Supta Ghosh vs Sophia Wangkhem
- Court
- Bombay High Court
CNR No : HCBM020241952026
2026:BHC-OS:23208
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AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO.24194 OF 2026
WITH
COMM ARBITRATION APPLICATION (L) NO.24205 OF 2026
Supta Ghosh
Petitioner/
Applicant
ATUL
GANESH
KULKARNI
…
Vs.
Digitally signed by
ATUL GANESH
KULKARNI
Date: 2026.10.27
12:11:16 +0530
1. Sophia Wangkhem
2. Yamini R. Mohan
3. Feet Beat – The Studio LLP
… Respondents
Ms. Priya Rombade for the Petitioner/Applicant.
Mr. Akash Loya with Mr. Aditya Sheth, and Ms. Diya
Chordia i/by Sujit Lahoti & Associates for Respondent
Nos.2 and 3.
CORAM : AMIT BORKAR, J.
RESERVED ON : OCTOBER 21, 2026.
PRONOUNCED ON : OCTOBER 27, 2026
JUDGMENT:
1. The Applicant has filed the present Application seeking
appointment of a Sole Arbitrator to resolve the disputes between
the Applicant and the Respondents arising out of the LLP
Agreement.
2. The Applicant states that she and Respondent Nos. 1 and 2
are partners of Respondent No. 3, namely, Feet Beat. The Studio
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LLP, which was registered under the Limited Liability Partnership
Act, 2008, bearing Registration No. LLPIN AAH-5228, having its
registered office at Powai, Mumbai. The business of the LLP was
carried on under the brand name “Impetus. The Studio”. The
Applicant states that she and Respondent Nos. 1 and 2 entered into
an LLP Agreement dated 6 October 2016. Under Clause 8 of the
Agreement, the partners had agreed to establish and run training
centres for dance, fitness, recreation, hobbies, crafts and other art
forms, along with related activities and such other businesses as
may be decided by the partners from time to time. The Applicant
states that Clause 23 of the Agreement provides for resolving
disputes between the partners and the LLP. Under this clause, the
partners are required to first try to resolve their disputes through
mutual discussions and, if the disputes cannot be resolved in the
manner provided in the Agreement, the same are required to be
referred to arbitration under the Arbitration and Conciliation Act,
1996. The Agreement provides that the Courts at Mumbai shall
have exclusive jurisdiction over disputes arising out of or relating
to the Agreement. Relying upon this clause, the Applicant has filed
the present Application under Section 11(6) of the Arbitration and
Conciliation Act, 1996, seeking appointment of an independent
Sole Arbitrator to decide the disputes between the parties.
3. The Applicant states that she and Respondent Nos. 1 and 2
were equal partners and designated partners of the LLP, each
having 33.33 per cent share in the business. According to her, all
three partners had equal rights and there was no separate
agreement giving any particular partner different responsibilities
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or treating any partner as an employee. She states that from the
beginning she actively took part in the day-to-day working and
administration of the business along with the other partners. Her
mobile number was displayed on the firm's banners and
advertisements so that persons could contact the firm for
enquiries, as she had experience in the field, contacts with clients
and connections with well-known instructors which helped in
developing the business. The Applicant claims that she contributed
about Rs.14,00,000/- towards the business and gave her time,
efforts and professional knowledge for its growth. She states that
she looked after various administrative works, including payment
of telephone and electricity bills, repairs and maintenance,
preparation of receipts and promotional material, maintaining
receipt entries, answering enquiries and following up with clients.
She helped in promoting classes and workshops through
WhatsApp groups and contacts in different housing societies in
Powai. According to the Applicant, the partners obtained the
necessary licences for carrying on the business, including a
Phonographic Performance Licence in 2018, which was renewed
from time to time. They created an Instagram page under the
name “Impetus. The Studio”, a Facebook page, Google and
YouTube accounts and several WhatsApp groups relating to
different dance forms and activities. These platforms were created
for publicity, reaching more persons and developing the business
and its reputation. Although Respondent No. 2 handled the
Instagram and Facebook pages, the Applicant claims that all three
partners contributed to the growth of the firm. She relies upon
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screenshots of these platforms and reviews posted by students,
parents and instructors to show how the firm developed its public
presence and goodwill. The Applicant alleges that some clients
who received services attended by Respondent No. 1 posted
negative reviews, which affected the business and resulted in loss
of revenue and reputation. She states that, despite her efforts for
nearly ten years, Respondent Nos. 1 and 2 sent an email dated 16
July 2025 through the official email account of the firm, blaming
her for the development of the business and its slow revenue
growth and treating her as an employee whose services could be
terminated for not achieving the expected results. The Applicant
says that she was surprised and hurt by this email because no
proper meeting of the partners had been held to discuss the
allegations or decide any action against her. She replied by email
dated 25 July 2025, denying the allegations and asking the
Respondents to explain the basis of their assessment. She
questioned the manner in which decisions were taken without her
participation and contrary to the LLP Agreement. According to her,
she had suggested maintaining proper records of each partner's
work, keeping transparent accounts of expenses and introducing
systems to assess the progress of the business, but Respondent Nos.
