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2025 Supreme(Bom) 1063
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SOMASEKHAR SUNDARESAN, J.
Shashikant Chimanlal Makwana and Ors. – Applicants
Versus
Pramod Karunakar Shetty and Anr. – Respondents
Arbitration Application No. 118 of 2025 Along With Arbitration Petition No. 46 of 2025 Along With Arbitration Petition (L) No. 10473 of 2025
Decided On : 10-07-2025
For the Applicants : Mr. Mayur Khandeparkar a/w. Mr. Sanket Mungale a/w Mr. Vikramjit Garewal.
For the Respondents: Ms. Sneha Phene a/w Mr. Pratik Divkar i/b Ms. Rajni Divkar
The court emphasized the necessity for compliance with contractual obligations by both parties, mandating arbitration for resolutions, given the mutual indecisiveness and abusive relationship in the partnership agreement.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 9 and 11 - Disputes arising from a Limited Liability Partnership Agreement regarding a Resto-Bar business - The court found that both parties have not performed their respective obligations under the Agreement and thus directed the constitution of an Arbitral Tribunal to resolve the disputes. (Paras 3, 19, 30)
(B) Jurisdiction of courts under Section 9 - The court highlighted that it could not intervene in private contractual matters without adequate evidence of compliance by both parties and noted that the parties were in a mutually abusive commercial relationship. (Paras 28, 30, 39)
Facts of the case:
The Applicants sought relief against physical dispossession by the Respondent regarding a restaurant business under dispute, with allegations of abusive conduct and financial mismanagement under the LLP Agreement.
Findings of Court:
The court recognized the need for an Arbitral Tribunal to examine the agreement and the obligations of the parties comprehensively, affirming ongoing interim protection measures.
Issues: The primary issues revolved around the enforcement of the LLP Agreement and the conduct of each party in relation to their obligations.
Ratio Decidendi: The court ruled that without evidence of compliance from both sides, it is impractical to issue further interventions under Section 9; the Arbitral Tribunal is thus constituted for detailed examination.
Result: The Application for arbitration is allowed and an Arbitral Tribunal is constituted.
| Table of Content |
|---|
| 1. background of llp and obligations (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. temporary injunctive reliefs granted (Para 7 , 8 , 9 , 10 , 11) |
| 3. renewal of liquor license obligations (Para 12 , 13 , 14) |
| 4. claims of discord and request for injunctions. (Para 16) |
| 5. evidence of financial transactions needed (Para 18 , 19 , 20 , 21 , 22 , 23 , 24) |
| 6. mutual obligations and violations under agreement (Para 25 , 26 , 27 , 28) |
| 7. jurisdiction of section 9 (Para 29 , 30 , 31) |
| 8. constitution of arbitral tribunal (Para 32 , 33) |
| 9. direction for accounting and obligations. (Para 36) |
| 10. final orders and ongoing rights (Para 39 , 40 , 41 , 42) |
JUDGMENT :
SOMASEKHAR SUNDARESAN, J.
Context and Factual Background :
1. Arbitration Application No. 118 of 2025 (“Application 118”) is an Application under Section 11 of the Arbitration and Conciliation Act, 1996 (“the Act”) whereas Arbitration Petition No.46 of 2025 (“Petition 46”) and Arbitration Petition (L) No. 10473 of 2025 (“Petition 10473”) are the Petitions under Section 9 of the Act.
2. The disputes and differences between the parties relate to a Limited Liability Partnership Agreement dated March 24, 2023 (“Agreement”). Petitioners, Shashikant Chimanlal Makwana (“Makwana”), Pradeep Narottam Harsora (“Harsora”), Pattron Hotels and Travels Pvt. Ltd. (“Pattron”) and a Respondent, Mr. Pramod Shetty (“Pramod”) are partners of the Limited Liability Partnership called PPS Bar and Kitchen LLP which is the other Respondent (“LLP”).
3. The parties constituted the LLP in terms of the Agreement, to run a Resto-Bar business in the name of Hotel Pramod at Tardeo. The premises of the establishment are tenanted premises with Pramod being the legal heir of the original tenant, his father Mr. Y. Karunakar Shetty. The tenanted premises are subject matter of eviction proceedings initiated by the landlords. Under the Agreement, Pramod is obligated to keep making payments to the landlord and not settle the eviction suit in any manner.
4. The liquor license for the establishment is also in the name of the late Mr. Y. Karunakar Shetty. It is stated and apparent from the record that Pramod’s sister Ms. Priya Brijesh Shetty is staking a claim to entitlements under the liquor license.
5. A plain reading of the Agreement would show that Pramod is stated to be entitled to a share of 42.5% in the LLP, and the Petitioners hold the balance stake. The prime mover of the LLP appears to be Harsora (and Pattron, which in any case appears to be a company owned and controlled by Harsora). Makwana is an employee who was made to conduct the operations of the LLP. The terms and conditions of the devolution of responsibilities among the partners of the LLP are also set out in the Agreement.
6. The Agreement recites in at least two places that the LLP was to take over the business that was being run at Hotel Pramod and that the then existing liabilities owed to the creditors by Pramod were in the sum of Rs.55 Lakhs prior to formation of LLP. Consequently, although payment of Rs.75,000/- per month was contracted to be paid to Pramod, it was also contracted that the amounts owed to Pramod would be set off against the dues of Rs.55 Lakhs owed to various creditors. Pramod would receive such payment only after the liabilities of Rs. 55 Lakhs were fully paid out to the creditors.
Petition 46:
7. In Petition 46, taking note of the physical actions of Pramod, this Court had passed an ex parte order on February 10, 2025 (“February 2025 Order”) granting reliefs to the Petitioners as a pro tem measure, in terms of the following prayers:
(a) That pending the hearing and final disposal of the Arbitration Petition, this Hon'ble Court be pleased to pass an order of temporary injunction restraining the Respondent No.1, his agents, servants, hirelings, goons, relatives or any other person or persons claiming through or under him, from dispossessing the Petitioners from the said premises viz. Shop No.1, Ground Floor, Adam Hotel 1431147, Wadia Street, Near Tar
