Arbitration Mandatory for LLP Disputes Under Section 23(4), Even If Agreement Is Silent On Arbitration: Karnataka HC [Read Order]

Karnataka: The Karnataka High Court has appointed a sole arbitrator to resolve disputes between the partners of Maverick Motors LLP, holding that the Limited Liability Partnership Act, 2008, read with the First Schedule, mandates reference to arbitration even where the partnership agreement does not contain an arbitration clause.

Justice Suraj Govindaraj delivered the order in CMP No. 34 of 2025 on 31 October 2025.

The petition arose from disagreements between the partners of the LLP, which had executed its partnership agreement in October 2022. Although the agreement itself did not include an arbitration clause, the petitioners initiated correspondence in January 2024 proposing arbitration. The respondent initially expressed willingness to go before an arbitral forum but later disagreed with the petitioners’ nomination of an arbitrator and proposed a name of his own.

Since no consensus emerged, the petitioners approached the High Court under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996. The Court noted that the respondent, despite being served, remained unrepresented at the hearing.

Justice Govindaraj examined Section 23 of the LLP Act, which sets out how mutual rights and duties between partners are governed. While the first three sub-sections deal with agreements and their filing, the Court placed emphasis on Section 23(4), a provision that applies when an LLP agreement is silent on any matter. In such cases, the statute requires the partners to be governed by the First Schedule to the Act.

Entry 14 of the First Schedule stipulates that all disputes between partners that cannot be resolved under the terms of the LLP agreement “shall be referred for arbitration” under the Arbitration and Conciliation Act. The Court therefore observed that this mechanism operates independently of whether the parties have included an arbitration clause in their LLP agreement. By virtue of the statute, arbitration becomes the default mode of resolving internal disputes in an LLP.

The Court also took note of the respondent’s earlier communication acknowledging that issues could be addressed before an arbitral tribunal once constituted. The only disagreement between the parties appeared to concern the identity of the arbitrator rather than the process of arbitration itself.

In light of the statutory mandate and the parties’ own correspondence, the Court held that the requirements under Section 11 stood satisfied. It therefore appointed Justice K.N. Keshavanarayana, former Judge of the Karnataka High Court, as the sole arbitrator to adjudicate the disputes.

The matter was placed before the Arbitration and Conciliation Centre attached to the High Court, and counsel were directed to appear before the Director of the Centre on 12 November 2025.

Case Title: Maverick Motors LLP & Ors. v. Rohith Murthy

[Read Order]