1 and 2 repeatedly ignored these suggestions and used their
majority position to take decisions. The Applicant alleges that the
Respondents intended to remove her from the firm after the
business had developed and acquired recognition. She was not
willing to give up her position as a designated partner because of
her financial and personal contributions. According to her, the
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dispute arose because the Respondents did not recognise her equal
rights and sought to treat her as an employee rather than as a
partner.
4. The Applicant states that, thereafter, a joint meeting or
conference call was held between all three partners, in which it
was decided to wind up the LLP on the ground that the business
was not viable and the Respondents were unable to continue its
operations. Although she did not consider winding up to be a
reasonable decision, she agreed to proceed with it according to
law. According to the Applicant, the Respondents assured her that
the existing business would be closed and that none of the
partners would carry on the same or similar business by using the
goodwill and reputation developed by the LLP. It was agreed,
according to her, that the social media platforms, publications and
WhatsApp groups created during the existence of the LLP would be
deleted and would not be used by any partner for personal benefit.
Relying upon these assurances, the Applicant executed the Deed of
Dissolution dated 25 May 2026 along with the other partners. The
Deed provided that the business activities of the LLP would be
discontinued from the effective date of dissolution and that the
bank account would be closed after clearing the pending dues and
balances. She signed the affidavits, declarations, indemnities and
other documents required for processing the winding up of the LLP
with the Registrar of Companies. The Applicant states that she
signed these documents believing that the business would come to
an end and that the assets and goodwill developed during the
existence of the LLP would not be used by the Respondents to
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continue the same business without her participation. However,
she alleges that after signing the dissolution documents,
Respondent Nos. 1 and 2 began advertising the recommencement
of a similar business under the name “IMPEL STUDIO”. According
to her, these advertisements were posted through the existing
social media platforms of the LLP and invited students, parents
and members of the local community to join the classes. She
alleges that the Respondents continued to use the firm's social
media accounts, WhatsApp groups and Google page, even though
she had been assured that these platforms would be discontinued.
The Applicant states that Respondent Nos. 1 and 2 contacted
clients and instructors associated with the former LLP and
informed them that her partnership and association with the firm
had come to an end. According to her, the Respondents continued
dealing with these clients and instructors, many of whom had been
introduced to the business through her efforts and contacts. She
claims that the Respondents used the goodwill and reputation
developed by all the partners to obtain new business and continue
dealing with existing clients and corporate customers. She alleges
that the domain and Google page associated with the LLP were
used in a manner which directed persons searching for the former
firm towards the Respondents' proposed business. According to
her, the similar business was being carried on from the registered
office of the LLP, creating an impression that the earlier business
had reopened under a new name. She states that the Respondents
continued using the social media accounts, WhatsApp groups,
advertisements, publications and other resources without her
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consent or prior information. The Applicant alleges that the
Respondents had induced her to sign the Deed of Dissolution and
other winding-up documents while intending to continue the
business themselves and retain its goodwill and reputation. She
therefore claims that their actions were contrary to the
understanding on which the dissolution had been agreed upon and
were intended to divert the business and its clientele to their new
venture, depriving her of the benefits arising from her equal share
in the firm.
5. The Applicant states that Respondent Nos. 1 and 2 have
neither deleted the social media accounts and WhatsApp groups
nor removed the banner displayed at the studio premises.
According to her, the continued use of these resources gives the
Respondents an advantage in attracting existing as well as new
clients. She claims that the reputation, recognition, client
relationships and online presence of the former LLP were
developed through the joint efforts of all three partners, including
her financial investment and professional contribution, and that
the Respondents cannot use these resources for their own benefit
without her consent while denying her corresponding rights and
benefits. She relies upon the screenshots of the Google page,
advertisements announcing the recommencement of the business
and the present status of the social media accounts in support of
her allegations. The Applicant submits that these acts have caused
her financial loss and have given rise to disputes regarding her
rights in the goodwill and other intangible assets of the LLP. She
states that she is willing to have these disputes decided through
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arbitration under Clause 23 of the LLP Agreement, as the disputes
concern the dissolution of the firm, the alleged breach of
assurances given at the time of dissolution and the alleged
unauthorised use of goodwill and other intangible assets.
According to her, an independent Sole Arbitrator is required to
decide the respective rights and obligations of the parties and the
claims arising from these disputes. The Applicant states that she
issued a notice invoking arbitration on 6 June 2026, calling upon
the Respondents to resolve the disputes and appoint an arbitrator
in accordance with the Agreement. The Respondents received the
notice and replied on 14 June 2026. However, according to the
Applicant, they did not follow the agreed procedure for
appointment of an arbitrator. She therefore submits that the
requirements for invoking the jurisdiction of this Court under
Section 11 of the Arbitration and Conciliation Act, 1996, have
been fulfilled. She states that, for protecting her alleged rights
during the pendency of the dispute, she has separately filed an
Application under Section 9 of the said Act, seeking interim relief
against the alleged misuse of the firm's assets, social media
platforms, domains and WhatsApp groups. The Applicant submits
that this Court has jurisdiction to entertain the present Application
as the Respondents reside in Mumbai, the LLP carries on or
proposes to carry on business in Mumbai, the LLP Agreement was
executed at Mumbai and the firm is registered in Mumbai. She
states that she has not filed any other petition or application
seeking appointment of an arbitrator before this Court or any other
Court. On these grounds, the Applicant seeks appointment of an
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independent Sole Arbitrator under Section 11 of the Arbitration
and Conciliation Act, 1996, to decide the disputes and differences
between the parties, along with the costs of the Application and
such reliefs as this Court considers appropriate.
