Heeranand Narwani S/o Late Shri Chatta Ram Nirwani v. Manifest Ventures LlP
2025-07-10
ARUN MONGA
body2025
DigiLaw.ai
Order : ARUN MONGA, J. 1. Application herein is under section 11 of the Arbitration & Conciliation Act, 1996 with the prayer to appoint a sole arbitrator to decide/adjudicate upon the dispute between the parties arising out of an agreement dated 12.08.2019 (Annex.2). 2. Case set up in application is that the applicant and the Non- Applicants jointly established a Limited Liability Partnership (LLP) under the name M/s Manifest Ventures LLP for the purpose of land development and related real estate activities. The LLP was duly incorporated on 06.08.2019, under the provisions of the Limited Liability Partnership Act, 2005. As per the LLP Agreement, the Applicant held a 99% ownership stake and contributed the majority of the capital. The LLP Agreement clearly outlined the respective rights, obligations, and capital contributions of the partners, along with procedures governing resignation, removal, and distribution of profits. 2.1. In furtherance of the LLP’s business objectives, the partners identified and agreed to acquire a key property located at Plot No.396, Main "C" Road, Sardarpura, Jodhpur, measuring 6610.99 square feet, valued at approximately ?11 crores. Initially, the Applicant contributed a sum of Rs.1.16 crores via RTGS transfers, as reflected in the registered sale deed dated 27.09.2019. However, during the COVID-19 pandemic, on 28.04.2021, Non-Applicant No.3 allegedly forged documents and unlawfully removed the Applicant from the LLP, in blatant violation of the procedure prescribed in the LLP Agreement. Simultaneously, a new partner was inducted into the LLP. The Applicant contends that this act was fraudulent and deliberately intended to deprive him of his rightful share in the LLP’s assets, profits, and management. 2.2. As a result, disputes have arisen between the parties concerning the Applicant’s wrongful removal, capital contributions, entitlement to profits, and his overall rights and interests in the LLP. 2.3. The Applicant has already filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief, which is pending adjudication before the learned Commercial Court, Jodhpur Metropolitan. 2.4. Since, despite request, the non-applicants did not cooperate in the mutual process of appointing an arbitrator, therefore, the Applicant also sent a legal notice on 23.12.2023 (Annex.5). Hence, the applicant is constrained to approach this Court under Section 11 (6) of the Act, seeking appointment of an arbitrator to ensure that the disputes is resolved in accordance with the arbitration clause as envisaged in the LLP Agreement. 3.
Hence, the applicant is constrained to approach this Court under Section 11 (6) of the Act, seeking appointment of an arbitrator to ensure that the disputes is resolved in accordance with the arbitration clause as envisaged in the LLP Agreement. 3. Despite being duly served, no one has appeared on behalf of the respondent, nor has any response to the instant application been filed. However, the respondents, in their reply to the notice, have stated that the amount claimed by the petitioner as investment was never advanced by him, except for a nominal sum of Rs.1,000/- as capital in Manifest Ventures LLP. The petitioner was never involved in the operation of Plot No. 396, Sardarpura C Road. The respondent Kishan Kushlani, an NRI residing in Dubai, had made the petitioner a partner only to meet certain legal formalities, with the entire investment actually remitted by Kishan Kushlani. Subsequently, Kishan Kushlani introduced new partners and asked the petitioner to retire from the LLP. The petitioner had agreed to do so and also executed a retirement deed dated 28.04.2021. This deed was duly submitted to the bank, which approved it and removed the petitioner’s name from the LLP’s bank account. The petitioner had full knowledge of his retirement. Thus, he had no further involvement with the property. Allegations leveled by him are vague and unsubstantiated. Since the partnership was dissolved through the retirement deed, there is no question of breach of the agreement dated 12.08.2019. Therefore, no case is made out to seek appointment of an arbitrator. The petitioner in fact concealed the execution of the retirement deed, which was duly disclosed by the respondents during the investigation of the FIR lodged by the petitioner. 4. I have gone through the record and heard the learned counsel for the applicant. 5. At the outset, on a query posed by the Court as to whether, in light of the allegation of fraud, the arbitration application seeking invocation of Section 11 of the Act for appointment of an Arbitrator is maintainable, learned counsel for the petitioner cites Supreme Court judgment rendered in Sunder Kukreja & Ors. Vs. Mohanlal Kukreja & Anr. (2009) 4 SCC 585 , submitting that such allegations of forgery can be examined by the learned Arbitrator. The relevant portion of the judgment is as follows: “18.
