Karnataka High Court Mandates Arbitration in LLP Dispute

Justice Suraj Govindaraj Appoints Sole Arbitrator to Resolve Dispute Between Maverick Motors LLP and Rohith Murthy

In a significant ruling, the Karnataka High Court has mandated arbitration in a dispute between partners of Maverick Motors LLP, underscoring the statutory requirement for arbitration under the Limited Liability Partnership Act, 2008. The decision was delivered by Justice Suraj Govindaraj on October 31, 2025, in Civil Misc. Petition No. 34 of 2025, marking a pivotal moment in the interpretation of arbitration clauses within LLP agreements.

The case revolved around a disagreement between Maverick Motors LLP, represented by Advocate Sri Hemanth R. Rao, and the respondent, Rohith Murthy, regarding their LLP agreement dated October 15, 2022. Despite the absence of an explicit arbitration clause in the agreement, disputes arose, prompting the petitioners to propose arbitration via email on January 8, 2024. The respondent, in principle, agreed to arbitration but raised objections regarding the nominated arbitrator.

With no consensus reached between the parties, Maverick Motors LLP approached the Karnataka High Court seeking the appointment of a sole arbitrator under Section 23(4) and Entry 14 of the First Schedule of the LLP Act, 2008. The court noted that the LLP agreement lacked an arbitration clause, thereby invoking the statutory provision that mandates arbitration for unresolved disputes between LLP partners.

Justice Govindaraj emphasized the importance of Section 23(4) of the LLP Act, which stipulates that in the absence of an agreement addressing disputes, the First Schedule's provisions apply. Entry 14 of the First Schedule mandates referring disputes to arbitration as per the Arbitration and Conciliation Act, 1996. This provision ensures statutory and compulsory arbitration, binding all partners to adhere to it.

In his oral order, Justice Govindaraj appointed Sri Justice K.N. Keshavanarayana, a former judge of the Karnataka High Court, as the sole arbitrator to adjudicate the dispute. The arbitration proceedings will be conducted under the aegis of the Arbitration Center attached to the court.

The court instructed the registry to forward the order to the Director of the Arbitration and Conciliation Centre, facilitating the necessary arrangements for the arbitration process. All parties involved, represented by their respective counsel, are scheduled to appear before the Director on November 12, 2025, at 2:30 p.m.

This ruling highlights the Karnataka High Court's commitment to upholding statutory arbitration mandates within LLP agreements, reinforcing the legislative intent to ensure efficient dispute resolution mechanisms. The judgment serves as a precedent for similar cases, emphasizing the obligation of LLP partners to comply with statutory arbitration provisions when their agreements do not explicitly address dispute resolution.

Bottom Line:

Limited Liability Partnership Act, 2008 - Disputes arising out of LLP agreements that cannot be resolved in terms of the agreement shall mandatorily be referred to arbitration as per Entry 14 of the First Schedule of the LLP Act, 2008.

Statutory provision(s): Limited Liability Partnership Act, 2008 Section 23(4), Entry 14 of the First Schedule, Arbitration and Conciliation Act, 1996

Maverick Motors LLP v. Rohith Murthy, (Karnataka) : Law Finder Doc Id # 2807638