6. Learned counsel appearing for Respondent Nos. 1 and 2
submits that the Applicant and Respondent Nos. 1 and 2 had
entered into an Agreement for Limited Liability Partnership dated
6 October 2016 for running a dance studio and had established
Respondent No. 3 LLP. Clause 23(b) of the LLP Agreement
provided for referring disputes between the parties to arbitration.
Clause 25(a) provided that Respondent No. 3 LLP could be
voluntarily wound up in accordance with the Limited Liability
Partnership Act, 2008, and the rules framed under it. It is
submitted that, due to certain differences between the Applicant
and Respondent Nos. 1 and 2, the parties executed a Deed of
Dissolution dated 25 May 2026 for dissolving Respondent No. 3
LLP. Under Clause 9 of the said Deed, the parties confirmed that
their accounts had been settled and that no claims remained
outstanding between them. Clause 9 of the Deed of Dissolution,
appearing at page 73 of the Section 11 Application, reads as
follows:
“9. Full and Final Settlement
The Partners confirm that all accounts between them have
been settled and no claims remain outstanding.”
7. It is submitted that, although the Deed of Dissolution
contains a clause specifying the governing law, it does not contain
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any clause providing for arbitration of disputes. According to
Respondent Nos. 1 and 2, the parties have settled their accounts
and recorded that no claims remain outstanding. Therefore, no
dispute or claim remains to be referred to arbitration, and the
present application is liable to be dismissed.
8. Learned counsel for Respondent Nos. 1 and 2 submits that
the Deed of Dissolution does not contain an arbitration clause.
Therefore, according to them, there is no valid and subsisting
arbitration agreement between the parties under which the present
disputes can be referred to arbitration.
9. It is submitted that the Deed of Dissolution was executed for
the purpose of dissolving Respondent No. 3 LLP, which had been
established under the LLP Agreement. According to Respondent
Nos. 1 and 2, after execution of the Deed of Dissolution, the LLP
Agreement ceased to remain effective as the agreement governing
the rights and obligations of the parties. They contend that the
Deed of Dissolution is now the only valid and subsisting document
governing the relationship between them. Since the Deed of
Dissolution does not contain an arbitration clause, they submit that
no valid and subsisting arbitration agreement remains between the
parties. In support of this submission, learned counsel relies upon
the decision of this Court in BKS Galaxy Realtors LLP v. Sharp
Properties, 2024 SCC OnLine Bom. 3514.
10. It is submitted that the LLP Agreement and the Deed of
Dissolution are two separate and independent agreements.
According to Respondent Nos. 1 and 2, the LLP Agreement
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governed the rights and obligations of the parties while the LLP
was in existence, whereas the Deed of Dissolution governs their
rights and obligations after the dissolution of the LLP. On this
basis, Respondent Nos. 1 and 2 contend that the LLP Agreement
stood superseded upon execution of the Deed of Dissolution. In
support of this submission, they rely upon the following
circumstances.
(i) No clause in the LLP Agreement provides for the rights
and obligations of the parties after dissolution of Respondent
No. 3 LLP.
(ii) Clause 25(a) of the LLP Agreement provides for
voluntary winding up of the LLP in accordance with the
Limited Liability Partnership Act, 2008, and the rules framed
under it. According to Respondent Nos. 1 and 2, neither the
Act nor the rules require execution of a separate Deed of
Dissolution for voluntary winding up. They therefore submit
that the Deed of Dissolution was not executed merely to
carry out any provision of the LLP Agreement, but was an
independent agreement between the parties.
(iii) Clause 27(a) of the LLP Agreement and Clause 10 of
the LLP Agreement provide that the laws of India shall
govern the agreement. The Deed of Dissolution separately
contains a governing law clause. According to Respondent
Nos. 1 and 2, this would not have been necessary if the Deed
of Dissolution were merely a continuation of the LLP
Agreement. They rely upon Clause 8 of the Deed of
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Dissolution, which provides for indemnification against
claims by each of the partners, to support their submission
that the Deed of Dissolution is an independent agreement.
11. Learned counsel submits that the allegations made by the
Applicant mainly concern the alleged use of the resources of
Respondent No. 3 LLP by Respondent Nos. 1 and 2 after
dissolution of the LLP. Reliance is placed upon paragraphs 25 to 27,
32, 37 and 38 of the Section 11 Application. According to
Respondent Nos. 1 and 2, these allegations arise from events
occurring after dissolution and relate primarily to the Deed of
Dissolution. They therefore contend that such disputes cannot be
referred to arbitration under the arbitration clause contained in
the earlier LLP Agreement. In support of these submissions,
learned counsel relies upon the following decisions of this Court:
(a) Hindustan Construction Co. v. Mumbai Metro One
Private Limited, 2025 SCC OnLine Bom. 5299.
(b) Jayantilal Khandawala v. Iffat Ahmedi, 2015 SCC
OnLine Bom. 4181.
