIT v. B . Poset ty & Co.
(supra) . The relevant portion of the judgment reads as under:
“8. Dealing with sub-partn ership and it s validity, S. T.
Desai on The Law of Partnership in India (6th Edn.) at page
152, states the law, thus :
“Sub-partner ship may arise when as a res ult of an
agreement betwee n a partner in a firm and a
strange r the latter becomes jointl y interest ed with
that partner so far as his sh are in the firm is
concerned. Such mutual intere sts may amount to a
partnership, but it is no t a partnership in the main
firm, but what is ca lled a sub-partnership. Such an
agreement will not have the effect o f making t he
stranger a partner of the main fir m. He will have no
demand aga inst that firm, nor will h e be entitled to
ask for a ccounts of i ts business so long as it
continues to trade. It would hardly be questioned
that a sub -partner is not liable to the creditors of the
main f irm for any of its debts .
Sub-partnerships have been recognised in
India both b efore and after the prese nt act came i nto
force. In Muralidhar vs. CIT MANU/SC/0116/19 66:
[1966]62ITR323(SC) the Supreme Court quoted
with approval the fo llowing st atement of th e law
from Lindley on Pa rtnership :
“A sub -partnership is, as it were, a
partner ship within a partnersh ip; it
presuppo ses the existence of a partn ership to
which it i s itse lf subordinate. An agreement to
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share profits only constitutes partnersh ip
between th e parties to the agreeme nt. If,
therefore, several pe rsons are partners and
one of them agrees to shar e the profits
derived by him with a strange r, this
agreement do es not make the stranger a
partner in the original firm. The result of such
an agreement is to constitute what is c alled a
sub-partnership, that is to say, it make s the
parties to it partners i nter se; but it in no way
affects the other members of the prin cipal
firm.”

In this case, the lessee is Nizamabad Group Sendhi
Contractors ( main firm). T he sub-partnership is a distinct
and different firm. It is one recognise d by la w and it is not a
partn ership with the main firm. It will not have the effect of
makin g the partners in the sub -partnership, pa rtners of the
main firm. In other wor ds, the main firm, the lessees and th e
sub-partnership are distinc t and different. In the li ght of the
above legal position, it ca nnot be said that either the sub-
partnership in the in stant case, or any of its partners as a
partner, became a part ner of the main firm, N izamabad
Group Sendhi Co ntractors. The inhibition con tained in s. 14
of the Abk ari act will apply only in a case wher e the lessee
declares any pe rson as its partner. Here, the lessees, M/s
Nizamabad Group S endhi Contractors, had not declared
either the sub -partnership or any othe r person, as its
partner. In such circumstances, the in hibition contained in
s. 14 of the Abk ari act cannot apply. It is true that Sri
Posett y and 10 others formed the sub -partnershi p, “B.
Posetty & Co.” – for a legitim ate business purpose, to
provide the requisite finance, on conditi on of allotment of
certain shares to them out of Mr. Posettys sh are in the main
firm. The su b-partnership financ ed one of its partners to
make a capital investment in the main firm . Such an
arrangement o r agreement between pers ons who formed a
distinct and different firm, is valid in law and to such a
situation s. 14 o f the Abkari act is not attr acted; nor is there
any ba sis to hold that there was any cont ravention of the
provisions of the sa id Act. Law r ecognises formation of s ub-
partnership. The main part nership and the sub -partne rship
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are, for the purp ose of law, dis tinct and different entities .
Registration canno t be r efused to the sub -partnership on th e
ground that one of the pa rtners of the main firm had agreed
to share the profits received by him from the firm, with a
stranger or strangers (members of the sub -partnership)
since the agreement does not make the s trange r or strangers
or the sub -partnersh ip firm, a partner in the o riginal firm
and such a n arrangement or agreeme nt does not affect
either the main firm or its o ther me mbers, in any way …..”
(emphasis supp lied)

