11:38 Matter number five is on – the sixth scheduled is Shardul Suresh Shroff v/s Cyril Shroff & 6 others that everyone (who’s a lawyer and not there for their own case) is waiting for.
11:41 P Chidambaram is sitting in the first row. Not sure if he’s acting for either of the Shroffs, here for another matter or just chilling here out of curiosity.
11:46 Confirmed: Senior advocate Chidambaram is acting for Shardul Shroff against his brother.
11:49 Priyal Guliani @PriyalGuliani of Bloomberg TV tweets:
Amongst family Cyril Shroff, Vandana Shroff & Pallavi Shroff present in the courtroom says @PriyaSheth7
P Chidambaram for Shardul Shroff, Iqbal Chagla for Cyril Shroff
12:10 Two reports now that Darius Khambata is also acting on for Cyril Shroff (presumably alongside Iqbal Chagla)
Sajeet Kesav Manghat @sajeetkm: And Darius is appearing for Cyril Shroff
12:21 The hearing has begun…
12:26 P Chidambaram (“PC”) says that Bharati Shroff’s will was videographed.
12:29 PC said: However unfortunate this may be, the fact is that defendant number 1 [e.g. Cyril Shroff], has been disinherited.
Iqbal Chagla (IC) interrupts for Cyril, saying that there had been a suppression of facts.
PC takes back initiative: Let me have the privilege of addressing the court…
12:34 PC argues for Shardul that the managing committee’s overriding of the will and deciding to divide Bharati Shroff’s equity evenly between the brothers, was unprecedented in the history of the firm.
PC says that never before had a decision been taken by resolution but only ever unanimously, and that while the mother was alive, she was consulted in all decisions.
12:37 PC says that two members of the management committee took a decision and passed it in respect of 52,000 “units” of the firm – units presumably referring to the equity points of Bharati Shroff, which are equivalent to a 22.5 per cent stake in Amarchand.
PC is reading an email by Abraham and Goulding (see background below), which they allegedly circulated in the capacity of managing committee members.
PC is objecting that Abraham and Goulding have taken upon themselves the role of the probate court as far as the will of Bharati Shroff was concerned. PC is contesting that they can do so and how they could have assumed that role.
[Readers may recall from earlier story, that the management committee allegedly decided to overrule the will and split the inherited equity equally between the brothers – click here for more details]
12:41 PC says that the best way to deal with the matter would be to put the 52,000 units of equity bequeathed by Bharati Shroff in suspension.
12:53 Bharati’s will reads: “I have made a conscious decision with the specific intention to keep Cyril and his family out of the management of my estate”.
Her will adds that her relationship with Cyril had been strained since 2003 and had never been fully repaired.
13:01 The gloves really are off in Delhi - a lot of personal massala being spilt here in open court from Shardul Shroff’s side. On the facts, for now: the will was dated June 2012, a codicil to the will was made on 25 January 2014.
13:15 According to PC, the will allegedly says that Cyril and his family were abusing and neglecting Bharati Shroff. More to follow…
13:18 Personal massala aside, getting to the crux of the matter, some legal arguments first for now: PC argues that the legal issue is whether a pre-will document in any way impact her testamentary and dispositive power.
PC says that things were moving in the right direction in mediation, but ended in great disappointment alas.
13:21 PC finished arguing, now Iqbal Chagla (IC) is up.
13:27 Actually, Darius (Khambata) is also joining in – seems he’s appearing on behalf of the two independent foreigners (George and James). He says that he’s upset that allegations of “inter meddling” were made by PC. He is saying that an internal email of 12 November has been suppressed, in which the two had an assurance that they would not be “inter meddling” by sending the email that PC took objection to.
Arguing on behalf of the two “independent professionals”, Darius says that they passed a resolution that was ratified by the majority.
How can it be alleged that the family arrangement or partnership agreement was breached? he asks.
Both George and James acted in accordance with those contracts.
It’s fine if Shardul doesn’t want to honour that agreement, says Darius, but don’t make wild allegations of a breach.
Was this allegation necessary, asks Iqbal, fully agreeing with Darius.