12. Respondent Nos. 1 and 2 submit that the Deed of Dissolution
is a separate agreement which contains provisions regarding the
governing law and indemnification of claims. According to them,
the parties consciously did not include any clause for arbitration
while executing the Deed of Dissolution. They contend that this
omission shows that the parties did not intend to continue the
earlier arbitration arrangement for disputes arising after
dissolution of the LLP. On this basis, they submit that no valid and
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subsisting arbitration agreement exists between the parties in
respect of the present disputes. For these reasons, Respondent Nos.
1 and 2 submit that the Deed of Dissolution is the only valid and
subsisting agreement governing the parties from 25 May 2026
onwards. Since it contains no arbitration clause, they contend that
the present application under Section 11 of the Arbitration and
Conciliation Act, 1996, is not maintainable and deserves to be
dismissed.
13. Without prejudice to their above submissions, and while
denying that the arbitration clause in the LLP Agreement continues
to be valid and effective, Respondent Nos. 1 and 2 submit that the
present application is not maintainable even if it is assumed that
the said arbitration clause remains in force. According to them,
none of the Respondents received a valid notice under Section 21
of the Arbitration and Conciliation Act, 1996, invoking arbitration.
They contend that receipt of such notice is necessary before an
application for appointment of an arbitrator can be maintained
under Section 11 of the Act.
14. Learned counsel submits that the observation of the Supreme
Court in Bhagheeratha Engineering Ltd. v. State of Kerala, (2026)
5 SCC 758, that failure to issue a notice under Section 21 is not
fatal in the circumstances of that case, does not apply to the
present proceedings. The reasons given are as follows.
(i) In Bhagheeratha Engineering Ltd ., the objection
regarding non-issuance of a notice under Section 21 was
raised in a petition under Section 34 of the Act, after the
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arbitration proceedings had concluded and an arbitral award
had been passed. In the present case, however, the objection
concerns the maintainability of an application under Section
11 seeking appointment of an arbitrator.
(ii) In that case, one of the parties had already issued a
notice under Section 21, on the basis of which the arbitral
tribunal was constituted and the arbitration proceedings
commenced. According to Respondent Nos. 1 and 2, the
Supreme Court held in that context that a separate notice
under Section 21 need not be issued by the other party
merely to raise its own claims. In the present case, they
submit that, apart from the legal notice dated 6 June 2026,
which they contend does not amount to a valid notice under
Section 21 invoking arbitration under the LLP Agreement, no
other notice invoking the arbitration clause was issued.
15. In this regard, learned counsel relies upon Unistar Metals
Private Limited v. GE Power Limited, 2026 SCC OnLine Bom. 9163.
It is submitted that, in that decision, this Court considered the
decisions of the Supreme Court in Bhagheeratha Engineering Ltd.
and Advaya Projects (P) Ltd. v. Vishal Structurals Ltd., (2025) 9
SCC 686, and held that Section 21 requires the arbitration notice
to be received by the other party before arbitration proceedings
can commence.
16. Learned counsel relies upon the decisions of the Supreme
Court in Arif Azim Co. v. Aptech Limited, (2024) 5 SCC 313, and
Bharat Sanchar Nigam Ltd. v. Nortel Networks Pvt. Ltd., (2021) 5
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SCC 738. According to Respondent Nos. 1 and 2, these decisions
support their submission that service of a notice under Section 21
is a necessary requirement for maintaining an application under
Section 11 of the Arbitration and Conciliation Act, 1996. In view of
the above submissions, Respondent Nos. 1 and 2 pray that the
application under Section 11 of the Arbitration and Conciliation
Act, 1996, be dismissed.
REASONS AND FINDINGS:
17. The main question before the Court is whether, after signing
the Deed of Dissolution dated 25 May 2026, the Petitioner can still
use the arbitration clause in the LLP Agreement dated 6 October
2016 for referring her disputes to arbitration.
18. The LLP Agreement mentions the names of the three
partners as Sophia Wangkhem, Supta Ghosh and Yamini Mohan.
Clause 12 says that the profits and losses shall be shared equally
and each partner will have a 33.33% share. Clause 8 describes the
business of the LLP as including training centres for dance, fitness,
recreation, hobbies and other art forms. Thus, at this stage, it is
not disputed that the Petitioner and Respondent Nos. 1 and 2 were
parties to a written LLP Agreement and that the Agreement
contained terms about their rights and duties in the business. The
Petitioner’s complaint is not only that the Respondents have
started a competing business. She raises a dispute about what
happened to the assets, goodwill, business connections and other
resources which were developed when all three were partners. The
relevant clauses of the LLP Agreement have to be seen. Clause
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17(a) states that every partner shall “have the rights, title and
interest in all the assets and properties in the said the LLP in the
proportion of their Capital Contribution”. Clause 17(b) gives each
partner the right to inspect and copy the books and records of the
LLP. Clause 17(c) permits a partner to carry on an independent
business, but the LLP must be informed about it before it starts and
the name of the LLP must not be used for that business. Clause 17
says that a partner must give account to the LLP for any benefit
obtained without its consent from a transaction concerning the LLP
or by using its property, name or business connection. These
clauses show that a partner could not use the name, property or
business connections of the LLP for personal benefit without giving
an account for it. Clause 18 places some restrictions on a person
while that person continues to be a partner of the LLP. Among
other things, it restricts carrying on a competing business and
earning profits by unauthorised use of the LLP’s name, resources,
assets or business connections without accounting for them.
