Rajasthan High Court - Jaipur
M/S Srasti Liquor Bottling Llp vs Mrs. Sita Rajesh Varma W/O Shri Rajesh ... on 30 April, 2026
[2026:RJ-JP:18273-DB] [CMA-2724/2025]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Miscellaneous Appeal No. 2724/2025
1. M/s Srasti Liquor Bottling LLP, (LLPIN-AAT-9270)Through
Its Designated Partner, Shri Arun Vashishtha, Having Its
Registered Office At 604-605, Vaibhav Shine Multiplex,
Vaishali Nagar, Jaipur-302021
2. Shri Arun S/o Shri Kam Kishore, R/o 22, Amar Nagar,
(RFC Colony,) Vaishali Nagar, Jaipur.
3. Mrs. Reeva W/o Shri Arun, R/o 22, Amer Nagar (RFC
Colony), Vaishali Nagar, Jaipur., Through Power Of
Attorney Holder Rafat Ali, S/o Mobin Ali, Aged About 45
Years, Residing At S-1, Ganesh Apartment, Indraprasth
Colony, Near Ganesh Ji Ka Mandir, Vaishali Nagar, Jaipur,
Rajasthan, Jaipur-302021
----Appellants
Versus
Mrs. Sita Rajesh Varma W/o Shri Rajesh Shamlal Varma, R/o 57-
58, Mahatma Gandhi Nagar, DCM Ajmer Road, Jaipur.
----Respondent
For Appellant(s) : Mr. Kamlakar Sharma, Senior Counsel
assisted by Mr. Prakul Khurana, Adv.
Mr. Rajat Sharma, Adv.
Mr. Saksham Pandey and
Mr. Shubhendra Singh, Adv.
For Respondent(s) : Mr. Amol Vyas, Adv. with
Mr. Bajrang Singh Jaitawat, Adv. and
Mr. Abhishek Purohit, Adv.
HON'BLE THE ACTING CHIEF JUSTICE MR. SANJEEV PRAKASH SHARMA
HON'BLE MRS. JUSTICE SHUBHA MEHTA
Judgment
Date of conclusion of arguments : 20/04/2026
Date on which judgment was reserved : 20/04/2026
Whether the full judgment or only
the operative part is pronounced : Full judgment
Date of pronouncement : 30th/04/2026
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REPORTABLE
(Per Hon'ble The Acting Chief Justice)
Facts of the Case
1. The brief facts which are required to be taken into
consideration for adjudication of this appeal are that the appellant
No.2 and the respondent entered into a Limited Liability
Partnership (hereinafter referred to as 'LLP') on 26.09.2020 and
set up a LLP with registered office at Jaipur. It was duly registered
under the Limited Liability Partnership Act, 2008 (hereinafter
referred to as the 'Act of 2008'). A supplementary deed of the LLP
was executed on 15.03.2022 whereby appellant No.3 was also
inducted as a partner.
2. Rajasthan Liquor Limited (hereinafter referred to as 'RLL')
offered to be impleaded as a partner in the firm in the year 2023
and it is stated that the appellants No.2 and 3 as well as
respondent mutually agreed to induct the RLL in the LLP. For the
purpose of induction, RLL entered into an MoU with the LLP and a
sum of rupees one crore was advanced by RLL in multiple
tranches. An amount of rupees three crore was to be considered
as the induction amount and 30% stake in the LLP was to be
acquired by RLL.
3. From the collective shares of appellants No.2 and 3, 16.5%
of their stake was to be transferred to the RLL and the respondent
was also to transfer 13.5% of her share to RLL and at the outset
Rs.45 lakhs was given to the appellants and another Rs.45 lakhs
were deposited in the account of respondent.
4. However, before RLL could be inducted, certain disputes
arose between appellants No.1, 2 and the Respondent. So far as
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the respondent is concerned, she was insisting on certain
conditions to be laid down as binding on the RLL before she was to
be inducted, whereas the appellants No.2 and 3 were of the view
that no further conditions be laid down.
5. In the circumstances the appellants 2 and 3 decided to
conduct a meeting in terms of Clause 38 of the deed of the LLP
and a notice was sent to the respondent to attend the said
meeting. However, the respondent has alleged that she had
informed that it would not be possible to attend the meeting on
12.10.2024. The Appellants conducted the meeting in absence of
the Respondent. It was noted during the meeting that RLL had
issued a notice demanding legal action against the partnership
firm including criminal action within 48 hours if they were not
inducted in the LLP.
