Supta Ghosh vs Sophia Wangkhem & Ors.

The Applicant has filed the present Application seeking appointment of a Sole Arbitrator to resolve the disputes between the Applicant and the Respondents arising out of the LLP Agreement.

The Applicant states that she and Respondent Nos. 1 and 2 are partners of Respondent No. 3, namely, Feet Beat. The Studio LLP, which was registered under the Limited Liability Partnership Act, 2008, bearing Registration No. LLPIN AAH-5228, having its registered office at Powai, Mumbai. The business of the LLP was carried on under the brand name “Impetus. The Studio”. The Applicant states that she and Respondent Nos. 1 and 2 entered into an LLP Agreement dated 6 October 2016. Under Clause 8 of the Agreement, the partners had agreed to establish and run training centres for dance, fitness, recreation, hobbies, crafts and other art forms, along with related activities and such other businesses as may be decided by the partners from time to time. The Applicant states that Clause 23 of the Agreement provides for resolving disputes between the partners and the LLP. Under this clause, the partners are required to first try to resolve their disputes through mutual discussions and, if the disputes cannot be resolved in the manner provided in the Agreement, the same are required to be referred to arbitration under the Arbitration and Conciliation Act, 1996. The Agreement provides that the Courts at Mumbai shall have exclusive jurisdiction over disputes arising out of or relating to the Agreement. Relying upon this clause, the Applicant has filed the present Application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an independent Sole Arbitrator to decide the disputes between the parties.

The Applicant states that she and Respondent Nos. 1 and 2 were equal partners and designated partners of the LLP, each having 33.33 per cent share in the business. According to her, all three partners had equal rights and there was no separate agreement giving any particular partner different responsibilities or treating any partner as an employee. She states that from the beginning she actively took part in the day-to-day working and administration of the business along with the other partners. Her mobile number was displayed on the firm's banners and advertisements so that persons could contact the firm for enquiries, as she had experience in the field, contacts with clients and connections with well-known instructors which helped in developing the business. The Applicant claims that she contributed about Rs.14,00,000/- towards the business and gave her time, efforts and professional knowledge for its growth. She states that she looked after various administrative works, including payment of telephone and electricity bills, repairs and maintenance, preparation of receipts and promotional material, maintaining receipt entries, answering enquiries and following up with clients. She helped in promoting classes and workshops through WhatsApp groups and contacts in different housing societies in Powai. According to the Applicant, the partners obtained the necessary licences for carrying on the business, including a Phonographic Performance Licence in 2018, which was renewed from time to time. They created an Instagram page under the name “Impetus. The Studio”, a Facebook page, Google and YouTube accounts and several WhatsApp groups relating to different dance forms and activities. These platforms were created for publicity, reaching more persons and developing the business and its reputation. Although Respondent No. 2 handled the Instagram and Facebook pages, the Applicant claims that all three partners contributed to the growth of the firm. She relies upon screenshots of these platforms and reviews posted by students, parents and instructors to show how the firm developed its public presence and goodwill. The Applicant alleges that some clients who received services attended by Respondent No. 1 posted negative reviews, which affected the business and resulted in loss of revenue and reputation. She states that, despite her efforts for nearly ten years, Respondent Nos. 1 and 2 sent an email dated 16 July 2025 through the official email account of the firm, blaming her for the development of the business and its slow revenue growth and treating her as an employee whose services could be terminated for not achieving the expected results. The Applicant says that she was surprised and hurt by this email because no proper meeting of the partners had been held to discuss the allegations or decide any action against her. She replied by email dated 25 July 2025, denying the allegations and asking the Respondents to explain the basis of their assessment. She questioned the manner in which decisions were taken without her participation and contrary to the LLP Agreement. According to her, she had suggested maintaining proper records of each partner's work, keeping transparent accounts of expenses and introducing systems to assess the progress of the business, but Respondent Nos. 1 and 2 repeatedly ignored these suggestions and used their majority position to take decisions. The Applicant alleges that the Respondents intended to remove her from the firm after the business had developed and acquired recognition. She was not willing to give up her position as a designated partner because of her financial and personal contributions. According to her, the dispute arose because the Respondents did not recognise her equal rights and sought to treat her as an employee rather than as a partner.