Schedule II to the LLP Agreement includes “Sale or Assignment of
goodwill of the LLP” among matters requiring the prescribed
approval of the partners. These clauses are relevant because the
Petitioner says that the social media pages, Google page, goodwill
and business connections of the earlier business continued to be
used. Whether each of these things is an asset of the LLP, whether
the Respondents continued to use them and whether such use
gives the Petitioner a right to claim money will have to be decided
on the basis of evidence. But the existence of these clauses does
not prove the Petitioner’s whole claim. Clause 18 refers to
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restrictions which apply while a person remains a partner of the
LLP. After dissolution, it cannot be said only on the basis of this
clause that the former partners are stopped from carrying on any
similar business. The Petitioner will have to show the legal basis
for saying that the Respondents cannot use the particular assets or
business connections, or that they must give an account of the
benefits obtained from their use. Her claim that a separate
assurance was given at the time of dissolution is disputed, and that
assurance is not written in the Deed of Dissolution. These matters
will have to be considered when the merits of her claim are
decided. But they do not remove the written arbitration clause in
the LLP Agreement or decide whether the disputes come within
that clause.
19. There is a difference between the Petitioner’s claim that she
contributed about Rs. 14,00,000/- and the capital contribution
mentioned in the Agreement. Clause 11(a) of the LLP Agreement
records the total capital contribution as Rs. 15,000/-, with each of
the three partners contributing Rs. 5,000/-. Clause 11(b) says that
any capital contribution, if required, shall be made in the agreed
ratio or as may otherwise be decided in writing between the
partners. It says that any amount contributed apart from the
specified capital contribution shall be credited to or debited from
the partner’s current account and shall not be treated as capital
contribution for the purpose of the Agreement. Therefore, the
written Agreement does not establish that the whole amount of Rs.
14,00,000/- claimed by the Petitioner was capital contribution.
She will have to produce material to show how much she paid,
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how those payments were recorded and what legal effect they
have. Similarly, the Agreement does not say that the Petitioner
must receive Rs. 10,00,000/- towards goodwill. The amount
claimed and how it has been calculated will have to be proved.
These observations do not decide whether she is entitled to any
amount. They only show that the amount and nature of her
contribution and the value of goodwill cannot be treated as proved
merely because they are mentioned in the Petition.
20. Clause 23 of the LLP Agreement deals with settlement of
disputes. Clause 23(a) provides:
“All disputes between the partner(s) or between the
Partner(s) and the LLP shall be attempted to resolve by
mutual discussions, failing which the decision of majority of
the Partners shall prevail;”
21. Clause 23(b) provides:
“All dispute between the Partner(s) or between the partner
and the LLP arising out of the Agreement which cannot be
resolved in terms of this Agreement shall be referred for
arbitration as per the provisions of the Arbitration and
Conciliation Act, 1996 (26 of 1996).”
22. Clause 23(c) says that the courts at Mumbai shall have
exclusive jurisdiction over disputes arising out of or relating to the
Agreement. Clause 24(a) says that no alteration or change in the
Agreement will be valid unless it is put in writing as a supplement
to the Agreement and accepted by every partner. Therefore, the
parties have a written arbitration clause between them. The
question is whether that clause continues to apply to the present
disputes after the Deed of Dissolution was signed. The Deed of
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Dissolution dated 25 May 2026 records that the partners mutually
agreed to dissolve the LLP and stop its business. Clause 2 says that
the business activities of the LLP have been discontinued from the
effective date of dissolution. Clause 3, under the heading
“Settlement of Accounts”, says that all assets of the LLP shall be
realised, all liabilities and obligations shall be paid and discharged,
and the remaining balance, if any, shall be distributed among the
partners in their agreed profit-sharing ratio. Clause 4 says that the
capital contributed by each partner shall be returned after the
liabilities are settled, subject to availability of funds. Clause 5 says
that the bank accounts of the LLP shall be closed after all dues and
balances are cleared.
23. Respondent Nos. 1 and 2 mainly rely upon Clause 9 of the
Deed of Dissolution. The exact words of this clause are:
“9. Full and Final Settlement
The Partners confirm that all accounts between them have
been settled and no claims remain outstanding.”
24. They say that this clause is clear and final and the Petitioner
cannot now make any claim regarding her investment, goodwill or
share in the LLP. They point out that Clause 10 of the Deed says
that it will be governed by the laws of India, but it does not
contain an arbitration clause. According to them, the parties
knowingly entered into a later agreement without providing for
arbitration. Therefore, the arbitration clause in the earlier LLP
Agreement cannot be applied to the Deed of Dissolution when the
parties have recorded that their accounts are settled and no claims
remain outstanding.