6. Since the Appellants found the amount had already been
received from RLL and Respondent was not agreeing to induct RLL
as a partner, they were left with no other alternative but to oust
the Respondent from the LLP and accordingly they took a decision
to oust the Respondent from the LLP and return her share.
7. A letter was also sent to the ROC with Forms 3 and 4 in
respect to cessation of respondent from the LLP.
8. Aggrieved of the said action, the respondent filed application
under Section 9 of the Act of 1996. The learned commercial court
heard and passed an interim order on 02.06.2025 directing as
under:
"127- vr% izkFkhZ dh vksj ls vf/kfu;e dh /kkjk 9 ds rgr
izLrqr fd;k x;k gLrxr izkFkZuk i= Lohdkj fd;k tkdj
vizkFkhZ la[;k 1 ,y,yih dh fnukad 12-10-2024 dks
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vk;ksftr dh xbZ ehfVax esa ikfjr fd;s x;s izLrkoksa ,oa ,sls
izLrkoksa ds Øe esa fnukad 13-10-2024 dks vizkFkhZ la[;k 1 o
2 ds e/; fu"ikfnr fd;s x;s iwjd djkj dh fØ;kfUofr dks
izLrkfor e/;LFkrk dk;Zokgh esa fo}ku e/;LFkrk vf/kdj.k }
kjk vafre vokMZ ikfjr fd;s tkus rd LFkfxr fd;k tkrk gSA
128- vFkkZr~ izkFkhZ dk vizkFkhZ la[;k 1 ,y,yih ls fd;k x;k
fu"dklu izLrkfor e/;LFkrk dk;Zokgh esa fo}ku e/;LFkrk
vf/kdj.k }kjk vafre vokMZ ikfjr fd;s tkus rd LFkfxr
jgsxk rFkk mHk;i{k ds e/; fnukad 18-08-2023 dks
fu"ikfnr ,oa izekf.kr gqvk iwjd djkj izHkkoh jgsxkA
129- mijksDr vof/k ds nkSjku mHk;i{k ewy djkj
fnukafdr 26-09-2020 ,oa iwjd djkj fnukafdr 18-08-2023 esa
r; ikbZ xbZ 'krksZa ds vuqlkj vizkFkhZ la[;k 1 ,y,yih dk
lapkyu lqfuf'pr djsaxsA
130- gkykafd ,slk lEHko ugha gksus dh lwjr esa mHk;i{k
e/;LFkrk dk;Zokgh ds nkSjku vizkFkhZ la[;k 1 ,y,yih ds
fo?kVu dh Hkh ekax djus ds fy, Lora= gksaxsA
131- izLrkfor e/;LFkrk dk;Zokgh esa fo}ku e/;LFkrk
vf/kdj.k }kjk vafre vokMZ ikfjr fd;s tkus rd vizkFkhZ
la[;k 1 ,y,yih ds lHkh cSad [kkrksa dk lapkyu iwjd djkj
fnukad 18-08-2023 esa r; ikbZ xbZ 'krksZa ds vuqlkj lHkh rhuksa
Designated Partners }kjk la;qDr :i ls fd;k tkosxkA
132- vizkFkhZ la[;k 2 o 3 ds lkFk&lkFk Lo;a izkFkhZ dks Hkh
izLrkfor e/;LFkrk dk;Zokgh esa fo}ku e/;LFkrk vf/kdj.k }
kjk vafre vokMZ ikfjr fd;s tkus rd ikcUn fd;k tkrk gS
fd vkilh lgefr ds fcuk vizkFkhZ la[;k 1 ,y,yih dh
fdlh Hkh vpy lEifRr dks fdlh r`rh; i{kdkj dks
vUrfjr@lqiqnZ uk djsa] uk gh fdlh r`rh; i{kdkj dk dksbZ
fgr l`ftr djsa rFkk rhuksa Hkkxhnkjku dh lgefr ds fcuk
fdlh vU; u;s Hkkxhnkj dks vizkFkhZ la[;k 1 ,y,yih esa
'kkfey uk djsaA
133- ;gka ;g Li"V fd;k tkrk gS fd izkFkhZ dks vizkFkhZ la[;k
1 ,y,yih ls fu"dkf"kr fd;s tkus ds ckn vizkFkhZ la[;k 2
o 3 }kjk vizkFkhZ la[;k 1 ,y,yih esa fuos'k fd;s x;s
vfrfjDr iwath fuos'k dks foMªk fd;k tk ldsxk ;k vkilh
lgefr ls izkFkhZ }kjk Hkh leku jkf'k dk vfrfjDr iwath fuos'k
fd;k tk ldsxk ;k vizkFkhZ la[;k 2 o 3 }kjk fd;s x;s
vfrfjDr iwath fuos'k dh jkf'k dks vkilh lgefr ls mfpr