13:31 Iqbal then asks, possibly rhetorically, for what purpose has this suit been filed?
Justice Dhanuka doesn’t take it as a rhetorical question and answers: Maybe to find a solution?
What a judge. Gotta give it to him, he’s certainly keeping his cool.
13:33 Iqbal is arguing that the partnership agreement is an arrangement that should have been at the forefront, and it is sad that Shardul’s counsel have gone into the details of an un probated will.
However, IC says that the Bombay side is still ready for mediation.
13:43 What would we mediate on, asks IC? The suit of course!
PC plays nice, and says they’re ready to mediate on the suit, which he also said in the beginning.
IC asks why his learned friend (PC) is being so guarded – why had he not spoken of the allegedly suppressed email of 12 November?
PC proposes that the profit from those 52,000 units that belonged to Bharati Shroff, be kept in a separate account.
13:37 Justice Dhanuka interjects with a stinging sizzler: Don’t you think spending time with clients will help you earn more than spending time here?
Everyone laughs. Whoever said family disputes can’t be fun?
13:51 Chidambaram, Iqbal and Darius talk mediation.
PC makes a statement unreservedly accepting that we will not act in respect of the 52,000 units of equity.
Darius says both warring brothers should come to a settlement.
PC complains that Darius is acting beyond his brief.
Darius disagrees and says that the parties must ALWAYS look at a settlement and says that we must act beyond our brief.
PC responds that there is no atmosphere as of now for mediation, so let’s begin somewhere (by freezing those 52,000 units), right now.
Iqbal says that there need to be two mediators – one from commerce and one from the legal fraternity, to solve the entire problem, rather than come up with a piecemeal solution.
PC says that the Delhi Shroffs would come, then asks for the court to adjourn until 3pm.
PC and Iqbal discuss with each other, and takes permission to return at 3pm.
Court grants permission.
We’ll keep updating bits and bobs and will be back at 3pm in any case.
14:36 Long massala update on Shardul’s arguments, via Chidambaram (PC)
Some more detail on the less legal parts of counsel’s arguments so far. PC basically read out most of the will (and later codicil to the will in court).
The codicil and the will was videographed, holographed and attested before witnesses, said PC.
PC, reading out the will and codicil, said that Bharati wrote that she was “reduced to a mere showpiece” to be brought out by her younger son, Cyril, only when he wanted to show the world how nicely he treated her. Otherwise, she was upset that she was left completely unattended in the family residence in Mumbai and treated as though she did not exist – for “days on end” there would be no conversation, she wrote.
According to PC, she wrote that she had to hire an old cook for an hour even to get her meals cooked, which at one point in time were cooked in another building without Cyril or his wife’s knowledge. According to PC, she was told to “eat what there is or make your own meal”.
She wrote that her relationship with Cyril had allegedly been strained since 2003, and he continued abusing and neglecting her, and that he was “non-transparent”, “irrational” and “immoral”.
The original will made in 2012, stated that her 52,000 equity units in Amarchand Mangaldas, the firm, could be bought out by each brother with the proceeds to be held by a specified charity.
However, importantly, in the codicil to the will made in January 2014, Bharati Shroff stated, according to PC, that she was disinheriting Cyril and his entire family because the above incidents had disturbed her to the core.
PC said that according to the will, Cyil and his family’s arrogance and selfish behaviour crossed all boundaries, and that she had made a holographic will to establish the fact that the expressed intention of hers to disinherit the Bombay side of the family of all shares, movable and immovable property, was not to be doubted.
She was also upset, she wrote, that Cyril had wrongly attributed statements to her, in front of his in-laws (Samdhi), that were accusatory.
PC argued that Goulding and Abraham’s circulation of the board resolution that Bharati’s 52,000 equity units be split equally among the brothers, was the first ever non-unanimous decision of the management board and was meddling with the will and assuming the role of a probate court.
The firm’s CFO, Ashwin Maheshwari, was one of the defendants, explained PC, because the next quarterly profit distribution, which is due to happen on 10 December, should not happen under the 50-50 split but should be frozen, with the profits for the late mother’s 52,000 units placed in a separate account.