55. The Counsels for the respondent h ave in fact relied upon the
judgment of th e Karnataka High Court in the case of Mushtaque &
Co. v. Commis sioner of I ncome Tax , Mysore, (1972) 84 ITR 561 , in
support of their submission that the r espondent has po wer to intro duce
partners in to the Delhi Co rporate F irm. The said jud gment nowhere
gives a unilateral p ower to a pa rtner to introd uce a partner to the
partn ership firm. In fact, by referring to Section s 30 and 31 of th e
Partnership Act , it is held in the said judgment that no person shall be
admitted to the pa rtnership of a n existing firm without the consen t of
the e xisting partners. The judgment is of no hel p to the respondent.
56. In view o f above conclusion, the i ssue of n on-joinder of the
partners alleged to have been indu cted by the respondent is liab le to be
rejected . Further, the agreement in term s of the Deed which
incorporates the arbitration clause is between the parties herein and n ot
with the alleged inducted partners .
WHETHER G RANT OF RELIEF AS PER PRAYED FOR IS
BARRED IN VIEW OF THE PROVISIONS OF SRA:

57. A submission was made by the Counsels for the respondent that
the Deed being t erminable in natu re, the same cannot be speci fically
enforced und er Section 14(d) of the SRA in view of C lauses 7A and 8
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read with Clauses 5 , 9 and 10 of the Deed. Reliance was also placed
on Sectio ns 14(b), 16(b) and 41(e) and (i) of SRA for an argu ment t hat
the Deed cannot be specifically en forced/ injunction cannot be g ranted.
The relevant portion of the said provisions of the SRA are reproduced
as under:
“14. Contracts not sp ecifically enforceable .- The
following contracts cannot be spec ifically enforced,
namely: –
(a) ……………………….;
(b) a contract, the performance of whic h involves the
performance of a continuous duty which the court cannot
supervise;
(c) a contract which is so dependent on th e personal
qualifi cations of the parties that th e court cannot enforce
specific performance of it s material term s; and
(d) a contra ct which is in its nature determinable .”

xxx xxx xxx
16. Personal bars to relief. –
(a)……………
(b) who has become incapab le of performin g, or
violates any essential term of, the contract that on his
part remains to be performance , or acts in fraud of the
contract, or wilfully acts at variance with, or in
subversion of, the relation intended to be establ ished b y
the con tract; or
(c) ……………………………”

xxx xxx xxx

41. Injunction when refused .- An injunction cannot be
granted –
(a)………………
(b)………………
(c)………………
(d)……………….
(e) to prevent the breach of a contract the performance
of which would not be specifically enfo rced;
(f)………………
(g)………………
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(h)………………
(i) when the conduct of the plaintiff or his agents has
been such as to disentitle him to t he assistance of th e
court;
(j)…………………”

58. To consider this submis sion based on Section 14(d) of the SRA
this Court has to con sider t he effect of Clauses 7A and 8 read with
Clauses 5, 9 and 10 of the Deed , which I have already been
reproduced above. A contra ct is s aid to be determina ble if the ir exist s
in the cont ract a clause for termination at the option of one of the
partner s.
59. I have already in para graphs 33 and 34 above held that Clause
7A of the Deed does not contemplate termination of the petitioner
from partn ership by the respond ent. So, it is not a provision relating to
determination of the Deed. Even , Clause 8 prescribes terminat ion of
