Shashikant Chimanlal Makwana v. Pramod Karunakar Shetty
Appointment of Arbitral Tribunal and Conversion of Section 9 Petitions to Section 17 Applications; Examination of Equities and Financial Records in LLP Dispute.
Court: Bombay High Court
Citation: 2025:BHC-OS:12144
Decision Date: 10-07-2025
List of Laws
The Arbitration and Conciliation Act, 1996; Section 9 of the Arbitration and Conciliation Act, 1996; Section 11 of the Arbitration and Conciliation Act, 1996; Section 17 of the Arbitration and Conciliation Act, 1996; Limited Liability Partnership Agreement; Section 11(8) read with Section 12(1) of the Act; Section 27 of the Act
- Facts: A dispute arose between partners of PPS Bar and Kitchen LLP, formed under a Limited Liability Partnership Agreement. The Petitioners (Shashikant Chimanlal Makwana, Pradeep Narottam Harsora, and Pattron Hotel and Travels Pvt. Ltd.) sought interim reliefs under Section 9 of the Arbitration and Conciliation Act, 1996, alleging that the Respondent, Pramod Karunakar Shetty, was disrupting the business, particularly by failing to renew the liquor license. Pramod contended he was unaware he had signed an agreement to form an LLP and that the agreement was not valid. The Petitioners had previously obtained an ex parte order restraining Pramod from interfering with the business. Pramod's sister filed a complaint with excise authorities, leading to the suspension of the liquor license.
- Procedural Posture: The case involves Arbitration Application No. 118 of 2025, Arbitration Petition No. 46 of 2025, and Arbitration Petition (L) No. 10473 of 2025 before the High Court of Judicature at Bombay. The court was considering applications for interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, pending the commencement of arbitration proceedings.
- Issue: (1) Whether interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, should be granted to direct Pramod to renew the liquor license and prevent him from disrupting the business. (2) Whether the ex parte order previously granted should be continued. (3) Whether an Arbitral Tribunal should be appointed to resolve the disputes between the parties.
- Holding: The Court allowed Application 118, appointed an Arbitral Tribunal, and directed that the Section 9 petitions be converted into applications under Section 17 of the Act for consideration by the Arbitral Tribunal. The interim relief granted in Petition 46 was to continue until the Arbitral Tribunal decided otherwise.
- Reasoning: The Court found that there were mutual inequities in the conduct of the parties, with Pramod allegedly disrupting the business and the Petitioners failing to provide proper accounts and financial statements. The Court noted that the suspension of the liquor license by the excise authorities, based on a complaint by Pramod's sister, complicated the matter. The Court determined that a detailed examination of evidence was necessary to resolve the disputes, which was best suited for an Arbitral Tribunal. The Court emphasized the importance of audited financial statements and the need to examine the trade credits and profit shares of the parties. The Court appointed an Arbitral Tribunal to adjudicate the disputes and directed the parties to submit their claims and evidence to the Tribunal. The court stated, "All these proceedings are finally disposed of in the aforesaid terms. Needless to say, that all rights and contentions of the parties including the basic contention that the Agreement is not a product of the parties being ad idem over the bargain recorded therein are kept open for consideration by the Learned Arbitral Tribunal".
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