14:55 Reconvening shortly at 3pm with both sides hopefully having come to an agreement about the two mediators who can fix this, frankly, rather undignified mess. (If there is anything left to salvage that is other than a separation of the two brothers, possibly Ambani style with certain no-go areas that would no doubt lead to more disputes down the road.)
15:01 Cyril has been very composed throughout the hearings so far, and has not said a word, letting counsel do the able talking. Shardul, we understand, is not present in court, though his wife Pallavi Shroff is.
15:02 Update: A junior rushes into the courtroom and asks for five more minutes time as the seniors are still discussing a way to mediate (or not).
15:06 While you wait, might also want to check CNBC’s The Firm’s Twitter feed (in reverse chronological order), which just published a bulletpoint highlight summary of the first half the proceedings and arguments.
15:26 We’re back.
Iqbal Chagla (IC) is telling the court that they are seeking time to file their reply and to inform the court that mediation is on.
Despite that, complains IC, his learned friend Chidambaram had gone on to discuss the contents of the will, which is being criticised by many. He shouldn’t have done that, says IC.
Cyril talks quietly to his wife Vandana, standing by his side in court.
15:34 Chagla tells the court that both brothers have agreed on one mediator but are trying to figure out the other two mediators.
Chagla tells Justice Dhanuka that he hopes his writing is legible.
Chidambaram quips that Chagla’s writing is always legible.
15:38 Justice Dhanuka has heard no objections to Iqbal’s proposal and tells the parties to enter into time-bound mediation within the framework of the family agreement.
15:43 There seems to be agreement on the Shroff mediators: Investment banker & JM Financial founder Nimesh Kampani was the pick from both sides. Cyril proposed senior counsel Harish Salve, who was accepted by both parties, and Shardul nominated Justice BN Srikrishna, which again both parties agreed on.
15:53 The court ordered mediations to finish by 31 December 2014, and the next hearing for 19 January.
15:56 An update from earlier – apparently, according to PC, the family partnership agreement spells out in great detail exactly what is to happen in the case of the death of either or several of the three family members.
Does anyone have a copy we can see (rhetorical question).
18:13 Update: Just noticed something in our notes that we missed. In closing, Chagla told the court that the Mumbai Shroffs would be filing an affidavit within three weeks showing the “deep involvement” of Shardul in the will.
Looks like this one isn’t over…
18:21 And here’s a tweet from the Indian Express of P Chidambaram leaving the Bombay HC after a hard day’s work
Senior lawyer P Chidambaram leaves from Bombay High Court after a hearing. He was representing Shardul Shroff. pic.twitter.com/cXikxEDrz8
— The Indian Express (@IndianExpress) November 18, 2014
Doesn’t seem like the Mumbai side will take today’s allegations lying down.
20:42 The Bombay high court’s short order can be accessed here. Something to be said for Bombay efficiency!
1:19 Unlike over the weekend, when only a handful of papers have reported the dispute, after the high court hearing it’s all become fair game for the mainstream media and there’s a raft of stories. And even TV, with ET Now’s suitably breathless coverage, has jumped on the Shroff vs Shroff story.
All said, if you believe any publicity is good publicity, maybe it’s doing the Amarchand brandname some good?
Background
As first reported by Legally India on Friday, Shardul Shroff filed three petitions in the Bombay high court, with one probate petition and two petitions against his brother Cyril Shroff, his wife Vandana Shroff, non-family equity partner and management committee member L Viswanathan, external management committee members James Abraham and George Goulding (respectively former senior members of BCG, and Slaughter and May), Amarchand’s CFO Ashwin Maheshwari, and the firm itself.
At issue is the brothers’ late mother’s will, who allegedly granted all her property on her death three months ago, including her at least 22 per cent equity stake in the firm, to Shardul alone. This could have upset the power balance between the two brothers, with Cyril and Shardul respectively managing the firm from Mumbai and Delhi with roughly equal profit shares and control.
Bombay high court photo by Michael Siegel
Comments
From Delhi side, though less legal arguments being made so far and rather more personal arguments, it seems...