C;kt nj ij Unsecured Loan ds :i esa vizkFkhZ la[;k
1 ,y,yih esa ;Fkkor j[kk tk ldsxkA
134- vizkFkhZ la[;k 2 o 3 dks funsZf'kr fd;k tkrk gS fd
vkt ls lkr fnol ds vUnj vizkFkhZ la[;k 1 ,y,yih dk
fnukad 12-10-2024 ls vkt fnukad rd dk lEiw.kZ ys[ks&tks[ks
dh ,d izekf.kr izfr U;k;ky; esa izLrqr djsa rkfd mldk
e/;LFk dk;Zokgh ds nkSjku vko';drkuqlkj mi;ksx fd;k tk
ldsA
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135- izkFkhZ ,oa vizkFkhZ la[;k 2 o 3 dks funsZf'kr fd;k tkrk
gS fd vkt ls lkr fnol ds vUnj vizkFkhZ la[;k 1 ,y,yih
dh ehfVax vk;ksftr djsa rFkk ml ehfVax esa U;k;ky; ds bl
vkns'k ds Øe esa lHkh t:jh izLrko ikfjr djrs gq, vkxkeh
rhu fnol ds vUnj jftLVªkj vkWQ dEiuht ds ;gka bl
vksn'k esa vfHkfyf[kr fd;s x;s fu"d"kZ ds vuqlkj la'kksf/kr
QkeZ la[;k 3 o 4 izLrqr djsaA
136- mHk;i{k gLrxr dk;Zokgh dk [kpkZ e/;LFkrk dk;Zokgh
esa ikfjr gksus okys vokMZ ds vuqlkj ogu djsaxsA
137- ;gka fQj ls ;g Li"V fd;k tkrk gS fd bl vkns'k esa
O;Dr dh xbZ izFken`"V;k jk; dk ,oa vfHkfyf[kr fd;s x;s
fu"d"kZ dk izLrkfor e/;LFkrk dk;Zokgh ds nkSjku ys'kek= Hkh
dksbZ izHkko ugha gksxk rFkk fo}ku e/;LFkrk vf/kdj.k }kjk
bl vkns'k esa O;Dr dh xbZ izFken`"V;k jk; ,oa vfHkfyf[kr
fd;s x;s izFken`"V;k fu"d"kksZa ls ys'kek= Hkh izHkkfor gq;s fcuk
mHk;i{k dh vksj ls vius le{k is'k dh tkus okyh lk{; ds
vk/kkj ij Lora= :i ls xq.kkoxq.k ij fu"d"kZ vfHkfyf[kr
fd;k tkosxkA
138- vkns'k vkt fnukad 02-06-2025 dks fy[kk;k tkdj [kqys
U;k;ky; esa lquk;k x;kA "
9. Feeling aggrieved, the appellants have preferred this appeal
under Section 37 of the Act of 1996.
SUBMISSIONS BY THE PARTIES
10. Learned counsel for the appellants has submitted that the
action and stringent approach of the Respondent has not only
jeopardized the LLP's relationship with an important business
partner but also exposed the firm to legal risks, including charges
of fraud, misrepresentation and criminal breach of trust. Learned
counsel points out that despite being notified on 14.09.2024 of a
meeting being scheduled on 18.09.2024, where induction of RLL
as a partner was on the agenda, the Respondent chose to abstain
from participating in the meeting directly or via any
representative.
11. Learned counsel for the Appellants further submits that from
various inquiries received by the Appellant from the market, it
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came to light that her husband and representative, Mr. Rajesh
Verma misrepresented himself as the owner of the LLP and its
factory, attempting to sell the factory without the knowledge or
consent of the Appellant.
12. Learned counsel further submitted that the Respondent
deceitfully transferred an amount of Rs 2.4 crore to another entity,
i.e., Srasti Liquik Transit LLP where Appellant No. 2 was a partner
and subsequently misappropriated the funds by transferring the
same amount to her personal account without consequence.