The Applicant states that, thereafter, a joint meeting or conference call was held between all three partners, in which it was decided to wind up the LLP on the ground that the business was not viable and the Respondents were unable to continue its operations. Although she did not consider winding up to be a reasonable decision, she agreed to proceed with it according to law. According to the Applicant, the Respondents assured her that the existing business would be closed and that none of the partners would carry on the same or similar business by using the goodwill and reputation developed by the LLP. It was agreed, according to her, that the social media platforms, publications and WhatsApp groups created during the existence of the LLP would be deleted and would not be used by any partner for personal benefit. Relying upon these assurances, the Applicant executed the Deed of Dissolution dated 25 May 2026 along with the other partners. The Deed provided that the business activities of the LLP would be discontinued from the effective date of dissolution and that the bank account would be closed after clearing the pending dues and balances. She signed the affidavits, declarations, indemnities and other documents required for processing the winding up of the LLP with the Registrar of Companies. The Applicant states that she signed these documents believing that the business would come to an end and that the assets and goodwill developed during the existence of the LLP would not be used by the Respondents to continue the same business without her participation. However, she alleges that after signing the dissolution documents, Respondent Nos. 1 and 2 began advertising the recommencement of a similar business under the name “IMPEL STUDIO”. According to her, these advertisements were posted through the existing social media platforms of the LLP and invited students, parents and members of the local community to join the classes. She alleges that the Respondents continued to use the firm's social media accounts, WhatsApp groups and Google page, even though she had been assured that these platforms would be discontinued. The Applicant states that Respondent Nos. 1 and 2 contacted clients and instructors associated with the former LLP and informed them that her partnership and association with the firm had come to an end. According to her, the Respondents continued dealing with these clients and instructors, many of whom had been introduced to the business through her efforts and contacts. She claims that the Respondents used the goodwill and reputation developed by all the partners to obtain new business and continue dealing with existing clients and corporate customers. She alleges that the domain and Google page associated with the LLP were used in a manner which directed persons searching for the former firm towards the Respondents' proposed business. According to her, the similar business was being carried on from the registered office of the LLP, creating an impression that the earlier business had reopened under a new name. She states that the Respondents continued using the social media accounts, WhatsApp groups, advertisements, publications and other resources without her consent or prior information. The Applicant alleges that the Respondents had induced her to sign the Deed of Dissolution and other winding-up documents while intending to continue the business themselves and retain its goodwill and reputation. She therefore claims that their actions were contrary to the understanding on which the dissolution had been agreed upon and were intended to divert the business and its clientele to their new venture, depriving her of the benefits arising from her equal share in the firm.

The Applicant states that Respondent Nos. 1 and 2 have neither deleted the social media accounts and WhatsApp groups nor removed the banner displayed at the studio premises. According to her, the continued use of these resources gives the Respondents an advantage in attracting existing as well as new clients. She claims that the reputation, recognition, client relationships and online presence of the former LLP were developed through the joint efforts of all three partners, including her financial investment and professional contribution, and that the Respondents cannot use these resources for their own benefit without her consent while denying her corresponding rights and benefits. She relies upon the screenshots of the Google page, advertisements announcing the recommencement of the business and the present status of the social media accounts in support of her allegations. The Applicant submits that these acts have caused her financial loss and have given rise to disputes regarding her rights in the goodwill and other intangible assets of the LLP. She states that she is willing to have these disputes decided through arbitration under Clause 23 of the LLP Agreement, as the disputes concern the dissolution of the firm, the alleged breach of assurances given at the time of dissolution and the alleged unauthorised use of goodwill and other intangible assets. According to her, an independent Sole Arbitrator is required to decide the respective rights and obligations of the parties and the claims arising from these disputes. The Applicant states that she issued a notice invoking arbitration on 6 June 2026, calling upon the Respondents to resolve the disputes and appoint an arbitrator in accordance with the Agreement. The Respondents received the notice and replied on 14 June 2026. However, according to the Applicant, they did not follow the agreed procedure for appointment of an arbitrator. She therefore submits that the requirements for invoking the jurisdiction of this Court under Section 11 of the Arbitration and Conciliation Act, 1996, have been fulfilled. She states that, for protecting her alleged rights during the pendency of the dispute, she has separately filed an Application under Section 9 of the said Act, seeking interim relief against the alleged misuse of the firm's assets, social media platforms, domains and WhatsApp groups. The Applicant submits that this Court has jurisdiction to entertain the present Application as the Respondents reside in Mumbai, the LLP carries on or proposes to carry on business in Mumbai, the LLP Agreement was executed at Mumbai and the firm is registered in Mumbai. She states that she has not filed any other petition or application seeking appointment of an arbitrator before this Court or any other Court. On these grounds, the Applicant seeks appointment of an independent Sole Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, to decide the disputes and differences between the parties, along with the costs of the Application and such reliefs as this Court considers appropriate.

