22 Jan 2121

The jurisdiction under Section 9 of the Arbitration Act is a jurisdiction to order interim measures preceding or during or after the arbitral proceedings - Delhi High Court

Case : Rajiv K Luthra v. Mohit Saraf FAO(OS) (COMM) 13/2021, CM No.2329/2021 and CM No.2330/2021

Court : Delhi High Court

Bench : Justice Rajiv Sahai Endlaw and Justice Sanjeev Narula

Decided on : 22 Jan 2121

The Relevant Statutes

Sections 9 and 37 of Tthe Arbitration and Conciliation Act, 1996

The Indian Partnership Act,1932

Brief Facts and Procedural History:

1. This appeal has arrived before the Honourable High Court against the judgement of Single Judge in the matter of dispute between appellant and Respondent, co-founders of L&L Partners. On October 13, 2020, the appellant sent an email to the respondent purportedly terminating the respondent’s partnership in the Delhi Corporate Firm with immediate effect.

2. Aggrieved by the termination respondent approached the honourable High Court of Delhi and filed the petition under Section 9 of the Arbitration and Conciliation Act, 1996. The termination was held to be violative of Partnership Deed and Indian Partnership Act, 1932 by the Honourable Court. While allowing section 9 of the Arbitration and Conciliation Act, 1996 Honourable Court directed the stay of the operation of the email dated October 13, 2020.

3. Aggrieved by the order the appellant has appealed before the Honourable High Court of Delhi.

The Issue of the Case

Whether the appeal against the order staying the termination of the respondent from the law firm maintainable?

The Observations of the Court:

1. It was observed by the Honourable Delhi High Court that Advocates, who advise others and dispassionately seek legal resolution of the disputes of others, should not be seen as resorting to police aid against each other therefore what restrain against both appellant as well as respondent, ought to be ordered for the preservation of status quo.

2. The Honourable Delhi High Court observed that granting access to the respondent to the email id of the law firm would give access to the respondent to the entire database of the law firm relating to all affairs whatsoever of the law firm.

3. The contention by the counsel for the appellant stating how the access would make respondent capable of doing harm and mischief to the law firm and the clients, was considered by the Honourable Delhi High Court.

The Decision Held by the Court

1. The appellant is directed to restore the respondent access to the law firm’s e-mail id and is restrained from directly or indirectly preventing or otherwise restricting the respondent’s access to and use of the Delhi firm’s IT infrastructure however the respondent shall be entitled to the said access, not from the offices of the law firm but remotely from his home.

2. Appellant and the respondent are directed to use all the information on such system of the law firm for the bona fide use of and in the benefit of the law firm.

3. The appellant is restrained from directly or indirectly interfering with the respondent servicing the clients of the law firm.

4. Both appellant and the respondent are restrained from, (i) making any communication in any manner whatsoever to any person, prejudicial to the affairs of the law firm or prejudicial to each other (save before the Court / Arbitral Tribunal); (ii) inducting any new partners/associates or any other personnel and/or from adding to a regular financial liability of the law firm; (iii) doing any other actions towards changing the status as existing immediately prior to the filing of the petition and if already changed since then, as existing today; and, (iv) from interfering in any manner whatsoever, directly or indirectly in performance by each other or by any other advocate or personnel of the law firm, of their respective roles in the discharge of their duties and in servicing the clients and affairs of the law firm.

5. However, the respondent, under orders of the Single Judge or under this arrangement, shall not be entitled to physically access the offices of the law firm as the court is of the opinion that such an event is likely to lead to an ugly situation. The appellant to also, by the next date, on affidavit, furnish accounts of the law firm, with effect from 13th October 2020 till date, in a sealed cover.

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