13. He further submits that sans any consultation, the
Respondent had written to the LLP's bank making false accusation
which resulted in freezing of the LLP's bank account.
14. Learned counsel further submits that the Respondent's son
(Prince Rajesh Varma), was engaging in fraudulent activities,
including manipulating the LLP's stock registers. It is pointed out
that such misconduct was uncovered and discussed in a partners
meeting held on 26.09.2024, wherein it was unanimously resolved
to remove him from the position of CEO.
15. Learned counsel further submits that during this meeting,
the Respondent's husband (Rajesh Varma) threatened to shut
down the factory if his demands and the retention of the ousted
CEO were not accepted. Learned counsel submits even subsequent
to his removal, the Rajesh Varma refused to return the LLP's
confidential information, including sensitive operational data,
which was an attempt to obstruct the LLP's smooth functioning.
16. Learned counsel for the Appellants points out that owing to
such acts of the Respondent, it was deemed appropriate to refund
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the money received from RLL with interest and to formalize such a
resolution, an MoU was drafted to settle the matter amicably,
which was refused by the Respondent. Learned counsel relies on
this to show the intention to commit fraud on part of the
Respondent and that her actions also fall within the definition of
'Criminal Breach of Trust' under Section 316 of the Bharatiya
Nyaya Sanhita, 2023.
17. Learned counsel further submits that post her ouster, vide
meeting dated 12.10.2024, the Respondent, instead of adhering
to the arbitration mechanism, chose to register an FIR against
non-appellant Nos. 2 and 3 on 14.10.2024 in order to harass them
and the same is riddled with false allegations (and this fact was
concealed before the learned commercial court which also failed to
take cognizance of the same) and vide a final report dated
30.07.2025, the police noted the allegation of RRL's induction
without the Respondent's consent to be false, the supplementary
deed relied upon by respondent was never executed nor accepted
by ROC and that the issue of wrongful expulsion is a civil dispute
falling within the Act of 1996.
18. Learned counsel also points out that the learned commercial
court erroneously concluded that the MoU was not in force, rather
in pursuance of the same RLL transferred Rs 3 crore (from which
Rs 45 lakh was withdrawn by the Respondent) to Appellant No. 1's
bank account as consideration for the proposed 30% stake in the
LLP.
19. Learned counsel further submits that the learned commercial
court failed to address the central issue of misappropriation of
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funds and also incorrectly mentioned the date of withdrawal of Rs
45 lakh as being done on 25.01.2023 (as mentioned in the
minutes of the meeting dated 12.10.2024 owing to clerical error)
but was done on 25.01.2024. Learned counsel also points out that
the learned commercial court exceeded its jurisdiction by going
beyond the pleadings to grant reliefs not prayed for in the
Respondent's application filed under Section 9 of the Act of 1996.
20. Learned counsel for the Appellants submits that in response
to the Section 9 application filed by the Respondent, the
Appellants contended that there were compelling circumstances
created by the Respondent's conduct which necessitated her
expulsion from the LLP and that the same were in accordance with
law and the terms of the LLP agreement.
21. Learned counsel submits that as the Respondent failed to
initiate arbitration proceedings within the mandatory period
stipulated under Section 9(2) of the Act of 1996 (90 days from the
date of ad-interim relief, i.e., 22.03.2025 or reasonable extended
period), the Appellants were constrained to file an appropriate
application before this Court seeking dismissal of the Section 9
application as non-maintainable (owing to being delayed by 120
days) and therefore the interim relief is rendered automatically
inoperative.
22. Learned counsel submits the learned commercial court
wrongly dismissed the Appellants material on record and despite
the delay in filing the application, proceeded to wrongfully
condone the delay of 44 days beyond the 90 day statutory period.
Learned counsel also submits that the learned commercial court
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exceeded its jurisdiction by giving findings on the merits and
holding the Respondent's expulsion as mala fide and directing her
reinstatement until passing of the final award which amounts to
passing of an interim arbitral award and encroaching on the
subject matter of arbitration.