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25. The objection based on Clause 9 must be considered
carefully. The Petitioner has signed a document which says that the
accounts between the partners have been settled and no claims
remain outstanding. If her present claim is only for an amount
which was already due and which was meant to be settled under
this clause, the clause may operate against her. She cannot ignore
a term of the Deed of Dissolution which she has signed. Further,
the alleged oral assurance that the Respondents would not carry
on a similar business or use the earlier social media resources is
not written in the Deed. The Arbitral Tribunal will have to consider
this absence while deciding whether such assurance was given,
whether the parties intended it to bind them and whether it can be
enforced. At this stage, the Court cannot say that the alleged oral
assurance has been proved. However, Clause 9 must be read with
the other terms of the Deed of Dissolution and the disputes raised
by the Petitioner. Clause 3 says that all assets of the LLP “shall be
realized” and that the remaining balance, if any, “shall be
distributed” among the partners in their agreed profit-sharing
ratio. The Deed does not say that the goodwill, brand value, social
media pages, Google page, WhatsApp groups or business
connections have been transferred to Respondent Nos. 1 and 2. It
does not say how these assets were valued or dealt with. The Deed
does not state that the whole LLP Agreement has been replaced or
that Clause 23 of that Agreement will no longer apply to disputes
arising from it. The words “no claims remain outstanding” are
broad and have to be given proper effect. But whether these words
settle all existing rights relating to goodwill or only record the
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settlement of accounts as the parties understood it requires the
Deed to be read along with the surrounding facts. The Petitioner
complains about acts which allegedly took place after dissolution,
including use of the earlier business’s social media resources for
promoting the new business. Without examining these matters
further, a claim based on conduct after the date of the Deed cannot
be treated as already settled only because the Deed says that no
claims remain outstanding on the date it was signed.
26. The fact that the Deed of Dissolution does not contain an
arbitration clause is relevant, but it does not mean that the
arbitration clause in the LLP Agreement cannot be used for every
dispute between the former partners. There is a difference
between a claim which arises only under a new and separate
agreement and a claim which is said to arise from rights and duties
under an earlier agreement, even though that agreement has later
come to an end. Here, the Petitioner relies not only on alleged oral
assurances given at the time of dissolution but on her claimed
rights in the assets, goodwill and business connections developed
under the LLP Agreement. Clauses 17 and 18 and Schedule II, read
with Clause 23, provide a prima facie contrbasis for referring
disputes about those rights to arbitration. Whether these terms
continue to apply to the particular claims after dissolution, or
whether the Deed has settled or ended those rights, is the issue
which needs to be decided. The Deed does not preserve Clause 23,
but it does not say that Clause 23 is cancelled or that all disputes
arising from the LLP Agreement must be decided only by a civil
court.
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27. The Respondents rely upon BKS Galaxy Realtors LLP . In that
case, this Court held that where the parties had brought an earlier
agreement to an end by executing a conveyance deed, the
arbitration clause in the earlier agreement for sale had come to an
end. The Court observed that the decision in Interplay Between
Arbitration Agreements under the Arbitration and Conciliation Act,
1996 and the Stamp Act, 1899, In re , did not disturb the principle
in Union of India v. Kishorilal Gupta & Bros. AIR 1959 SC 1362
that “if the parties put an end to a validly executed contract, the
arbitration clause of the original contract perishes with it.” This
principle was applied because, on the facts of that case, the
Agreement for Sale had ended when the conveyance deed was
executed and the rights then sought to be enforced arose under
separate documents.
28. The principle laid down in BKS Galaxy Realtors LLP has to be
followed. But its application depends upon what the later
document does and what the claim is based upon. A deed which
ends a business and provides for settlement of accounts is not the
same as a conveyance deed which completes a sale for which an
earlier agreement was made. In the present case, the Deed of
Dissolution itself provides for realisation of the LLP’s assets,
payment of liabilities and distribution of the remaining balance.
The Petitioner says that assets and business connections developed
during the partnership were later used in a manner which
deprived her of her rights. At this stage, without examining the
Deed and the facts through arbitration, it cannot be said that the
present disputes have no connection with the rights and duties
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under the LLP Agreement. The principle in BKS Galaxy Realtors
LLP would apply if it is found that the parties had fully replaced
their earlier contrrights by a later agreement and that the dispute
arises only under the later agreement. Whether the present Deed
has that effect cannot be decided only because it contains Clause
9.
29. The Respondents have relied upon Hindustan Construction
Company . In that case, the Court found that the Settlement
Agreement had changed and replaced the earlier Contract. The
later agreement provided for governing law and jurisdiction but
did not contain an arbitration clause or include the earlier
arbitration clause. It recorded full and final settlement of disputes
which had arisen under the earlier contract and work order. The
Court therefore held that the earlier arbitration clause could not be
read into the later Settlement Agreement. Paragraph 57 explains,
in substance, that although Section 16(1)(b) provides that a
finding by the Arbitral Tribunal that a contract is null and void
does not invalidate the arbitration clause, this does not mean that
an arbitration clause in an earlier contract will always continue
when the parties knowingly enter into a later agreement which
decides their rights. Paragraph 58 holds that the earlier arbitration
clause did not apply in that case because the Settlement
Agreement had replaced the earlier Contract. Paragraph 59 records
that the Settlement Agreement was a separate agreement, did not
contain an arbitration clause and did not refer to arbitration. The
above decision recognises that if a later agreement replaces the
earlier agreement and decides the rights and claims arising from it,
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the arbitration clause in the earlier agreement cannot be read into
the later agreement. But the present matter has to be decided on
its own documents. In Hindustan Construction Company , the
Settlement Agreement settled the claims arising under the earlier
contract and work order, and the Court found that the earlier
contract had been replaced. In the present case, Clause 9 of the
Deed of Dissolution records that the accounts have been settled
and no claims remain outstanding. This clause is important, but
the Deed provides for realisation of assets and distribution of the
remaining balance. It does not say that all rights and duties under
the LLP Agreement have been replaced or that the arbitration
clause has been removed. The Petitioner alleges that the goodwill
and online resources of the LLP were used after dissolution.