Learned counsel appearing for Respondent Nos. 1 and 2 submits that the Applicant and Respondent Nos. 1 and 2 had entered into an Agreement for Limited Liability Partnership dated 6 October 2016 for running a dance studio and had established Respondent No. 3 LLP. Clause 23(b) of the LLP Agreement provided for referring disputes between the parties to arbitration. Clause 25(a) provided that Respondent No. 3 LLP could be voluntarily wound up in accordance with the Limited Liability Partnership Act, 2008, and the rules framed under it. It is submitted that, due to certain differences between the Applicant and Respondent Nos. 1 and 2, the parties executed a Deed of Dissolution dated 25 May 2026 for dissolving Respondent No. 3 LLP. Under Clause 9 of the said Deed, the parties confirmed that their accounts had been settled and that no claims remained outstanding between them. Clause 9 of the Deed of Dissolution, appearing at page 73 of the Section 11 Application, reads as follows:

It is submitted that, although the Deed of Dissolution contains a clause specifying the governing law, it does not contain any clause providing for arbitration of disputes. According to Respondent Nos. 1 and 2, the parties have settled their accounts and recorded that no claims remain outstanding. Therefore, no dispute or claim remains to be referred to arbitration, and the present application is liable to be dismissed.

Learned counsel for Respondent Nos. 1 and 2 submits that the Deed of Dissolution does not contain an arbitration clause. Therefore, according to them, there is no valid and subsisting arbitration agreement between the parties under which the present disputes can be referred to arbitration.

It is submitted that the Deed of Dissolution was executed for the purpose of dissolving Respondent No. 3 LLP, which had been established under the LLP Agreement. According to Respondent Nos. 1 and 2, after execution of the Deed of Dissolution, the LLP Agreement ceased to remain effective as the agreement governing the rights and obligations of the parties. They contend that the Deed of Dissolution is now the only valid and subsisting document governing the relationship between them. Since the Deed of Dissolution does not contain an arbitration clause, they submit that no valid and subsisting arbitration agreement remains between the parties. In support of this submission, learned counsel relies upon the decision of this Court in BKS Galaxy Realtors LLP v. Sharp Properties, 2024 SCC OnLine Bom. 3514.

It is submitted that the LLP Agreement and the Deed of Dissolution are two separate and independent agreements. According to Respondent Nos. 1 and 2, the LLP Agreement governed the rights and obligations of the parties while the LLP was in existence, whereas the Deed of Dissolution governs their rights and obligations after the dissolution of the LLP. On this basis, Respondent Nos. 1 and 2 contend that the LLP Agreement stood superseded upon execution of the Deed of Dissolution. In support of this submission, they rely upon the following circumstances.

Learned counsel submits that the allegations made by the Applicant mainly concern the alleged use of the resources of Respondent No. 3 LLP by Respondent Nos. 1 and 2 after dissolution of the LLP. Reliance is placed upon paragraphs 25 to 27, 32, 37 and 38 of the Section 11 Application. According to Respondent Nos. 1 and 2, these allegations arise from events occurring after dissolution and relate primarily to the Deed of Dissolution. They therefore contend that such disputes cannot be referred to arbitration under the arbitration clause contained in the earlier LLP Agreement. In support of these submissions, learned counsel relies upon the following decisions of this Court:

Respondent Nos. 1 and 2 submit that the Deed of Dissolution is a separate agreement which contains provisions regarding the governing law and indemnification of claims. According to them, the parties consciously did not include any clause for arbitration while executing the Deed of Dissolution. They contend that this omission shows that the parties did not intend to continue the earlier arbitration arrangement for disputes arising after dissolution of the LLP. On this basis, they submit that no valid and subsisting arbitration agreement exists between the parties in respect of the present disputes. For these reasons, Respondent Nos. 1 and 2 submit that the Deed of Dissolution is the only valid and subsisting agreement governing the parties from 25 May 2026 onwards. Since it contains no arbitration clause, they contend that the present application under Section 11 of the Arbitration and Conciliation Act, 1996, is not maintainable and deserves to be dismissed.