23. Learned counsel submits that on 04.06.2025, under the garb
and purported authority of the impugned over, the Respondent
unilaterally and illegally convened and conducted a partners
meeting in violation of the mandatory requirements of quorum,
notice and majority decision making as prescribed under the
governing partnership deed and the Act of 2008, whereby the
Respondent illegally passed a resolution authorizing herself to act
on behalf of the LLP, including the power to sign and file necessary
documents including Form Nos. 3 and 4 with the ROC and take all
consequential actions to ensure ''compliance'' with the impugned
order.
24. Learned counsel, vide a separate Section 151 CPC
application, also submits that during the pendency of the appeal
against the order of the learned commercial court, the Respondent
in a mala fide manner initiated Execution Petition 67 of 2025
before the learned Commercial Court-I, Jaipur Metro-II seeking
enforcement of the very order under challenge in the present
appeal and for which the learned commercial court passed an ex
parte order on 01.07.2025 allowing respondent to operate the
LLP's bank accounts, attaching the registered office of the LLP and
Bundi factory and directing the ROC to file Appellant's Forms 3 and
4 as defective.
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25. Per contra, learned for the respondent submits that the
present application is not maintainable as the Appellants have
incorrectly invoked the inherent powers of this court under Section
151 of the Code of Civil Procedure 1908 (hereinafter referred to as
'CPC') and that such an application can only be maintained under
Order XLI Rule 27 of the CPC which specifically governs the
production of additional evidence at the Appellate stage. Learned
counsel further submits that under the garb of the said
application, the appellants have sought the relief of stay, which
falls outside the scope of Section 151.
26. Learned counsel for the Respondent also submits that the
order passed by the learned commercial court has not been stayed
by this Court and therefore there is no question of staying the
execution, more particularly, when the Respondent has been
illegally removed from the LLP despite holding 45% share in the
same. Learned counsel on the aspect of limitation also submits
that the order passed by the learned commercial court is in
complete conformity with Order XXI Rule 22 of the CPC as
issuance of notice is not required if the execution petition is filed
within 2 years from the date of decree.
27. Learned counsel for the Respondents further submits that in
execution proceedings there is no requirement of impleading of a
new party. Learned counsel further submits that the status quo
order dated 07.07.2025 passed by this Court is restricted only to
the immovable property and does not extend to the entirety of the
order dated 02.06.2025 or to other aspects of execution.
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28. As no stay was granted by this Court, the appellants
approached the Supreme Court and the Supreme Court has
directed this Court to ensure that the present Special Appeal is
heard and disposed of on or before 30.04.20261.
ANALYSIS AND FINDINGS
29. We have considered the submissions.
30. At the outset, while there have been a multitude of
allegations made pertaining to misappropriation of funds and
wrongful expulsion from the LLP, from a perusal of the facts of the
case, it is evident that there has been no arbitrator which has
been appointed yet to adjudicate the disputes and hence no
arbitral award passed.
31. In fact, the order of the learned commercial court also
mentioned the interim measures granted under Section 9 of the
Act of 1996 to be subject to the outcome of the final arbitral
award. Therefore, at this stage, this court cannot examine on
merits of the case, more specifically, pertaining to the issues
raised regarding the validity of the Respondent's expulsion, breach
of trust and allegations of misappropriation of the LLP's funds,
which is to be adjudicated by an arbitrator appointed for the same
in terms of the arbitration clause enshrined in LLP agreement. In
this regard, it would be apposite to quote Section 37 of the Act of
1996:
"37. Appealable orders.- (1) [Notwithstanding anything
contained in any other law for the time being in force, an
appeal] shall lie from the following orders (and from no
others) to the Court authorised by law to hear appeals from
original decrees of the Court passing the order, namely:-
[(a) refusing to refer the parties to arbitration under section
8;
1 Petition(s) for Special Leave to Appeal(C) 36515-36516/2025, dated 20.03.2026
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(b) granting or refusing to grant any measure under section
9;
(c) setting aside or refusing to set aside an arbitral award
under section 34.]
(2) An appeal shall also lie to a Court from an order of the
arbitral tribunal.-
(a) accepting the plea referred to in sub-section (2) or sub-
section (3) of section 16; or
(b) granting or refusing to grant an interim measure under
section 17.
(3) No second appeal shall lie from an order passed in
appeal under this section, but nothing in this section shall
affect or taken away any right to appeal to the Supreme
Court."