Whether the Deed settled those rights as well, or whether the
claim arises from the earlier LLP Agreement, is not the same as a
claim based only upon a later settlement agreement.
30. The decision in Jayantilal Khandawala , concerns a case
where a later Memorandum of Understanding replaced the earlier
rights and duties and resulted in novation. The principle of that
decision is that when the parties end an earlier contract and
replace it with a new contract, the earlier rights cannot be
enforced against the new arrangement, and the arbitration clause
in the earlier contract may stop applying to disputes arising only
under the new contract. But it does not mean that every document
signed after an earlier agreement removes the arbitration clause.
The terms of the later document and the nature of the claim must
provide a proper basis for finding that the earlier rights have been
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fully replaced. In the present case, Clause 9 may be held to prevent
some or all of the Petitioner’s monetary claims. However, the issue
is not so clear that the existence and scope of the arbitration
agreement can be rejected at the beginning without the Arbitral
Tribunal examining it.
31. The scope of the Court’s enquiry under Section 11 needs to
be considered. In SBI General Insurance Co. Ltd. v. Krish Spinning ,
(2024) 12 SCC 1, paragraphs 114 to 116, the Supreme Court
explained that at the appointment stage the Court has to examine
whether an arbitration agreement prima facie exists, and that
questions of “accord and satisfaction” are ordinarily to be decided
by the Arbitral Tribunal. The Court observed that a dispute about
accord and satisfaction is not itself a challenge to the existence of
the arbitration agreement. The same principle was explained again
by the Supreme Court in Maharashtra State Electricity Distribution
Company Limited v. R.Z. Malpani , 2026 INSC 342, paragraphs 20
and 21. The Supreme Court held that the enquiry under Section 11
is limited to seeing whether an arbitration agreement prima facie
exists. Questions of accord and satisfaction, limitation, dishonesty,
and other disputed matters are ordinarily to be left to the Arbitral
Tribunal under Section 16 of the Act.
32. Applying this principle, the Court cannot decide the present
Petition as if it were deciding a suit for recovery of Rs.
10,00,000/-. The existence of the LLP Agreement and Clause 23 is
not disputed. Whether Clause 9 of the Deed of Dissolution settles
all the Petitioner’s claims is an important question. But the
documents must be read together and the nature and date of each
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claim must be considered. Merely because a later document
contains a full and final settlement clause, the Court cannot ignore
an arbitration agreement already entered into by the parties,
particularly when the dispute is whether that settlement covers the
claims now raised. Respondent Nos. 1 and 2 can raise their
objection based on Clause 9 before the Arbitral Tribunal as a
preliminary issue. The Tribunal can decide whether the claim is
barred by the Deed of Dissolution, whether the earlier agreement
has been replaced in a way which prevents arbitration and
whether any claim remains for consideration. Appointment of an
Arbitrator does not mean that the Petitioner’s claim is accepted or
that the Deed of Dissolution is being ignored.
33. The objection based on Section 21 of the Arbitration and
Conciliation Act does not require rejection of the Petition. The
Petitioner relies upon the notice dated 6 June 2026 invoking
arbitration, and the Respondents replied on 14 June 2026.
Therefore, this is not a case where the Respondents did not know
that the Petitioner wanted to refer the dispute to arbitration. Their
objection is that the notice was not a valid invocation. In
Bhagheeratha Engineering Ltd. , particularly paragraph 39, the
Supreme Court held that Section 21 is meant to determine when
arbitral proceedings begin, especially for calculating limitation,
and that “There is no mandatory prerequisite for issuance of a
Section 21 notice prior to the commencement of Arbitration.” It
holds that failure to issue such notice would not be fatal if the
claim is otherwise valid and the dispute can be referred to
arbitration. Paragraphs 40 to 42 explain that Section 21 is
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procedural in nature and the contents of the notice do not decide
which claims can be raised before the Arbitral Tribunal, subject to
the arbitration agreement and the requirements of the Act.
34. This Court has considered this issue in Unistar Metals Private
Limited . In paragraphs 18 to 21, the Court relied upon
Bhagheeratha Engineering Ltd. and Adavya Projects Private
Limited , and held that a defect in the manner in which the notice
invoked arbitration would not defeat an application under Section
11 where the notice invoked the arbitration clause, identified the
dispute and sought its resolution through arbitration, and the
other party opposed appointment. The Court recognised that the
notice is important for deciding when arbitration begins and for
limitation, but did not treat every defect in its form as a reason to
refuse appointment. In the present case, the notice is stated to
have invoked arbitration and the Respondents have replied to it. At
this stage, there is no material to show that the parties had agreed
upon a special notice procedure which was not followed, apart
from the provisions of the LLP Agreement and the Arbitration Act.
