[LLP Act] Partners Bound To Refer Disputes To Arbitration Even Without Such Clause In Agreement Under Entry 14 Of First Schedule: Karnataka HC

The Karnataka High Court has said that Entry 14 of the First Schedule of the Limited Liability Partnership Act 2008 is in effect a statutory and compulsory arbitration, which is required to be adhered to by the partners in a limited liability partnership.For Context: Entry 14 of the First Schedule of LLP Act, 2008 reads thus: All disputes between the partners arising out of the limited liability partnership agreement which cannot be resolved in terms of such agreement shall be referred for...

Karnataka High Court Grants Ex-Parte Injunctions In Favour Of Neil Patel Digital LLC In Dispute Over Breach Of LLP Agreement

The Karnataka High Court bench of Justice Suraj Govindaraj has passed ex-parte injunctions under Section 9 of the Arbitration and Conciliation Act, 1996, in favour of Neil Patel Digital LLC (“NPD LLC”). The disputes had arisen from breach of the covenants of a Limited Liability Partnership Agreement. The LLP Agreement contained various negative covenants restricting the Respondent No. 1 in respect of, among other things, transfer of funds beyond stipulated limits, appointment of key...

LLP Can Be Bound By Arbitration Clause Despite Not Being Signatory To LLP Agreement: Bombay High Court

The Bombay High Court bench of Justice Somasekhar Sundaresan has held that the mere fact that an LLP is not a signatory to an LLP Agreement does not, by itself, preclude it from being a party to arbitration proceedings initiated between Partners under the arbitration clause of such an agreement. The Court observed that an LLP is not a “third party” to its LLP Agreement but an entity with rights and obligations vis-à-vis its partners as per the statutory scheme of the LLP Act. The Arbitral...

No Provision To Waive Eligibility Requirements Under Section 43(3) Of the LLP Act For Investigation: NCLT New Delhi

The National Company Law Tribunal New Delhi bench of Dr. Sanjeev Ranjan (Technical Member) and Manni Sankariah Shanmuga Sundaram (Judicial Member) has held that there is no provision empowering it to relax / waive the eligibility requirements prescribed under Section 43(3) of LLP Act. Section 43(3) outlines the conditions under which the Central Government may appoint inspectors to investigate the affairs of an LLP. This subsection mandates that a minimum of one-fifth of the total...

LLP And Its Individual Partners Can't Raise Same Issue By Separate Appeals U/s 37 Of Arbitration Act: Calcutta High Court

The Calcutta High Court single bench of Justice Sabyasachi Battacharyya held that an LLP and its partners cannot file separate appeals under Section 37 of the Arbitration and Conciliation Act by citing the principle of 'separate legal entity'. It was held that the principle of res judicata would apply to prevent the individual partners from raising the same issue under Section 37, if the previous appeal filed in the name of the LLP was dismissed. Brief Facts: The arbitration was ...

S.37 Court Must Be Circumspect When Interfering With Arbitrator’s Interim Orders: Calcutta HC Preserves Deceased LLP Partner’s Share

The Calcutta High Court has recently held that a Court exercising powers under Section 37 of the Arbitration & Conciliation Act, 1996 (“1996 Act”) must be circumspect in its interference with interim orders of an arbitrator.In refusing to interfere with the order passed under Section 17 of the 1996 Act, for preserving the share of a deceased LLP partner, amounting to approx. Rs 6 crores in a separate interest bearing account in name of the LLP, a single-bench of Justice Moushumi Bhattacharya...

Delhi High Court Rules, Parties Under LLP Agreement Cannot Confer Jurisdiction On Courts

A Single Bench of Delhi High Court of Justice Amit Bansal, has held that carrying of business in any place does not confer jurisdiction on courts to adjudicate a dispute inter se partners in an LLP. The Partner of an LLP, registered at Hyderabad, had filed a suit before a Commercial Court in Delhi against the denial of access by remaining partners to the business accounts of LLP. The District Judge allowed the petition, dismissing the challenge to territorial jurisdiction raised by the...