Furthermore, on the scope of Section 37 of the Act of 1996,
the Hon'ble Supreme Court in Punjab State Civil Supplies
Corporation Limited and Another vs Sanman Rice Mills and
Others2 held as under:
"20. In view of the above position in law on the subject, the
scope of the intervention of the court in arbitral matters is
virtually prohibited, if not absolutely barred and that the
interference is confined only to the extent envisaged under
Section 34 of the Act. The appellate power of Section 37 of
the Act is limited within the domain of Section 34 of the Act.
It is exercisable only to find out if the court, exercising
power under Section 34 of the Act, has acted within its limits
as prescribed thereunder or has exceeded or failed to
exercise the power so conferred. The Appellate Court has no
authority of law to consider the matter in dispute before the
arbitral tribunal on merits so as to find out as to whether the
decision of the arbitral tribunal is right or wrong upon
reappraisal of evidence as if it is sitting in an ordinary court
of appeal. It is only where the court exercising power under
Section 34 has failed to exercise its jurisdiction vested in it
by Section 34 or has travelled beyond its jurisdiction that
the appellate court can step in and set aside the order
passed under Section 34 of the Act. Its power is more akin
to that superintendence as is vested in civil courts while
exercising revisionary powers. The arbitral award is not
liable to be interfered unless a case for interference as set
out in the earlier part of the decision, is made out. It cannot
be disturbed only for the reason that instead of the view
taken by the arbitral tribunal, the other view which is also a
possible view is a better view according to the appellate
court."
32. The first aspect for examination is whether the learned
commercial court erred in granting condonation of delay beyond
the statutory period. In this regard it would be appropriate to
2 2024 SCC OnLine SC 2632
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quote the relevant portion from the judgment of the learned
commercial court:
70- lkFk gh pwafd izkFkhZ dh vksj ls e/;LFkrk dk;Zokgh "kq:
fd;s tkus ds Øe esa ,d uksfVl fnukafdr 24-05-2025 tfj;s
jftLVMZ iksLV fnukad 06-05-2025 dks vizkFkhZx.k dks izsf'kr
fd;k tk pqdk gSA vFkkZr~ vizkFkhZx.k dh vksj ls fnukad
23-12-2024 dks nh xbZ v.MjVsfdax ds 134osa fnu e/;LFkrk
dk;Zokgh "kq: fd tk pqdh gS] ,sls esa gLrxr izdj.k ds
fof"k'V izd`fr ds rF;ksa ,oa ifjfLFkfr;ksa dks n`f'Vxr j[krs gq,
vf/kfu;e dh /kkjk 9¼2½ }kjk iznRr "kfDr;ksa dk iz;ksx djrs
gq, U;k;fgr esa 90 fnu ls vf/kd dh 44 fnu ds foyEc dh
vof/k dks c<+k;k tkdj bl nks'k dks nwj fd;k tkuk
U;k;ksfpr izrhr gksrk gSA
It would further be apposite to quote Section 9 of the Act of
1996:
''9. Interim measures, etc. by Court.- [1] A party may,
before or during arbitral proceedings or at any time after the
making of the arbitral award but before it is enforced in
accordance with section 36, apply to a court-
(i) for the appointment of a guardian for a minor or
person of unsound mind for the purposes of arbitral
proceedings; or
(ii) for an interim measure or protection in respect of any
of the following matters, namely:-
(a) the preservation, interim custody or sale of any
goods which are the subject-matter of the arbitration
agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any
property or thing which is the subject-matter of the
dispute in arbitration, or as to which any question may
arise therein and authorising for any of the aforesaid
purposes any person to enter upon any land or building
in the possession of any party, or authorising any
samples to be taken or any observation to be made, or
experiment to be tried, which may be necessary or
expedient for the purpose of obtaining full information
or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may
appear to the Court to be just and convenient,
and the Court shall have the same power for making
orders as it has for the purpose of, and in relation to,
any proceedings before it.
[(2) Where, before the commencement of the arbitral
proceedings, a Court passes an order for any interim
measure of protection under sub-section (1), the arbitral
proceedings shall be commenced within a period of ninety
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[2026:RJ-JP:18273-DB] (14 of 18) [CMA-2724/2025]
days from the date of such order or within such further time
as the Court may determine.
[(3) Once the arbitral tribunal has been constituted, the
Court shall not entertain an application under sub-section (1),
unless the Court finds that circumstances exist which may
not render the remedy provided under section 17
efficacious.]''
