Karnataka HC Appoints Arbitrator In Woman Partner’s Dispute Over ₹6.5 Crore LLP Exit Payment

In brief

The question

1. Whether the LLP Agreements contained an arbitration agreement covering the disputes raised by the petitioner.

The court held

The petition was allowed.

It also directed

Justice H.N. Nagmohan Das, former Judge of the Karnataka High Court, was appointed as sole arbitrator to adjudicate the disputes at the Arbitration and Conciliation Centre (Domestic & International), Bengaluru, under its applicable rules.

All claims and contentions were left open, and the parties were directed to appear before the Centre’s Director on 30 November 2026 at 11:30 a.m.

01Facts

The petitioner held a 45% partnership interest in respondent No. 1 under an LLP Agreement dated 12 February 2024.

¶ 2–3 · pp. 3–4

She alleged that financial irregularities and licensing non-compliance led her to seek an exit.

¶ 2–3 · pp. 3–4

A Deed of Assignment dated 30 July 2025 provided for transfer of her interest for ₹6.5 crore, and a supplementary LLP Agreement dated 28 July 2025 recorded her resignation, both subject to full payment.

¶ 2–3 · pp. 3–4

The petitioner alleged that the respondents breached the agreements and failed to pay the consideration, so the assignment had not taken effect and her partnership interest remained with her.

¶ 2–3 · pp. 3–4

The agreements contained arbitration clauses. After issuing a notice invoking arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, and receiving the respondents’ reply, the petitioner applied under Section 11(6) for appointment of an arbitrator.

¶ 3–4 · pp. 4–6

The respondents did not oppose appointment but sought to reserve the parties’ contentions.

¶ 5 · p. 6

02Issues

i.1. Whether the LLP Agreements contained an arbitration agreement covering the disputes raised by the petitioner.

¶ 6 · p. 6

ii.2. Whether, following the petitioner’s invocation of arbitration and the respondents’ non-opposition to appointment, a sole arbitrator should be appointed under Section 11(6) of the Act.

¶ 3–6 · pp. 4–6

03Law Applied

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, in considering the petitioner’s request for appointment of an arbitrator.

¶ 1 · p. 2

It also considered the petitioner’s notice under Section 21, by which she invoked arbitration.

¶ 3 · pp. 4–5

The relevant arbitration clauses provided for reference of disputes concerning the partners, the LLP, or the LLP Agreements to arbitration under the Act.

¶ 3 · pp. 4–5

No precedent was cited.

Provisions in the judgment · 2 · Linked ones open on LawLens

Arbitration and Conciliation Act, 1996 Section 11 Section 21

04Reasoning

The Court found that the LLP Agreements contained arbitration clauses providing for resolution of disputes between the parties, and that the petitioner had invoked those clauses by serving a notice under Section 21.

¶ 6 · p. 6

Given the existence of the arbitration agreement and the respondents’ no-objection to appointment, the Court concluded that a sole arbitrator should be appointed.

¶ 5–6 · pp. 6–7

It left all claims and contentions open for determination in arbitration.

¶ 5–6 · pp. 6–7