The court ruled that the arbitration clause covers all disputes between parties irrespective of compliance with other agreement provisions, allowing for arbitration invocation under Section 11.

ORDER

Dated this the 25th day of February, 2025

This Arbitration Request is filed invoking Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') seeking to appoint an Arbitrator to adjudicate the disputes and differences that have arisen between the petitioner and the respondents.

2. The 1^st respondent is a partnership firm constituted vide Annexure A3 Limited Liability Partnership Agreement dated 24.12.2016. Petitioner executed Annexure A1 partnership Admission Agreement dated 31.03.2022 and became a partner of the 1^st respondent. He is thus a party to Annexure A3 LLP agreement and bound by the terms therein. Petitioner had in the said respect, invested an amount of Rs.10,00,000/- in the 1^st respondent firm. This was done by the petitioner enticed by the assurance of the respondents that good returns would be provided and that he would be given periodic updates on income and expenditure. It is alleged by the petitioner that the respondents failed to fulfil the said promise.

Petitioner hence requested that his investment of Rs.10,00,000/- be returned to him. This was not favourably responded. Later, the petitioner got reliable information that the respondents were discretely trying to alienate the properties of the 1^st respondent. He then filed a civil suit numbered CS No.20 of 2024 before the Commercial Court (Additional Sub Court- III) Kozhikode, inter alia seeking to realise Rs.10,00,000/- with interest from the respondents. The maintainability of the said suit was challenged by the respondents pointing to the arbitration clause viz., clause 38 in Annexure A3 agreement. The Commercial Court taking note of the arbitration clause, referred the parties to arbitration vide Annexure A4 order. Petitioner hence preferred Annexure A5 notice dated 02.11.2024 invoking the arbitration clause and nominating an arbitrator. Respondents however chose not to respond to the said notice of invocation and hence the petitioner has moved this Arbitration Request invoking Section 11 of the Act.

3. A counter affidavit has been filed on behalf of the 1^st respondent by the 7^th respondent stating that the same binds the 1^st 2^nd and 8^th respondents as well. It is contended therein that the Arbitration Request is not maintainable since there exists no arbitrable dispute between the parties and that the Arbitration Request is premature. Though it is admitted that the petitioner had invested an amount of Rs.10,00,000/-, it is contended that no profits had been promised. The claim of the petitioner that he is entitled to be given a share of the profit is false and incorrect. It is stated that the original agreement dated 24.12.2016 (Annexure A3) had been drawn between the original partners and subsequently, whenever new partners were inducted, a partner admission agreement as in Annexure A1 was executed. Petitioner was also admitted as a partner vide the such a partnership admission agreement. Reliance is placed on clause 4 of the said Annexure A1 agreement and it is stated that as per the said clause, Annexure A1 shall form part of the Annexure A3 LLP agreement and all new partners are bound by the terms and conditions therein. It is stated that as per clause 18.2 of Annexure A3, pertaining to the resignation/retirement of partners, any partner who intends to withdraw from the 1^st respondent LLP have to give notice of such intention to the registered office at least 90 days prior to the date of such withdrawal and capital of the concerned partner would be settled within one year. Further, such withdrawal or resignation is not automatic and the same has to be ac