Without prejudice to their above submissions, and while denying that the arbitration clause in the LLP Agreement continues to be valid and effective, Respondent Nos. 1 and 2 submit that the present application is not maintainable even if it is assumed that the said arbitration clause remains in force. According to them, none of the Respondents received a valid notice under Section 21 of the Arbitration and Conciliation Act, 1996, invoking arbitration. They contend that receipt of such notice is necessary before an application for appointment of an arbitrator can be maintained under Section 11 of the Act.

Learned counsel submits that the observation of the Supreme Court in Bhagheeratha Engineering Ltd. v. State of Kerala, (2026) 5 SCC 758, that failure to issue a notice under Section 21 is not fatal in the circumstances of that case, does not apply to the present proceedings. The reasons given are as follows.

In this regard, learned counsel relies upon Unistar Metals Private Limited v. GE Power Limited, 2026 SCC OnLine Bom. 9163. It is submitted that, in that decision, this Court considered the decisions of the Supreme Court in Bhagheeratha Engineering Ltd. and Advaya Projects (P) Ltd. v. Vishal Structurals Ltd., (2025) 9 SCC 686, and held that Section 21 requires the arbitration notice to be received by the other party before arbitration proceedings can commence.

Learned counsel relies upon the decisions of the Supreme Court in Arif Azim Co. v. Aptech Limited, (2024) 5 SCC 313, and Bharat Sanchar Nigam Ltd. v. Nortel Networks Pvt. Ltd., (2021) 5 SCC 738. According to Respondent Nos. 1 and 2, these decisions support their submission that service of a notice under Section 21 is a necessary requirement for maintaining an application under Section 11 of the Arbitration and Conciliation Act, 1996. In view of the above submissions, Respondent Nos. 1 and 2 pray that the application under Section 11 of the Arbitration and Conciliation Act, 1996, be dismissed.

The main question before the Court is whether, after signing the Deed of Dissolution dated 25 May 2026, the Petitioner can still use the arbitration clause in the LLP Agreement dated 6 October 2016 for referring her disputes to arbitration.

The LLP Agreement mentions the names of the three partners as Sophia Wangkhem, Supta Ghosh and Yamini Mohan. Clause 12 says that the profits and losses shall be shared equally and each partner will have a 33.33% share. Clause 8 describes the business of the LLP as including training centres for dance, fitness, recreation, hobbies and other art forms. Thus, at this stage, it is not disputed that the Petitioner and Respondent Nos. 1 and 2 were parties to a written LLP Agreement and that the Agreement contained terms about their rights and duties in the business. The Petitioner’s complaint is not only that the Respondents have started a competing business. She raises a dispute about what happened to the assets, goodwill, business connections and other resources which were developed when all three were partners. The relevant clauses of the LLP Agreement have to be seen. Clause 17(a) states that every partner shall “have the rights, title and interest in all the assets and properties in the said the LLP in the proportion of their Capital Contribution”. Clause 17(b) gives each partner the right to inspect and copy the books and records of the LLP. Clause 17(c) permits a partner to carry on an independent business, but the LLP must be informed about it before it starts and the name of the LLP must not be used for that business. Clause 17 says that a partner must give account to the LLP for any benefit obtained without its consent from a transaction concerning the LLP or by using its property, name or business connection. These clauses show that a partner could not use the name, property or business connections of the LLP for personal benefit without giving an account for it. Clause 18 places some restrictions on a person while that person continues to be a partner of the LLP. Among other things, it restricts carrying on a competing business and earning profits by unauthorised use of the LLP’s name, resources, assets or business connections without accounting for them. Schedule II to the LLP Agreement includes “Sale or Assignment of goodwill of the LLP” among matters requiring the prescribed approval of the partners. These clauses are relevant because the Petitioner says that the social media pages, Google page, goodwill and business connections of the earlier business continued to be used. Whether each of these things is an asset of the LLP, whether the Respondents continued to use them and whether such use gives the Petitioner a right to claim money will have to be decided on the basis of evidence. But the existence of these clauses does not prove the Petitioner’s whole claim. Clause 18 refers to restrictions which apply while a person remains a partner of the LLP. After dissolution, it cannot be said only on the basis of this clause that the former partners are stopped from carrying on any similar business. The Petitioner will have to show the legal basis for saying that the Respondents cannot use the particular assets or business connections, or that they must give an account of the benefits obtained from their use. Her claim that a separate assurance was given at the time of dissolution is disputed, and that assurance is not written in the Deed of Dissolution. These matters will have to be considered when the merits of her claim are decided. But they do not remove the written arbitration clause in the LLP Agreement or decide whether the disputes come within that clause.