the Deed / dissolution by th e respo ndent , which Clause though
invoked, has not resulted in t he terminatio n of the Deed/disso lution .
Rather, it is the case of the respondent that the Delhi Co rporate F irm
continues to be ex ist / survive . Moreover , the stipulat ion in Clause 8
that the partnership being not „at will ‟ also fo rtifies my conclusion that
the partner ship is not determi nable. Further, Clause s 5, 9 and 10 which
prescr ibes leaving amount ; the consequenc es of termination /
retirem ent / death ; and Non -Compete and Buy-out by thir d parties
respectively are not indicati ve of the Deed being determinable .
60. Therefore, Section 14(d) and for that matter Section 41 (e) of
the SRA have no applica bility . It is also settled position of law that a
contract i f not determinabl e, the Court is within its power to enforce
the same (Ref: Intercontinental Hotels Group -India Private Limited
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and Ors. v . Shiva Satya Hotels Private Limited , 2014 GLH (1) 357).
61. Having said that I may st ate, the Counsels for th e respondent
may be j ustifi ed in arguing as a genera l rule that wher e a contract is
determina ble, the Court will not order the specific perfor mance of a
partne rship. But there are exception s to th is general rule, which
accordin g to Lind ley & Banks on Partnershi p, 20th Edition at 23 -137,
page 841, states as under :
“Where one or mo re partners are intent on ignoring the
terms of the partnersh ip agreement or otherwise acting in
breach of the implied duty of good faith which they owe to
their co -partner s, the court will, in an appr opriate case,
intervene either by gra nting an injunctio n against the
miscreant part ner(s) or by a ppointing a receive r or a
receiver and manager. These two remedi es are very
different in their effect, not least because the appointment of
a receiver will affect all the partners, both claimant( s) and
defendant(s ) alike. Lord Lindley summarised the posi tion
as follows:
“These two modes of interference require to be
considered separately; fo r they are not had recourse
to indiscriminately. The appointment of a receiver ,
it is true, always operate s as an injunction , for the
Court will not suffer its office r to be interfered with
by anyone, but it by no means foll ows that because
the Court will not take the affairs of a partner-ship
into its own hands, it will not restrain some one or
more of the partners fr om d oing what may be
complained of. ”
Similarly, at 23-140, pag e 842, it is stated as under:
“Exclusion: Wher e a partner, who had recover ed from
a temporary mental disorder, was excluded from the
management of the partnership affairs, he was gran ted
an injunction restraining the o ther partners from
seekin g to prevent him tr ansacting the b usiness of the
partnership. In another case, an exclud ed partner was
granted an injunction restraining the defendant from
applying any of the moneys and effects of the
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partnership otherwise than in the ord inary course of
busine ss, and from obstructing or interfering with the
claimant in the exercise or enjoym ent of his rights
under the partnership agreemen t. A similar attitude
will be adopted where any partner se eks to ex clude his
co-partners from possession of any partne rship
chattels or l and, even if he is the sole trustee thereof.
The position will be no different after the firm has been
dissolved. Ho wever, the balance of convenience may,
in some case s, weigh against the court ‟s interference. ”

