Lathika Pai Sues Microsoft, Seeks INR 35 Cr For Alleged Unfair Dismissal

Lathika Pai, a senior figure in the Indian startup ecosystem and a former Microsoft executive, has filed a civil suit against Microsoft India and Microsoft Corporation seeking INR 35.3 Cr in damages.

As per the filing in the Delhi High Court, Pai has alleged that she was forced to resign from the position of country head of venture capital and private equity partnerships at Microsoft in July 2024 due to “intimidation, retaliation and a hostile work environment”. 

She has alleged that this amounted to constructive dismissal, leading to loss of income, damage to her reputation, and significant mental distress.

For context, constructive dismissal happens when an employee resigns due to a hostile environment created by the employer.

Inc42 has accessed the copy of the case filing in the Delhi HC. The case has since then been transferred to the city civil court in Bengaluru. 

The development was first reported by The Morning Context.

Besides Microsoft India and Microsoft Corporation, the suit has named Microsoft India president Puneet Chandok, the company’s head of HR Arun Kakatkar, and three senior officials of the tech giant’s legal and compliance teams who handled internal investigations pertaining to her as the defendants.

Microsoft India didn’t respond to Inc42’s queries regarding the lawsuit till the time of publishing this story.

A Tale Of Two Investigations 

Notably, Pai is a known name in the Indian startup ecosystem. She founded startups like B2K Corp and JobSkills, which focussed on workforce training and social impact. She also founded SonderConnect to support women-led startups and has been actively mentoring and investing in early stage ventures, driving innovation and inclusivity. Besides, she is a member of TiE Delhi NCR’s board since 2021. 

On the back of her experience with Indian startups, Pai joined Microsoft as the MD for startups across India, the Middle East, and North Africa in 2018. 

The legal dispute centres around a programme Pai led at Microsoft, “Highway to a 100 Unicorns”. It was launched in 2019 under the ‘Microsoft for Startups’ programme. The initiative was aimed at supporting early-stage startups in small Indian cities, in partnership with state governments. 

As per the court filing, Microsoft received anonymous complaints about the “Highway to a 100 Unicorns”, in late 2019, alleging vendor favouritism, improper spending, and possible breaches of its anti-corruption policies. Following this, Microsoft’s Office of Legal Compliance (OLC) and Business and Regulatory Investigations (BRI) teams carried out an internal investigation.

Pai, in the petition, has claimed that she handed over her electronic devices and participated in interviews which, as per Microsoft’s policies, were recorded. 

Microsoft’s legal team didn’t find any wrongdoing and there are internal mails from senior officials of the team confirming this in the same year, the filing said. The project was cleared to continue and Pai was promoted in 2021 to lead venture capital and private equity partnerships.

However, in March 2024, Microsoft informed Pai that a second investigation would be launched into the same programme as new concerns had come to light. 

This time, the inquiry was led by an external law firm, Morgan Lewis & Bockius LLP. However, Pai objected to a second inquiry. The former Microsoft executive has alleged that she was denied basic procedural fairness, such as access to the original complaints or full transcripts of the earlier interviews.

She also objected to Microsoft’s refusal to record an April 2024 interview as part of the second investigation, which she has claimed was in violation of the company’s investigation policy and removed any accountability or fairness in the process.

Pai has also claimed that Microsoft “treated her with hostility” after she questioned the legality and transparency of the second investigation. 

She has alleged Microsoft said that her cooperation with the second inquiry was mandatory and her refusal to hand over her personal phone during the interview in April 2024 was treated as non-compliance. The company also accused her of failing to support the investigation process.

Following this, Pai has claimed that senior managers labelled her a “troublemaker”, ignored her contributions in public forums, and isolated her from internal support. 

Cyberbullying & Other Allegations

The former executive has also alleged that she lodged a complaint with Microsoft in early 2020 after receiving anonymous cyberbullying emails, but the company failed to take meaningful action “to trace the source”, despite promising a forensic investigation.

In her suit, Pai has also claimed that Microsoft’s senior leadership operated with inherent bias against dealings involving the Indian government, wrongly assuming corruption. She has argued that her engagement with state governments under the startup initiative became a basis for unfair scrutiny, despite the project being cleared after the first investigation.

According to Pai, Microsoft failed to uphold its own standards of fairness, due process, and internal policy. 

In July 2024, after nearly eight months of “harassment”, Pai tendered her resignation, saying she had no choice but to leave to protect her “mental and physical health and irreparable reputational damage and dilution of professional standing”. 

The Delhi HC heard the case on May 7, during which Microsoft’s lawyer Amit Sibal argued that the court lacks the territorial jurisdiction to entertain the suit. As a result, the case has been moved to the city civil court of Bengaluru, where the two parties will appear on June 9.