There is a difference between the Petitioner’s claim that she contributed about Rs. 14,00,000/- and the capital contribution mentioned in the Agreement. Clause 11(a) of the LLP Agreement records the total capital contribution as Rs. 15,000/-, with each of the three partners contributing Rs. 5,000/-. Clause 11(b) says that any capital contribution, if required, shall be made in the agreed ratio or as may otherwise be decided in writing between the partners. It says that any amount contributed apart from the specified capital contribution shall be credited to or debited from the partner’s current account and shall not be treated as capital contribution for the purpose of the Agreement. Therefore, the written Agreement does not establish that the whole amount of Rs. 14,00,000/- claimed by the Petitioner was capital contribution. She will have to produce material to show how much she paid, how those payments were recorded and what legal effect they have. Similarly, the Agreement does not say that the Petitioner must receive Rs. 10,00,000/- towards goodwill. The amount claimed and how it has been calculated will have to be proved. These observations do not decide whether she is entitled to any amount. They only show that the amount and nature of her contribution and the value of goodwill cannot be treated as proved merely because they are mentioned in the Petition.

Clause 23 of the LLP Agreement deals with settlement of disputes. Clause 23(a) provides:

Clause 23(b) provides:

Clause 23(c) says that the courts at Mumbai shall have exclusive jurisdiction over disputes arising out of or relating to the Agreement. Clause 24(a) says that no alteration or change in the Agreement will be valid unless it is put in writing as a supplement to the Agreement and accepted by every partner. Therefore, the parties have a written arbitration clause between them. The question is whether that clause continues to apply to the present disputes after the Deed of Dissolution was signed. The Deed of Dissolution dated 25 May 2026 records that the partners mutually agreed to dissolve the LLP and stop its business. Clause 2 says that the business activities of the LLP have been discontinued from the effective date of dissolution. Clause 3, under the heading “Settlement of Accounts”, says that all assets of the LLP shall be realised, all liabilities and obligations shall be paid and discharged, and the remaining balance, if any, shall be distributed among the partners in their agreed profit-sharing ratio. Clause 4 says that the capital contributed by each partner shall be returned after the liabilities are settled, subject to availability of funds. Clause 5 says that the bank accounts of the LLP shall be closed after all dues and balances are cleared.

Respondent Nos. 1 and 2 mainly rely upon Clause 9 of the Deed of Dissolution. The exact words of this clause are:

They say that this clause is clear and final and the Petitioner cannot now make any claim regarding her investment, goodwill or share in the LLP. They point out that Clause 10 of the Deed says that it will be governed by the laws of India, but it does not contain an arbitration clause. According to them, the parties knowingly entered into a later agreement without providing for arbitration. Therefore, the arbitration clause in the earlier LLP Agreement cannot be applied to the Deed of Dissolution when the parties have recorded that their accounts are settled and no claims remain outstanding.

The objection based on Clause 9 must be considered carefully. The Petitioner has signed a document which says that the accounts between the partners have been settled and no claims remain outstanding. If her present claim is only for an amount which was already due and which was meant to be settled under this clause, the clause may operate against her. She cannot ignore a term of the Deed of Dissolution which she has signed. Further, the alleged oral assurance that the Respondents would not carry on a similar business or use the earlier social media resources is not written in the Deed. The Arbitral Tribunal will have to consider this absence while deciding whether such assurance was given, whether the parties intended it to bind them and whether it can be enforced. At this stage, the Court cannot say that the alleged oral assurance has been proved. However, Clause 9 must be read with the other terms of the Deed of Dissolution and the disputes raised by the Petitioner. Clause 3 says that all assets of the LLP “shall be realized” and that the remaining balance, if any, “shall be distributed” among the partners in their agreed profit-sharing ratio. The Deed does not say that the goodwill, brand value, social media pages, Google page, WhatsApp groups or business connections have been transferred to Respondent Nos. 1 and 2. It does not say how these assets were valued or dealt with. The Deed does not state that the whole LLP Agreement has been replaced or that Clause 23 of that Agreement will no longer apply to disputes arising from it. The words “no claims remain outstanding” are broad and have to be given proper effect. But whether these words settle all existing rights relating to goodwill or only record the settlement of accounts as the parties understood it requires the Deed to be read along with the surrounding facts. The Petitioner complains about acts which allegedly took place after dissolution, including use of the earlier business’s social media resources for promoting the new business. Without examining these matters further, a claim based on conduct after the date of the Deed cannot be treated as already settled only because the Deed says that no claims remain outstanding on the date it was signed.