And at 23-145, page 8 44, it is stated as under:
“On the same basis, it m ay be that injunctive relief
could be obtained against a partner who seeks to
obstruct a particular course of action which will
benefit the partn ership at no detriment to himself, if his
actions involve a deliberate breach o f the duty of good
faith, e.g. where he is attempting t o secure an
alteration to the partnership agreement in his own
favour as the price of his co -operation . However, the
current edito r conside rs that such an order would only
be entert ained by the court in exceptional
circumstances. ”

62. In view of my conclusion above and the fact that the terminatio n
of the Deed has not been effected coupled with the action of the
respondent not being a bo na fide act ion/ in good faith, the exception to
the general rule that a contract cannot be specificall y enforced shall be
applicable and the plea of the Counsels fo r the respondent is rejected.
63. The learned Counsel s for the respo nden t have relied upon the
judgment in the ca se of Rajasthan Br ewery Ltd. (supra), where in the
Court in the facts of the case held that even in t he absence o f specific
clause auth orising or ena bling either p arty to terminate the agreem ent
in the event of happening of the events specified therein , from the very
nature of th e agreement being a private commercial transaction , the
same could be termina ted even without assigning any reason by
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serving a reasonable notice. The said judgment is clearly
distinguishable o n facts inasmuch as the case in hand is not a private
commercial transa ction but a partnership, w herein the relation between
the partners is fiduciary in character where the partners act f or the
comm on be nefit of all in all t ransactions relating t o the firm‟s business
and not indulging in taking advantage of one a nothe r by
misrepre sentat ion, conce alment of any sort. Further , there is n othing i n
the Deed which remotely indica te termination o f a partner except
termination of the Deed /dissolution . That apart, the termination has
been effected without even a n otice as cont empla ted und er Clau se 8
for eliciting a reply from the petitioner o n the g rounds o n which the
termination has been effected.
64. Similarly , the reliance placed by the Counsels for the respondent
on the judgment of this Court in the case of Turn arou nd Lo gistics
Private Ltd. (supra) is distinguishable in as mu ch as the ground on
which injunction against termination sought was that the plaintiff
therein had furnished a bank guarantee . On the other han d, the
defendant therein, justified the term ination on the ground that the
plaintiff was not an IATA approved company . It was on these facts
that the Court held the termination cannot be un reasonable , bad in law
or illegal. Even the Division Bench judgment of this Court in the case
of Indian Railway Catering and T ourism Corporation (supra) has no
applicability to th e facts of this case inasmuch as the contract between
the parties there in was a joint-venture agr eemen t, which is purely a
commercial contract , whereby the parties came tog ether for opera ting
a luxury tr ain. An argument by the respondents therein that th e train is
akin to a partnership property was neg ated by the Court in the facts of
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that case. Further, t he reliance place d on the judgment of a Coordinate
Bench of this Court in M/s Bharat Cate ring Corpora tion (supra) is
also misplaced in as mu ch as the re is a specific clause in the contract
which stipulated that the contract coul d be term inated b y the
respondent for vari ous rea sons provided therein unlike the case in
hand.
65. Insofar as the subm ission of learned Couns els for the respondent
that this Co urt in view of Sec tion 14( b) of the SRA also would not like
to give direction f or specific performance of the contract as grant of
such direction would involve a performance of a continuous duty
which the Court cannot supervi se by relying the ju dgment of t his
Court in Heijan Solid key Petroleum (supra) . This submissi on of the
counsels is also not appealing in the facts of this ca se as noted in detail
above. In fact, what has b een said in Lind ley & Banks on
Partnership , 20th Edition at 23 -137, pag e 841 and at 23 -145, page
844 as reproduced in paragraph 61 above are applicable on all fo urs to
reject this argument . Additionally, as held by Bombay High Court in
Ganpat v. Annaji , 1898 (23) ILR 144 Bom ., where a partner has been
wrongfull y terminated from the partnership the Court can grant an
injunction restraining the other part ners from preventing him from
taking part in the business of the firm.
66. Even the plea of th e Counsels for th e responden t by relying on
Section 1 4(c) of SRA that when both the parties hav e made it clear
that the y cannot work with each other as both of them have contended
that continuance of other party is not in the best i nterest of the firm ,
the Court shoul d no t make the parties work with each other though
looks appealing on a first blush , the acceptance o f such a plea would
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have the effect sus taining the impug ned email dated October 13, 2020
terminating the pet itioner f rom the partnership which prima facie in
the facts is imper missible . And as s uch, the petition has to be decided
in accordance with law . It is my conclusion , prima f acie, the
termination of the partnership of the petitioner being il legal and in
violation of the Deed , without the re being any power o n th e
respondent to take such an action, th e legal consequence thereof that
the partner needs to be reinstate d must follow. Even the Couns els for
the petition er are justified i n relying upon Pollock & Mulla on the
Indian Partnership Act, 8th Edn., at page 176, wherein the followi ng
has been stated: –
“An irre gular expulsion is wholly without effect ; it is like a
convi ction reached without jurisdiction. The partner whom
the majority purpor ts to expel does not cease to be a
partner, and his proper remedy is t o claim reinstatemen t in
his right, n ot to s ue for da mages whi ch, since he has n ot
ceased to be a partner, he cannot ha ve sustained. ”

67. The Counsels for the petitioner are also right in relying upon the
judgment of Bombay High Cour t in Cham psey Bhimji & Co. (supra),
wherei n in para grapgh 2 the Court has held as under:
“2. Having regard to the very clear wording of Order 39,
Rule 2, and to th e fact that this Court has always exerc ised
the power of remedying an injury or wrong by a
mandator y injunction on a n interlocutory app lication, I
have n o doubt whatever that this Co urt has power to make
a mandatory order on an interlocutory a pplication. I f the
Court had n o such power it would be in the power of a
party to cause insuf ferable inconvenien ce and grave inju ry
to another durin g the whole time th at would elapse
between the commission of the wrongful act and the
hearing of the suit fi led to remedy the wrong and redress
the injury .”