33. From a perusal of the above, it is evident that since an
arbitrator is yet to be appointed, the learned commercial court did
not exceed the scope of Section 9(2) of the Act of 1996 but rather
exercised its discretion granted to it under the said provision and
therefore, it cannot be said that the delay has been wrongfully
condoned and therefore the delay has been rightfully condoned by
the commercial court.
34. Having noted the aforesaid contentions and various aspects,
we have carefully gone through the record and the facts of the
case and find that the appellants No.2 and 3 and respondent have
entered into a partnership. As the respondent had objected to the
inclusion of RLL as a partner which resulted into a threat of
criminal action against the appellants, the appellants decided to
oust the respondent from the partnership in the meeting which
they conducted in absence of respondent.
35. Clause 38 of the LLP deserves to be quoted as under:
"Cessation of Existing Partners
.........
38. No majority of Partners can expel any partner except in the situation where any partner has been found/proved guilty of carrying of activity/business of LLP with fraudulent purpose."
36. From a perusal of the above, it is apparent that a procedure is required to be followed in terms of the above-mentioned clause for ousting a partner. A notice of the meeting was required to be given and if there is no communication, ex parte meeting can be (Uploaded on 01/05/2026 at 01:21:29 PM) (Downloaded on 02/05/2026 at 02:21:21 AM) [2026:RJ-JP:18273-DB] (15 of 18) [CMA-2724/2025] held. However, in the present case, we find that while notice of the meeting was sent to the Respondent, the Respondent also conveyed her non-availability to attend the meeting which has not been recorded in the minutes of the meeting dated 12.10.2024. We also notice that the various facts as alleged by the appellants before us in the appeal with regard to the allegations of the Petitioner's husband claiming interference and engaging in fraudulent activities regarding manipulating the LLP stock registers, it is not part of the decision.
37. Be that as it may, we do not intend to further examine the legality of the decision dated 12.10.2024 but we are satisfied prima facie that the Respondent's ousting from the partnership is not in accordance with Clause 38 of the LLP agreement and therefore the interim order passed by the commercial court to the extent of continuing the respondent as a partner in the LLP does not warrant interference.
38. With regards to the argument pertaining to interim reliefs being in the nature of passing of an interim arbitral award, it would be apposite to quote the relevant portion of the order of the learned commercial court as under:
128- vFkkZr~ izkFkhZ dk vizkFkhZ la[;k 1 ,y,yih ls fd;k x;k fu'dklu izLrkfor e/;LFkrk dk;Zokgh esa fo}ku e/;LFkrk vf/kdj.k }kjk vafre vokMZ ikfjr fd;s tkus rd LFkfxr jgsxk rFkk mHk;i{k ds e/; fnukad 18-08-2023 dks fu'ikfnr ,oa izekf.kr gqvk iwjd djkj izHkkoh jgsxkA 132- vizkFkhZ la[;k 2 o 3 ds lkFk&lkFk Lo;a izkFkhZ dks Hkh izLrkfor e/;LFkrk dk;Zokgh esa fo}ku e/;LFkrk vf/kdj.k }kjk vafre vokMZ ikfjr fd;s tkus rd ikcUn fd;k tkrk gS fd vkilh lgefr ds fcuk vizkFkhZ la[;k 1 ,y,yih dh fdlh Hkh vpy lEifRr dks fdlh r`rh;
i{kdkj dks vUrfjr @ lqiqnZ uk djsa] uk gh fdlh r`rh;
(Uploaded on 01/05/2026 at 01:21:29 PM) (Downloaded on 02/05/2026 at 02:21:21 AM) [2026:RJ-JP:18273-DB] (16 of 18) [CMA-2724/2025] i{kdkj dk dksbZ fgr l`ftr djsa rFkk rhuksa Hkkxhnkjku dh lgefr ds fcuk fdlh vU; u;s Hkkxhnkj dks vizkFkhZ la[;k 1 ,y,yih esa "kkfey uk djsaA
39. From a perusal of the above, it is evident that prior to directing restrictions on sale of property under Section 9 of the Act of 1996, the preconditions under Order 38 Rule 5 CPC must be satisfied. The law in this regard, has already been settled by the Apex Court in Sanghi Industries Limited vs Ravin Cables Ltd. and Another3 wherein it was held as under:
"5. The order(s) which may be passed by the Commercial Court in an application under Section 9 of the Arbitration Act, 1996 is basically and mainly by way of interim measure. It may be true that in a given case if all the conditions of Order XXXVIII Rule 5 of the CPC are satisfied and the Commercial Court is satisfied on the conduct of opposite/opponent party that the opponent party is trying to sell its properties to defeat the award that may be passed and/or any other conduct on the part of the opposite/opponent party which may tantamount to any attempt on the part of the opponent/opposite party to defeat the award that may be passed in the arbitral proceedings, the Commercial Court may pass an appropriate order including the restrain order and/or any other appropriate order to secure the interest of the parties. However, unless and until the conditions mentioned in Order XXXVIII Rule 5 of the CPC are satisfied such an order could not have been passed by the Commercial Court which has been passed by the Commercial Court in the present case, which has been affirmed by the High Court."