Vs. Mohanlal Kukreja & Anr. (2009) 4 SCC 585 , submitting that such allegations of forgery can be examined by the learned Arbitrator. The relevant portion of the judgment is as follows: “18. In our opinion the learned Division Bench was not correct in holding that the dispute should not have been referred to the arbitrator in view of the alleged retirement deed dated 16-8-1990. The very genuineness of the said retirement deed was challenged and in fact the forensic expert gave a report that it was not genuine. The learned Single Judge has recorded prima facie satisfaction that the dispute had not become dead. Hence, in view of the decision of this Court in Shree Ram Mills Ltd. v. Utility Premises (P) Ltd. it would have been appropriate to have left the question regarding the genuineness of the alleged retirement deed to be decided by the arbitrator. 19. In view of the above discussion, we set aside the decision of the Division Bench and we appoint Mr Justice D.P. Wadhwa, retired Judge of the Supreme Court as the sole arbitrator to decide the dispute between the parties, including the dispute whether the alleged retirement deed was genuine or not. Hon'ble Mr Justice D.P. Wadhwa can fix his own terms of emoluments and other requirements.” 6. In another Supreme Court judgment rendered in Ayyasamy Vs. Paramasaveim : (2016) 10 SCC 386 . His Lordship Mr. A.K. Sikri, J., (as he then was), held as under:- “xxxx xxxx xxxx 25. In view of our aforesaid discussions, In view of our aforesaid discussions, we are of the opinion that mere allegation of fraud simpliciter may not be a ground to nullify the effect of arbitration agreement between the parties. It is only in those cases where the court, while dealing with Section 8 of the Act, finds that there are very serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by the civil court on the appreciation of the voluminous evidence that needs to be produced, the court can sidetrack the agreement by dismissing the application under Section 8 and proceed with the suit on merits.
It can be so done also in those cases where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself of the entire contract which contains the arbitration clause or the validity of the arbitration clause itself. Reverse position thereof would be that where there are simple allegations of fraud touching upon the internal affairs of the party inter se and it has no implication in the public domain, the arbitration clause need not be avoided and the parties can be relegated to arbitration. While dealing with such an issue in an application under Section 8 of the Act, the focus of the court has to be on the question as to whether jurisdiction of the court has been ousted instead of focusing on the issue as to whether the court has jurisdiction or not. It has to be kept in mind that insofar as the statutory scheme of the Act is concerned, it does not specifically exclude any category of cases as non-arbitrable. Such categories of non-arbitrable subjects are carved out by the courts, keeping in mind the principle of common law that certain disputes which are of public nature, etc. are not capable of adjudication and settlement by arbitration and for resolution of such disputes, courts i.e. public fora, are better suited than a private forum of arbitration. Therefore, the inquiry of the Court, while dealing with an application under Section 8 of the Act, should be on the aforesaid aspect viz. whether the nature of dispute is such that it cannot be referred to arbitration, even if there is an arbitration agreement between the parties.
Therefore, the inquiry of the Court, while dealing with an application under Section 8 of the Act, should be on the aforesaid aspect viz. whether the nature of dispute is such that it cannot be referred to arbitration, even if there is an arbitration agreement between the parties. When the case of fraud is set up by one of the parties and on that basis that party wants to wriggle out of that arbitration agreement, a strict and meticulous inquiry into the allegations of fraud is needed and only when the Court is satisfied that the allegations are of serious and complicated nature that it would be more appropriate for the Court to deal with the subject- matter rather than relegating the parties to arbitration, then alone such an application under Section 8 should be rejected. xxxx xxxx xxxx 7. Concurring with above view, Dr. D.Y. Chandrachud, J., (as his Lordship then was), opined as under in the same very judgment:- “43…….. the allegations of criminal wrongdoing or of statutory violation would not detract from the jurisdiction of the Arbitral Tribunal to resolve a dispute arising out of a civil or contractual relationship on the basis of the jurisdiction conferred by the arbitration agreement.” 8. In light of aforesaid rendition, the Clause 25.3 as contained in the agreement dated 12.08.2019 is reproduced herein-below:- “25.3. All disputes between the partners or between the Partner and the LLP arising out of limited liability partnership agreement which cannot be resolved in terms of this agreement shall be referred for arbitration as per the provisions of the Arbitration and Conciliation Act, 1996.” 9. The aforesaid arbitration clause is not disputed. Moreover, there is no quibble about the fact that there is an existing dispute between the parties, but there is a dispute as to which forum should adjudicate the same. However, on a court query qua the pre arbitration proceedings as per Clause-25.3 ibid, it transpires that nothing worthwhile has come forth after issuance of legal notice. The dispute can, therefore, only be resolved by way of arbitration as mutually agreed by executing the contract to the effect. Parties are bound by the covenant already executed by them on mutually agreeable terms. 10. Valuation of the claim as per the applicant is Rs.11,00,00,000/-. However, the same is disputed by the respondent and subject matter of adjudication through arbitration proceedings.
Parties are bound by the covenant already executed by them on mutually agreeable terms. 10. Valuation of the claim as per the applicant is Rs.11,00,00,000/-. However, the same is disputed by the respondent and subject matter of adjudication through arbitration proceedings. It is not for this Court to make any observation qua the same. 11. Be that as it may, in view of the undisputed arbitration clause, owing to which the civil suit was held to be not maintainable, the instant application deserves to be allowed. 12. Accordingly, Hon’ble Mr. Justice (Rtd.) Gopal Krishan Vyas, Mobile No. 9829027317, Resident of - ‘Bal Gopal’, 17E/317, Chopasani Housing Board, Jodhpur is appointed as the sole Arbitrator to adjudicate the dispute between the parties. 13. The intimation of aforesaid be given by the learned counsel for the parties as well as by the Registry to Hon'ble Arbitrator. The above appointment is subject to necessary disclosure being made under Section 12 of the Act of 1996. 14. The parties are at liberty to participate in the arbitration proceedings through video conferencing subject to the approval and convenience of the learned Arbitrator. 15. All the disputes as well as defence raised before this Court on merits and/or limitation is left open to be adjudicated by the learned Arbitrator. 16. Application stands disposed of.