68. In support o f the ir submission the lea rned Counsel s for the
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respondent h ave relied upon the judgment s in the cas e of Marriott
International Inc. (supra) and Ramch andra Lalbhai (supra) are not
appliable in view of my conclu sion drawn ab ove. Moreover, the facts
in these judgments reveal that the contrac ts therein were commercial
contracts unlike the case in hand where this Court is c oncerned wi th a
partnersh ip deed.
69. Even the submission of the Counsels for the respondent based
on Section 16(b) of the SRA to contend that specific performance will
not b e granted in favour of a person who violates a n essential term o r
acts in vari ance of the contract is not appealing. This submis sion is
primarily premised on th e ground that the petitioner declaring the
withdrawal/ retire ment of the respondent went ahead distributing th e
equity of the resp ondent to 23 other persons . Admi ttedly, there is no
challen ge of the responde nt to the email dated October 12, 2020 . In the
absence of any challen ge to the same, it is doub tful wh ether the
respo ndent can say that the act of the petition er amoun ts to breach ing
the terms of the Deed. In any case , there are inter -se allegat ions made
by the parties which necessar ily ha ve to be adjudicated finally i n the
prospective arbitr ation proceedings . The judgment rel ied upon the
Counsel for the responde nt in support fo r their contenti on in Rajeev
Mehra (supra) is not a decision under Section 9 of the Act of 1996 nor
it arise s from a partnersh ip agreement, rath er it is on an application
under Order 12 R ule 6 in a suit for specific per formance of an
agreem ent to se ll wherein despite admi ssions of the oppos ite party but
on an observation that the plaintiff therein a cted at variance with the
agreement has denied th e relief of specific performa nce at that stage
and had relegated the parties to trial. Reliance was placed b y the
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Couns els for the resp ondent on J.L Gugna ni (HUF) (supra) and
Chancery Division jud gment in Carmichael v. Evans (1904) 1 Ch.
486. Insofar as the judg ment in the case of J.L Gugnani (HUF)
(supra) on which reliance has been p laced by the C ounsels for the
respo ndent is concerned, t he same is on similar lines to Rajee v Mehr a
(supra), wherein th e division bench of this Court also refused to grant
specific performance of the contract as the conduct of one of the
parties was contrary to the contract therein. Rightly s o, for a claim f or
specific performance , a party has to show that it was ready and willing
to perform the contract and has not breached the same. It is in this
perspective that the j udgment s on which reliance has been placed
needs to read and underst ood. In Carmich ael v. Evans (supra ), the
Cour t refused to grant inju nction against expulsion of one the partners ,
in the interest of the firm, as the partner seeking injunction therein was
convicted of fraud by the Magistrate . The judgment is distinguishable .
70. A rela ted argument was tak en by the C ounsels for respondent
that under Section 41( i) of the SRA , the conduct of the petitioner does
not enti tle him the relie fs as sought fo r by relying upon Gujarat
Bottling Co. Ltd . (supra) . As stated above, there are allegation s and
counter -allegations by the parties on th e breach of the terms of the
Deed. The said alle gations have to be conclusiv ely proved on finding
of facts based on cogent evidence in the prospective arbitration
proceedi ngs. Moreover, I have concluded , that the termination of the
petitioner f rom the partnership by the respondent , of which injunction
is sought , prima facie is in violation of the Deed, such a plea i s
unsustainable . Hence, the reliance placed on t he judgment in Gujarat
Bottling Co . Ltd. (supra) is misplaced in the f acts of this case , as the
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contract in hand is a partnership contrac t and certain rights flow in a
favour of a partner under the Par tnership Act and such rights may not
be adequately pr otected / compen sated if I am to agr ee with the pl ea of
the Counsels for the respondent.
71. The Counse ls for the res ponden t have also relied upon the
judgments in Samay Singh (su pra), Nandan Pictures (su pra) and
Online H otel Reservations Pvt. Ltd . v. Classic Citi Investment Pvt.
Ltd., 2009 (158) DLT 739 ; to contend that relief in t he nature of final
relief should not be granted ; to buttress the s ubmission that injunction
should not be granted to create new state of affai rs; and a direction
restoring the sta tus of the parties after termination under Section 9 of
the Act of 199 6 should not be granted , respecti vely. The said
judgments are dist inguishable on facts when th e partners hip consist of
two partners out of which one partner has been terminated by the other
and a serious qu estion arises on the status of such a par tnership.
RELIEF :
72. In view of my above discussion , prima facie the termination of
the pet itioner from partne rship by the respondent in term s of email
dated October 13, 20 20 being in violation of the Deed and the
Partnership A ct, keeping in view the mandate of Section 12 o f the
Partn ershi p Act, where a partner has the right to take part in the
conduct of the busi ness and also keeping away the p etitioner from t he
partnership busines s shall be to his prejudice , if he fi nally succeeds in
the pros pective arb itration proceedings , I direct that there s hall be a
stay of the operation of the email dated Octob er 13, 2 020 issued by the
respondent terminating the petitioner from the partnership till the
conclusion of the pros pective arbitration proceeding s.
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73. It is made cl ear that the aforesaid is a tentative / prima facie
view.
74. The petition is disposed of. No c osts.

V. KAMESWAR RAO, J

JANUARY 18, 2021/aky/jro

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