40. The scope of interference at the appellate stage with applications filed under Section 9 of the Act of 1996 was also examined by the Hon'ble Supreme Court in Meraj Yusha vs Hamida Khatoon and Others4 wherein the following order was passed:
"9. At this stage, we are not enquiring into the merits of the rival contentions since any expression of opinion by this Court may affect the course of the hearing of the interim applications in the arbitral proceedings. It would be appropriate that all applications for interim relief are heard by the sole Arbitrator under Section 17 of the Act of 1996. In the meantime, the interim stay which was granted by the Single Judge in the proceedings under Section 9 of the Act 3 2022 SCC OnLine SC 1392 4 Civil Appeal Nos. 8033-8035/2024, dated 26.07.2024 (Uploaded on 01/05/2026 at 01:21:29 PM) (Downloaded on 02/05/2026 at 02:21:21 AM) [2026:RJ-JP:18273-DB] (17 of 18) [CMA-2724/2025] of 1996 for a period of six weeks shall continue to remain in operation until 15 September 2024."
41. From a perusal of the order of the learned commercial court dated 02.06.2025 we are satisfied that the property of the LLP was required to be protected and no interference in this regard is necessary.
42. However, this Court finds that interference is warranted with the other observation and directions issued by the learned commercial court as observed hereinabove. It is the arbitrator who will decide all inter se disputes and it is the arbitrator who will take decisions regarding the disputes and how to settle them. The commercial court while exercising power under Section 9 of the Act of 1996 would not have the power to allow one of the parties to initiate proceedings for dissolution of the firm nor it can direct the Respondent to interfere with the affairs of the LLP as it only has 45% of the shares while the Appellant possesses majority shares. We say so as the powers under Section 9 of the Act of 1996 are only to the extent of passing of interim order which cannot be of final nature.
43. At the same time, since Form Nos. 3 and 4 had already been sent to the ROC, the direction to operate the bank account with the signatures of the respondent were also not called for and it amounted to granting status quo ante and the learned Commercial Court ought to have waited for the said adjudication by the arbitrator who has to be appointed by the High Court in this regard.
44. The effect of the above would be that the LLP will remain in the status as it was existing prior to ouster of respondent, i.e., (Uploaded on 01/05/2026 at 01:21:29 PM) (Downloaded on 02/05/2026 at 02:21:21 AM) [2026:RJ-JP:18273-DB] (18 of 18) [CMA-2724/2025] 12.10.2024 and properties of the LLP shall not be sold or mortgaged, nor any third party right would be created in the firm till disposal of the arbitration application.
45. The original funds of LLP shall also remain protected. However, day-to-day functioning of the LLP shall be allowed to be done by the concerned appellants.
46. We further stay all the execution proceedings initiated by the respondent and the accounts of the LLP shall be released to be continued to be operated under the signatures of Appellants No. 1 and 2 above. It is made clear that if the arbitrator finds any of the accounts being personally used by the Appellants 1 and 2, he would be empowered to consider reimbursement and appropriate relief to the Respondent.
47. The directions issued by the learned Commercial Court in paragraph nos. 127, 128, 129, 130, 131, 132, 133, 134, 135, 136 and 137 of the impugned order are hereby quashed and set aside.
48. To the aforesaid extent, the impugned order dated 02.06.2025 passed by the Commercial Court needs to be modified and we accordingly, do so.
49. The appeal stands partially allowed.
50. All pending applications also stand disposed of. (SHUBHA MEHTA),J (SANJEEV PRAKASH SHARMA),ACTING CJ Gaurav/ (Uploaded on 01/05/2026 at 01:21:29 PM) (Downloaded on 02/05/2026 at 02:21:21 AM) Powered by TCPDF (www.tcpdf.org)