Shows that there is no already arrived settlement, there is still a long way to go before the spoils get divided
Am not in court, am blogging / tweeting from home.
Ps: I'm happy to get the live updates..highlight of my otherwise boring morning:)
Glad to hear you're enjoying our coverage :)
These people talk of ethics & then wash their dirty linen in public!!!!!!!!!
Regardless its a shame a dignified woman's name is being dragged around the courts for such greedy purposes.
Shame in fact to all involved.
The lady spent all her life in Mumbai. at the fag end of her life, to shift to a new city... don't think that was even the option.
secondly, if she wanted to exercise that option, there would have been some bad blood, and the mumbai brother would have definitely taken preventive action. From the point of view of protecting his interests in the firm. : which apparently the mother did not want.
Whatever the case. It seems the mumbai brother really, really mistreated the mother. unlike reliance, where the brothers inherited the father's legacy, in the present case, the borthers built their own. And inspite of differences stayed as one firm - at least on paper.
So for Shardul to take the drastic step of ganging up with the mother against cyril, - there has to be some substantial reason for the same.
PC read the most damaging portion of the will in open court. - that would not have been without instructions of Shardul.
Whatever the outcome, cyril's reputation of mother's mistreatment, will definitely effect him. personally and professionally.
You make that statement in court on the first hearing: you send out a clear signal.
there is very limited that cyril can do now. any retaliation would only get more muck on him.
stop kidding yourself if you think this will affect him professionally...
Are firm associates & partners being approached by both sides as well? outside poaching attempts must also be on for both lawyers & clients
Meri zindagi, meri mehnat, uski naam, uski kamai,
Choosle macchar, choosle, kyunki jab upar se chaanta lagega tab, do thappa khaali khoon milega.
tab na rehaga izzat, na rahega kamai.
IMHO the judge should say, are you brothers not breaching the purpose and intent of partnership act, the concept of unlimited liability of partners, and limited no of partners, by structuring such multi layered partnerhips. And should ask the Sub-Registrar to initiate action.
Same goes for Shardul, or host of other so-called Stars, Zia, Salve, Nariman, etc etc etc
And its her house where she has lived most of her life with her husband and kids; won't it be hard to leave such a house.
For the above comment saying she's dead - i really don't know where to start - you want to feel sorry for cyril for having treated his mother unjustly and hence having not been granted her own property. Good luck.
And its her house where she has lived most of her life with her husband and kids; won't it be hard to leave such a house.
For the above comment saying she's dead - i really don't know where to start - you want to feel sorry for cyril for having treated his mother unjustly and hence having not been granted her own property. Good luck.[/quote]
What's to say she would have gotten any attention from the equally busy Delhi Shroffs? Or they wouldn't have ignored her? Or if there was such concern over her neglect, her family in Delhi didn't address it? From rumours around, it appears this is the way of the family!
What I don't understand is why Cyril thinks he has some right over this property. It belongs to the mother, to do with it what she pleases. Its absolutely absurd to feel bad for Cyril as if he was entitled to this property
@ WTF- she started a firm and built it with her husband (could have been that reason for she was smart enough to know that her will is not going to get the firm or her family any feather on their caps. pretty sure the firm, her and her husbands legacy were not in her mind when she wrote the will). Also, no harm in demanding love and respect. but if you are not getting despite asking/demanding for it, and having a loving elder son (if), the choice should be simple.
Nothing achieved except shame.. and multiple feelings of pleasure (did not want to use O word) for Kian.. given that his web site has had hits beyond his wildest dreams.
To the shroff brothers i say.. sit in a room.. without your so called advisors and hash things out mano-a-mano.
In terms of hits, we've had more, but there's no denying that this is the biggest law firm news story of the year by far...
My prince - where art thou!!
For instance, a lot of salary stories, CLAT stories, law school scandals, etc have far more hits so far. So did the SC sexual harassment stories, for example.
However, in terms of law firm stories these are clearly some of the biggest stories around, for obvious reasons.
But yeah, unlike the early days of the internet when you could eat hits (or at least monetise hits directly), that's not the case anymore, so whether one story gets a lot of hits or not is less important in the grand scale of things, though we're always happy when our stories get read of course...
