An LLP agreement’s silence on arbitration does not necessarily keep disputes out of arbitration. The Bombay High Court has applied the default mechanism in the Limited Liability Partnership Act, 2008 to appoint a sole arbitrator, rejecting the contention that a clause conferring jurisdiction on Mumbai courts excluded that remedy.
Mumbai: The Bombay High Court has appointed retired Justice R.D. Dhanuka as sole arbitrator in a dispute involving partners of Avighnaa Infra Buildcon LLP, although none of the agreements before it contained an arbitration clause [Prashant Vinod Vaghasiya and Another v. Vivekanand Dhaneshwar Jha and Others].
Justice S.M. Modak delivered the judgment on November 4, 2026; the court PDF was uploaded on November 5. The Court relied on Section 23(4) read with Entry 14 of the First Schedule to the LLP Act, rather than an express contractual arbitration clause.
The ruling disposes of the petition for appointment of an arbitrator. It does not decide the partners’ accounts, the validity of a disputed settlement or the merits of the challenge to a partner’s expulsion. The parties’ rights and contentions remain open.
The statutory route where the agreement is silent
Prashant Vinod Vaghasiya and Nirmala Vinod Vaghasiya sought appointment under Section 11(6) of the Arbitration and Conciliation Act, 1996. Their dispute with Vivekanand Dhaneshwar Jha arose against a background of changes in the LLP’s partners and several principal and supplementary agreements.
The Court recorded that there was no arbitration clause in any of the agreements. It nevertheless found that the parties had formed an LLP and were governed by the LLP Act.
Section 23(4), reproduced in paragraph 12, provides that where there is no agreement on a matter, the relevant provisions of the First Schedule determine the mutual rights and duties of the partners and of the LLP and its partners. Entry 14 addresses disputes between partners arising from the LLP agreement that cannot be resolved under its terms.
In paragraph 14, Justice Modak identified two requirements: the dispute must arise from the LLP agreement, and it must be incapable of resolution in terms of that agreement. The Court also referred to the Karnataka High Court’s decision in Maverick Motors LLP v. Rohith Murthy, where Entry 14 had been applied in the absence of an arbitration clause.
Mumbai-court clause did not exclude arbitration
Jha opposed the appointment by relying, among other things, on Clause 33 of the principal agreement. That clause subjected the agreement to substantive Indian law and the jurisdiction of Mumbai courts.
The High Court rejected the argument that this clause prevented reference to arbitration. Reading it with the LLP Act’s default remedy, the Court interpreted it as identifying the courts competent to deal with remedies under the Arbitration Act. It fixed Mumbai as the place of arbitration.
The judgment therefore distinguishes a clause choosing the courts that may exercise jurisdiction from a mechanism for resolving the underlying dispute. On the agreements before it, the former did not displace the statutory arbitration route.
Disputed settlement and notice objection
Jha also contended that an agreement dated December 7, 2025 had settled the disputes. The petitioners challenged that document. The Court noted that Nirmala had not signed it and that it contained blank spaces.
Relying on SBI General Insurance Company Ltd. v. Krish Spinning, the Court declined to let the asserted settlement defeat appointment. It treated the matter as one involving statutory arbitration and a contested settlement, without finally deciding the settlement’s validity.
The Court also overruled the objection that the invocation notice had been issued only by Prashant, not Nirmala. Paragraph 26 records that Prashant’s June 17, 2025 notice referred to the LLP Act. The ruling on that objection arose in the context of this statutory reference.
Arbitrator to consider additional parties
The Court found that the petitioners and Jha had, at different points, been partners of the LLP and that their dispute could be referred. It accepted that the reference should permit the parties to raise all their disputes, including Jha’s grievance about expulsion, rather than confining it to settlement of accounts.
As to additional respondents and an intervening entity, the Court granted liberty to seek impleadment before the arbitrator. Relying on ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji and Co. Pvt. Ltd., it left the arbitrator free to decide that issue. Their participation was thus not finally determined merely by appointment.
The operative directions require the petitioners’ advocates to communicate the order to the arbitrator within three weeks of its uploading. The arbitrator was requested to provide the statutory disclosure within two weeks of receiving it. Costs and fees are to be borne equally by the petitioners and Jha, subject to the final award.
Case Title: Prashant Vinod Vaghasiya and Another v. Vivekanand Dhaneshwar Jha and Others
Case Number: Commercial Arbitration Petition No.37 of 2026
Court: Bombay High Court, Civil Appellate Jurisdiction
Bench: Justice S.M. Modak
Judgment Date: November 4, 2026; uploaded November 5, 2026
Neutral Citation: 2026:BHC-AS:45211
Outcome: Sole arbitrator appointed; Mumbai fixed as the place of arbitration; parties’ rights and contentions kept open.
