The case brought by Rajat Gupta, one of the founding partners of private equity firm New Silk Route, has been dismissed by a federal court in New York. In the case, Gupta had alleged that co-founder Parag Saxena was trying to stop him from having any influence over New Silk Route, which has $1.4 billion under management.
Various reports said that the claims of breach of contract by former McKinsey honcho Gupta, who was convicted of passing inside information to Galleon hedge fund founder Raj Rajaratnam, were not relevant anymore.
"In February 2012, Gupta agreed to step down from New Silk Route’s two-member board after Saxena requested that he distance himself from the company while securities charges were pending. To protect his interests in the company, Gupta was allowed to designate a board member. But Gupta sued Saxena in March 2013, contending that his business partner was blocking him from appointing his representative to the board in a bid to gain control of the fund," said the New York Times report.
Gupta had alleged that his initial nominee was improperly removed from the board, but later he appointed another nominee. The judge said that since Gupta still has a functioning representative on the board, this makes the complaint moot.
Bloomberg said, quoting a memorandum filed by Saxena in the case, that the litigation was “nothing more than a crude attempt by convicted felon Gupta to burden an investment partnership with a frivolous lawsuit” while trying to “extract a buyout to defray tens of millions of dollars in liabilities that he has incurred from his criminal proceedings.”
New Silk Route, set up during the boom period before the financial crisis, raised one of the largest South Asia-focused funds. Its investments include companies like telecom tower firm Reliance Infratel, India's largest coffee chain Cafe Coffee Day (CCD) and more recently café and restaurant chain Moshe's.
(Edited by Joby Puthuparampil Johnson)