Hope that answers things somewhat :)
Certainly don't see many legal or strategic reasons for it, do you?
In terms of hits, we've had more, but there's no denying that this is the biggest law firm news story of the year by far...[/quote]
This is the biggest Indian law firm news ever!
This was more like India Vs Pakistan running comentary.
You mean Adani? #BLOWTOMODI
And before anyone asks, yes, because they sacked me.
ARE YOU SERIOUS?? The doyen of Indias BIGGEST law firm... and such are the living conditions for her? Something is seriously wrong. One would imagine that she would have an army of domestic helps to cater to her every whim and fancy...
That being said, today all the juniors in Dhanuka J's court thanked their stars they hadn't moved to Delhi to litigate. Sigh. Any Delhi lawyer here? Does Delhi have some class left?
Boss, Bombaite is saying Delhite had no class because something is fishy here. The will is too much drama to be true.
In any case I think Mr Khambata has resigned from the post of AG.
Chidambaram succeeded because Shardul wanted to wash dirty linen in public!!
Crazy.
#BLOWTOMODI
in family matters things arent always that simple....there s always more than meets the eye....
[i]If having two cultures wasn’t complicated enough, there is also the two-engines of growth theory. Cyril Shroff uses many variations, including the “two pilot” theory and the “two-wheels-of-a -bicycle” theory. So one engine, pilot or wheel (take your pick) is the family: The Shroffs. The other is the professional lawyers working for the firm. On this, the two brothers agree completely. They believe that the family presence allows for a greater appetite for risk and clients feel a sense of stability and comfort in the perception of continuity. At the same time it is crucial to promote a managerial class of able professionals who also have a stake in the firm’s success.[/i]
Source: http://forbesindia.com/printcontent/15382
http://bombayhighcourt.nic.in/generatenewauth.php?auth=cGF0aD0uL2RhdGEvb3JpZ2luYWwvMjAxNC8mZm5hbWU9Tk1TMjU1OTE0MTgxMTE0LnBkZiZzbWZsYWc9Tg==
For Shardul Shroff:
Mr. P.C. Chidambaram, Sr. Advocate along with Mr. Soli Cooper, Sr. Advocate with Mr. F. D'Vitre, Sr. Advocate with Mr. M.P. Bharucha with Mr. Jehangir Jeejeebhoy with Ms. Nandini Singh and Mr. Pruthviraj N.K. i/b M/s. Bharucha & Partners..
For Cyril & His wife.
Mr. Iqbal Chagla, Sr. Advocate along with Mr. Tushar Cooper with Mr.Gautam Ankhad with Mr. Rohan Dakshini with Ms. Rajashree Ram and Ms. Nikita Mishra i/by M/s. Federal & Rashmikant for defendant nos. 1 and 2.
For the non-partner members of the Management Committee.
Mr. D.J. Khambatta, Sr. Advocate along with Mr. Aditya Mehta with Mr. B. Desai with Mr. Verghese Thomas with Ms. Shanaya Irani and Ms. Aditi Deshpande i/by M/s. J. Sagar & Associates
For Mr. L.Vishwanath.
Dr. Birendra Saraf along with Mr. Nirav Shah with Ms. Hemangi Abhyankar i/by M/s. DSK Legal
If there was no sea link, then maybe the increased crowd would not have passed their house. bhai bhai seaface mein baithke chai pite.
http://indiankanoon.org/doc/799014/
No.
Shardul: Mere pas Maa ka equity hai!
That was a dialogue from a celebrated Hindi movie! Anyways, all safe!! ;-)
If yes, and the inheritor under a Will has signed an agreement previously as to how the devolution of such interest should occur among various persons (read as the Family Framework Agreement in the current context), then whether such agreement is enforceable, even as the bequest takes effect? Isn't the inheritor under the will then is governed by doctrine of election, relinquishment and/or general law of contract?
If not, then doesn't the death of an equity partner result in auto-dissolution of the firm, payout to the deceased partners' estate, and the firm's reconstitution in the form & substance provided in the partnership deed? Then are not the members of the firm entitled to claim ademption and requiring the inheritor/executor to bring that out?