The fact that the Deed of Dissolution does not contain an arbitration clause is relevant, but it does not mean that the arbitration clause in the LLP Agreement cannot be used for every dispute between the former partners. There is a difference between a claim which arises only under a new and separate agreement and a claim which is said to arise from rights and duties under an earlier agreement, even though that agreement has later come to an end. Here, the Petitioner relies not only on alleged oral assurances given at the time of dissolution but on her claimed rights in the assets, goodwill and business connections developed under the LLP Agreement. Clauses 17 and 18 and Schedule II, read with Clause 23, provide a prima facie contrbasis for referring disputes about those rights to arbitration. Whether these terms continue to apply to the particular claims after dissolution, or whether the Deed has settled or ended those rights, is the issue which needs to be decided. The Deed does not preserve Clause 23, but it does not say that Clause 23 is cancelled or that all disputes arising from the LLP Agreement must be decided only by a civil court.

The Respondents rely upon BKS Galaxy Realtors LLP . In that case, this Court held that where the parties had brought an earlier agreement to an end by executing a conveyance deed, the arbitration clause in the earlier agreement for sale had come to an end. The Court observed that the decision in Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Stamp Act, 1899, In re, did not disturb the principle in Union of India v. Kishorilal Gupta & Bros. AIR 1959 SC 1362 that “if the parties put an end to a validly executed contract, the arbitration clause of the original contract perishes with it.” This principle was applied because, on the facts of that case, the Agreement for Sale had ended when the conveyance deed was executed and the rights then sought to be enforced arose under separate documents.

The principle laid down in BKS Galaxy Realtors LLP has to be followed. But its application depends upon what the later document does and what the claim is based upon. A deed which ends a business and provides for settlement of accounts is not the same as a conveyance deed which completes a sale for which an earlier agreement was made. In the present case, the Deed of Dissolution itself provides for realisation of the LLP’s assets, payment of liabilities and distribution of the remaining balance. The Petitioner says that assets and business connections developed during the partnership were later used in a manner which deprived her of her rights. At this stage, without examining the Deed and the facts through arbitration, it cannot be said that the present disputes have no connection with the rights and duties under the LLP Agreement. The principle in BKS Galaxy Realtors LLP would apply if it is found that the parties had fully replaced their earlier contrrights by a later agreement and that the dispute arises only under the later agreement. Whether the present Deed has that effect cannot be decided only because it contains Clause 9.

The Respondents have relied upon Hindustan Construction Company. In that case, the Court found that the Settlement Agreement had changed and replaced the earlier Contract. The later agreement provided for governing law and jurisdiction but did not contain an arbitration clause or include the earlier arbitration clause. It recorded full and final settlement of disputes which had arisen under the earlier contract and work order. The Court therefore held that the earlier arbitration clause could not be read into the later Settlement Agreement. Paragraph 57 explains, in substance, that although Section 16(1)(b) provides that a finding by the Arbitral Tribunal that a contract is null and void does not invalidate the arbitration clause, this does not mean that an arbitration clause in an earlier contract will always continue when the parties knowingly enter into a later agreement which decides their rights. Paragraph 58 holds that the earlier arbitration clause did not apply in that case because the Settlement Agreement had replaced the earlier Contract. Paragraph 59 records that the Settlement Agreement was a separate agreement, did not contain an arbitration clause and did not refer to arbitration. The above decision recognises that if a later agreement replaces the earlier agreement and decides the rights and claims arising from it, the arbitration clause in the earlier agreement cannot be read into the later agreement. But the present matter has to be decided on its own documents. In Hindustan Construction Company, the Settlement Agreement settled the claims arising under the earlier contract and work order, and the Court found that the earlier contract had been replaced. In the present case, Clause 9 of the Deed of Dissolution records that the accounts have been settled and no claims remain outstanding. This clause is important, but the Deed provides for realisation of assets and distribution of the remaining balance. It does not say that all rights and duties under the LLP Agreement have been replaced or that the arbitration clause has been removed. The Petitioner alleges that the goodwill and online resources of the LLP were used after dissolution. Whether the Deed settled those rights as well, or whether the claim arises from the earlier LLP Agreement, is not the same as a claim based only upon a later settlement agreement.

