US District Judge George Daniels said in a December 3 order that New Silk Route CEO Saxena's "motion to dismiss is granted and the action is dismissed as moot. Accordingly the case is closed." (Agencies)
During a hearing in Manhattan federal court, Daniels said, "I have a dim view of the merits of this claim." The judge said since Gupta had a representative on the company board that left the original complaint moot.
Gupta's lawyer Rishi Bhandari said suit was filed in order to ensure that there was a designee on the board. "If they do anything to impair Gupta's rights, we can still sue to stop them," Bhandari added.
India-born Gupta, convicted last year on insider trading charges, had in March this year filed a breach-of-contract lawsuit against Saxena.
Gupta and Saxena had co-founded the private equity firm New Silk Route (NSR) in 2006.
The billion dollar plus investment enterprise focused on South Asia and the Middle East.
At the beginning of 2012, the two were the sole directors of the company and in February last year, while securities fraud charges against Gupta were pending, Saxena had requested that Gupta distance himself from NSR.
Gupta transferred his voting shares to NSR and executed the voting agreement according to which Gupta voluntarily stepped down from NSR's board of directors and designated NSR manager Anil Sood as his replacement.
However, Gupta claimed in his lawsuit that Saxena was in breach of the voting agreement after he "improperly" sought to remove his designee Sood and refused to permit the firm to acquire directors and officers' insurance.
While Sood was forced to step down from the board, Greg Orman was appointed in his place.
Saxena had filed a memorandum in the case earlier this year saying that the litigation was "nothing more than a crude attempt by convicted felon Rajat 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."
Gupta, among the most high-profile Wall Street executives to be charged with insider trading, was sentenced to two years in prison after being convicted of passing confidential boardroom information to hedge fund founder Raj Rajaratnam and is currently free on bail pending an appeal.
US District Judge George Daniels said in a December 3 order that New Silk Route CEO Saxena's "motion to dismiss is granted and the action is dismissed as moot. Accordingly the case is closed."