Will the mediators focus on this & ensuring continuity of Amarchand or on ensuring a fair split - which needs to factor in how the brand Amarchand is harnessed by the two branches, whether there would be non-compete as to practice areas or geographical area of operations, how the non-family equity holders in the two branches would be accommodated in the split firms (guessing that the family stake will rise back up to 55-60%) and the properties that the firms directly own.
The facts whilst appear unsavory is but an indication of the times we live in.
The question will be - is the FFA in the nature of an gift, or a disposition for consideration. If its a gift, then the testamentory disposition by Will will override it, as the gift had not yet come into being. If not a gift, then the Will should not cover these shares, as there was no property accruing to her estate after her death.
[Unless they are idiots, the partnership deed should defer to the FFA to the extent of the disposition of the family shares.]
That the FFA and/or the Partnership Deed required that on death the stake held by Ms Bharthi Shroff be bought up in equal proportion, and the proceeds applied for charity or per testamentary disposition, possibly led to the Managing Commiteee resolution.
That said, if the testament did disinherit Cyril and his branch of the family, that probably is vis-vis the property directly owned, and proceeds (including held in the Firm/s). If the partnership interest is seen as devolved upon Shardul and his branch of the family, then Shardul being bound by the FFA and the Partnership Deed, should uphold that bargain, and of course appropriate the proceeds for the partnership stake as per the Will. That could pave way for continuity of the firm with both the brothers sticking together.
If that continues to be disputed, the alternatives are possibly adhering to the following provisions (subject to the partnership deed): Sections 29, 37 and 42 (c) of the Partnership Act.
Then again: for some of the best and brightest legal minds focussed on this, the questions of law and facts are bound to fascinate and tittilate!
there are two properties which have to be dealt with differently -
A) her cash in hand, deposits, amounts awarded to her by the firm (whether vested or unvested) - Must close to be a 1000 Cr. estate based on previous 10 year amss revenue (and given that she did not spend all this money on anything but one old cook). These will be independent of the FFA. All such monies belong to Shardul upon the probate being complete. (Profits for this last year should also be part of this, if it vested before she popped it)
B) shares in firm - above anaylsis on FFA to prevail.
all that was eventually achieved in the hearing could have been achieved without pulling everyone into the gutter in this manner. i can understand shardul is bitter, but here he is acting as any party would, and his reactions are naturally guided by his emotions. Once the fire subsides and the smoke clears, he will regret it if the firm at large suffers. however, a senior counsel, should not only be more than just a mouthpiece of his client and should be mindful of the big picture. there is a duty to the court as well as to the other lawyers, and sometimes they need to save their clients from themselves, which i feel he should have done here.
i don't know what their ultimate strategy is, but i feel pc should have shown more restraint. what they did hurts everyone's chances of emerging strong from this. at the end of the day, the firm is likely to split, but if both factions come out of this smelling bad, everyone suffers. these allegations are not going to die. they will linger for a long time, and will hurt everyone. i think they've made a mistake which will be costly in the long run.
i thought of myself as a neutral bystander when i first heard the story break, because i have no affinity for either side, or for the firm in general, but i'm beginning to feel more sympathy for cyril now!!!
The reallocation of BSS's stake, in the background of this at instance of CSS, reeks of opportunism and mala fides - which disturbed status quo and resolution, and directly led to the lawsuit and washing of dirty linen at hands of PC. Reap as you sow...
seniors, especially of his stature, should elevate discussions. not drag them into the dirt
I think he fired them over some family issue which was affecting work...all i remember was it was loud and ugly. definitely not one of those normal yelling sessions that is typical of partners (esp the del ones!)
1) Its not only about the money, its about control… Over the firm, its assests, the clients and the firms resources…
2) So much for professionalism in the largest – most successful firm. Bollocks. This is not professionalism, professional managed disputes are never poured out in the open for the public to thrash.
3) For those who follow law firms in India, AMSS really had it coming for a while. Too much money+power+ego. The name was bigger than the product.