Case Note & Summary
The dispute arose from a Limited Liability Partnership Agreement dated March 24, 2023, executed to run a Resto-Bar business named Hotel Pramod at Tardeo, Mumbai. Petitioners Shashikant Chimanlal Makwana, Pradeep Narottam Harsora, and Pattron Hotels and Travels Pvt. Ltd., along with respondent Pramod Karunakar Shetty, were partners of PPS Bar and Kitchen LLP. The premises were tenanted with Pramod as legal heir of original tenant, and the liquor license stood in the name of late Y. Karunakar Shetty. The Agreement allocated 42.5% share to Pramod and the balance to petitioners, and provided for payment of Rs.75,000 per month to Pramod, to be set off against Rs.55 lakh pre-formation liabilities owed to creditors. Disputes arose regarding management, non-renewal of liquor license, and alleged interference. Petitioners filed Arbitration Application No. 118 of 2025 under Section 11 of the Arbitration and Conciliation Act, 1996, and Arbitration Petition No. 46 of 2025 and Arbitration Petition (L) No. 10473 of 2025 under Section 9. On February 10, 2025, the court passed an ex parte order in Petition 46 restraining Pramod from dispossessing petitioners and interfering with the premises. Arbitration did not commence within 90 days. Petition 10473 sought a direction to Pramod to renew liquor license FL-III 540 for 2025-26. Petitioners relied on CCTV footage from January 5, 2025 and a letter dated March 25, 2025 from Pramod to excise authorities stating inability to pay license fees and requesting suspension. Pramod contended that he never executed the Agreement, was unaware of LLP formation, and that only Harsora and his wife were designated partners; he also argued that petitioners had not provided accounts or paid amounts due, and therefore could not seek equitable relief. The court noted that the February 2025 Order covered only physical interference, not license non-renewal, but required Pramod to explain his conduct. The court emphasized that Section 9 jurisdiction is equitable and required petitioners to demonstrate compliance with their obligations, including payments to Pramod. Additional affidavit revealed no documentary evidence of payments, while Pramod's affidavit showed one payment of Rs.5 lakh to his wife's account, of which Rs.4.5 lakh was refunded because only Rs.50,000 was due. The judgment excerpt ended without recording a final operative order.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 Arbitration and Conciliation Act, 1996 - Application 118 is under Section 11 for appointment; disputes relate to LLP Agreement dated 24 March 2023 - Held that arbitration expected but not commenced; Section 9 protection before tribunal is 90 days (Paras 1,9). B) Arbitration Law - Interim Measures - Section 9 Arbitration and Conciliation Act, 1996 - Court granted ex parte order on 10 February 2025 restraining physical dispossession and interference; subsequent petition sought renewal of liquor license, not covered by earlier order; court asked Pramod to explain conduct regarding license - Held that non-renewal of liquor license is not covered by February 2025 Order (Paras 7-8,10,15). C) Arbitration Law - Equitable Jurisdiction under Section 9 - Section 9 Arbitration and Conciliation Act, 1996 - Court required petitioners to show documentary evidence of payments to Pramod; additional affidavit revealed no documentary evidence; Pramod's affidavit showed one payment of Rs.5 lakh to wife's account, with Rs.4.5 lakh refunded since only Rs.50,000 was due - Held that petitioners not equitable cannot expect equities (Paras 18-21). D) Contract Law - Execution and Binding Nature of Arbitration Agreement - Arbitration and Conciliation Act, 1996 - Pramod contended agreement not executed by him, no consent, only Harsora and wife designated partners; court noted stance not inspire confidence but even going by Pramod's stance, agreement appears signed with Harsora - Held that arbitration agreement may not bind if not executed (Paras 18-19).
Issue of Consideration
Whether Respondent No.1 Pramod is bound by the arbitration agreement contained in LLP Agreement dated 24 March 2023; Whether non-renewal of liquor license by Pramod violates the February 2025 Order passed in Petition 46; Whether petitioners are entitled to interim relief under Section 9 directing Pramod to renew the liquor license; Whether petitioners have complied with their payment obligations under the Agreement to seek equitable relief
Law Points
- Section 9 equitable jurisdiction requires examination of parties' conduct and compliance before granting interim measures
- Arbitration agreement binding only if validly executed
- Section 9 protection before arbitral tribunal is limited to 90 days
- Interim relief under Section 9 is equitable and petitioner must come with clean hands
- Non-renewal of liquor license not automatically covered by earlier injunction against physical interference