Therefore, the objection about the form or validity of the notice
cannot defeat the Petition. Any question about limitation arising
from the date or contents of the notice may be raised before the
Arbitral Tribunal.
35. The reliance upon Arif Azim Co. and BSNL , needs to be
considered. Those decisions deal with limitation and the need for a
live dispute at the referral stage, on the facts of those cases. They
do not mean that every objection to the form of a Section 21
notice or every claim of full and final settlement must be decided
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against the claimant at the Section 11 stage. The later explanation
in Krish Spinning and R.Z. Malpani makes it clear that once an
arbitration agreement prima facie exists, questions of accord and
satisfaction and limitation are ordinarily for the Arbitral Tribunal.
In the present case, the Petitioner sent the notice and the
Respondents replied. The Respondents refused to agree to
appointment on the ground that no arbitrable dispute remains.
Therefore, their refusal to appoint an Arbitrator gives the Court
reason to exercise its power under Section 11, subject to the
procedure under the Act.
36. It is necessary to see whether the Petitioner has shown a
dispute which is prima facie connected with the LLP Agreement.
She relies upon the screenshots of social media platforms and
reviews in Exhibits E and F, the later advertisement in Exhibit L,
the Google page in Exhibit M, the advertisement about restarting
business in Exhibit N, and the present status of social media pages
in Exhibit O. According to the Petitioner, these documents show
that the earlier business connections and online resources
continued to be used after dissolution. These documents alone do
not prove ownership of every page or account, misuse of goodwill
or the amount of loss suffered by the Petitioner. The Court cannot
now say that using the name “IMPEL STUDIO” amounts to breach
of the LLP Agreement. However, the documents and pleadings
show that the dispute is not imaginary or unrelated to the former
business. There is a real disagreement about the use and treatment
of the resources, goodwill and business connections developed
during the partnership.
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37. Whether the Petitioner has a personal right to claim part of
the value of goodwill, whether that goodwill was an asset of the
LLP, whether the assets were dealt with according to Clause 3 of
the Deed of Dissolution, whether the accounts were settled,
whether an oral assurance was given and whether the Respondents
must give an account of benefits received from the business
connections or resources of the LLP are matters for the Arbitral
Tribunal. The written Agreement and the Deed of Dissolution
provide enough material for a prima facie finding that disputes
have arisen from the earlier contrrelationship between the parties.
A final finding on whether the allegations are true, how much
money may be payable or who owns each intangible asset would
go beyond the proper scope of the present Petition.
38. In the aforesaid circumstances, the present Application under
Section 11 of the Act deserves to be disposed of by passing the
following order:
A) Ms. Shreya Jha, an Advocate Advocate of this Court, is
hereby appointed as the Sole Arbitrator to adjudicate upon
the the disputes and differences between the parties arising
out of or in connection with the LLP Agreement dated 6
October 2016 and the disputes relating to its dissolution.
Office Address: 908, Arcadia, NCPA Marg, Nariman Point,
Mumbai 400 021
Email: [email protected]
Contact: 72829 34554
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B) The Advocates for the Applicant shall communicate a
copy of this Order to the learned Sole Arbitrator within a
period of one week from today. The Applicant shall also
furnish to the Arbitral Tribunal the contact and
communication particulars of all the parties, along with a
copy of this Order.
C) The learned Sole Arbitrator is requested to forward the
statutory Statement of Disclosure under Section 11(8) read
with Section 12(1) of the Act to the Advocates for the
Applicant, to enable them to place the same before the
Registry of this Court. The Registry shall retain the said
Statement on the file of the present Application. The
Advocates for the Applicant shall furnish a copy thereof to
the Advocates for the Respondents.
D) The parties shall appear before the learned Sole
Arbitrator on such date and at such place as may be
indicated by the learned Sole Arbitrator, for obtaining
appropriate directions regarding the conduct of the arbitral
proceedings. Such directions may include the schedule for
filing pleadings, examination of witnesses, if any, and the
dates of hearing. At the said meeting, the parties shall
furnish to the Arbitral Tribunal valid and functional email
addresses, together with the mobile and landline telephone
numbers of their respective Advocates. Communications sent
to the email addresses so furnished shall be treated as valid
service of correspondence in connection with the arbitral
proceedings.
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E) The arbitral costs and fees of the learned Sole
Arbitrator shall be borne equally by the parties in the first
instance. The question of final allocation of such costs and
fees shall remain subject to the final Award that may be
passed by the Arbitral Tribunal.
39. The learned Sole Arbitrator shall be at liberty to adjudicate
upon the claims and counterclaims, if any, and to decide all
questions relating to the merits of the disputes, in accordance with
law. All contentions of the parties on the merits of their respective
claims and defences are expressly kept open for consideration by
the Arbitral Tribunal.
40. The Petition filed under Section 9 of the Arbitration and
Conciliation Act, 1996, shall stand converted into an application
under Section 17 of the said Act. The learned Arbitral Tribunal
shall consider and decide the same on its own merits, in
accordance with law.
41. All actions required to be taken pursuant to this Order may
be taken on the basis of a downloaded copy of the Order made
available on the official website of this Court.
42. The Arbitration Application stands disposed of in the
aforesaid terms.
(AMIT BORKAR, J.)
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