Bombay HC Sends LLP Partners’ Dispute to Arbitration Under LLP Act’s Default Rule, Despite No Arbitration Clause

The petitioners sought appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, in disputes concerning Avighnaa Infra Buildcon LLP.

The parties had entered into multiple LLP and supplementary agreements over time, but none contained an express arbitration clause.

The petitioners relied on Section 23(4) and Entry 14 of the First Schedule to the Limited Liability Partnership Act, 2008, which provide for arbitration of certain disputes between partners.

Respondent No. 1 opposed the petition, including on the grounds that a settlement agreement dated 7 December 2025 had resolved the disputes, that the Section 21 notice had been issued only by Petitioner No. 1, and that the agreement’s Mumbai-courts jurisdiction clause precluded arbitration.

Other respondents and a proposed intervenor sought participation in the arbitration.

Section 23(4) of the Limited Liability Partnership Act, 2008 provides that, where the LLP agreement makes no provision on a matter, the partners’ mutual rights and duties are determined by the First Schedule; Entry 14 directs that disputes between partners arising out of the LLP agreement, and not resolvable under that agreement, be referred to arbitration under the Arbitration and Conciliation Act, 1996.

The Court applied Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited to interpret the Mumbai jurisdiction clause as identifying the courts with jurisdiction in arbitration-related proceedings, rather than as excluding arbitration.

It relied on SBI General Insurance Company Limited v. Krish Spinning in rejecting the settlement/accord-and-satisfaction objection at the referral stage.

It relied on ASF Buildtech Private Limited v. Shampoorji Pallonji and Company Private Limited for the arbitral tribunal’s authority to determine whether non-signatories are bound and should be impleaded.

The Court also referred to Maverick Motors LLP v. Rohith Murthy in support of referring a dispute to arbitration under Entry 14 where the LLP agreement contains no express arbitration clause.

The Court found that the petitioners and Respondent No. 1 had been partners of the LLP at relevant times and that their disputes arose from their LLP relationship and the related agreements.

As the agreements contained no dispute-resolution provision, Entry 14 supplied the basis for statutory arbitration.

The Mumbai jurisdiction clause was not inconsistent with arbitration; the Court construed it as conferring jurisdiction on Mumbai courts for arbitration-related remedies and accordingly fixed Mumbai as the place of sitting.

The disputed settlement agreement did not defeat the referral, particularly because the petitioners challenged it; likewise, the Court held that the notice’s purpose was to calculate limitation and that the failure to issue it on behalf of Petitioner No. 2 was not a bar.

Questions concerning the participation of non-signatories were left for the arbitrator to determine on application.

The place of sitting was fixed at Mumbai, and the parties were permitted to raise their respective areas of dispute and contentions before the arbitrator.

Respondent Nos. 2–4 and the proposed intervenor were granted liberty to seek impleadment before the arbitrator, who would decide the applications.

The petition and pending interim application were disposed of.