The decision in Jayantilal Khandawala, concerns a case where a later Memorandum of Understanding replaced the earlier rights and duties and resulted in novation. The principle of that decision is that when the parties end an earlier contract and replace it with a new contract, the earlier rights cannot be enforced against the new arrangement, and the arbitration clause in the earlier contract may stop applying to disputes arising only under the new contract. But it does not mean that every document signed after an earlier agreement removes the arbitration clause. The terms of the later document and the nature of the claim must provide a proper basis for finding that the earlier rights have been fully replaced. In the present case, Clause 9 may be held to prevent some or all of the Petitioner’s monetary claims. However, the issue is not so clear that the existence and scope of the arbitration agreement can be rejected at the beginning without the Arbitral Tribunal examining it.

The scope of the Court’s enquiry under Section 11 needs to be considered. In SBI General Insurance Co. Ltd. v. Krish Spinning, (2024) 12 SCC 1, paragraphs 114 to 116, the Supreme Court explained that at the appointment stage the Court has to examine whether an arbitration agreement prima facie exists, and that questions of “accord and satisfaction” are ordinarily to be decided by the Arbitral Tribunal. The Court observed that a dispute about accord and satisfaction is not itself a challenge to the existence of the arbitration agreement. The same principle was explained again by the Supreme Court in Maharashtra State Electricity Distribution Company Limited v. R.Z. Malpani, 2026 INSC 342, paragraphs 20 and 21. The Supreme Court held that the enquiry under Section 11 is limited to seeing whether an arbitration agreement prima facie exists. Questions of accord and satisfaction, limitation, dishonesty, and other disputed matters are ordinarily to be left to the Arbitral Tribunal under Section 16 of the Act.

Applying this principle, the Court cannot decide the present Petition as if it were deciding a suit for recovery of Rs. 10,00,000/-. The existence of the LLP Agreement and Clause 23 is not disputed. Whether Clause 9 of the Deed of Dissolution settles all the Petitioner’s claims is an important question. But the documents must be read together and the nature and date of each claim must be considered. Merely because a later document contains a full and final settlement clause, the Court cannot ignore an arbitration agreement already entered into by the parties, particularly when the dispute is whether that settlement covers the claims now raised. Respondent Nos. 1 and 2 can raise their objection based on Clause 9 before the Arbitral Tribunal as a preliminary issue. The Tribunal can decide whether the claim is barred by the Deed of Dissolution, whether the earlier agreement has been replaced in a way which prevents arbitration and whether any claim remains for consideration. Appointment of an Arbitrator does not mean that the Petitioner’s claim is accepted or that the Deed of Dissolution is being ignored.

The objection based on Section 21 of the Arbitration and Conciliation Act does not require rejection of the Petition. The Petitioner relies upon the notice dated 6 June 2026 invoking arbitration, and the Respondents replied on 14 June 2026. Therefore, this is not a case where the Respondents did not know that the Petitioner wanted to refer the dispute to arbitration. Their objection is that the notice was not a valid invocation. In Bhagheeratha Engineering Ltd., particularly paragraph 39, the Supreme Court held that Section 21 is meant to determine when arbitral proceedings begin, especially for calculating limitation, and that “There is no mandatory prerequisite for issuance of a Section 21 notice prior to the commencement of Arbitration.” It holds that failure to issue such notice would not be fatal if the claim is otherwise valid and the dispute can be referred to arbitration. Paragraphs 40 to 42 explain that Section 21 is procedural in nature and the contents of the notice do not decide which claims can be raised before the Arbitral Tribunal, subject to the arbitration agreement and the requirements of the Act.

This Court has considered this issue in Unistar Metals Private Limited. In paragraphs 18 to 21, the Court relied upon Bhagheeratha Engineering Ltd. and Adavya Projects Private Limited, and held that a defect in the manner in which the notice invoked arbitration would not defeat an application under Section 11 where the notice invoked the arbitration clause, identified the dispute and sought its resolution through arbitration, and the other party opposed appointment. The Court recognised that the notice is important for deciding when arbitration begins and for limitation, but did not treat every defect in its form as a reason to refuse appointment. In the present case, the notice is stated to have invoked arbitration and the Respondents have replied to it. At this stage, there is no material to show that the parties had agreed upon a special notice procedure which was not followed, apart from the provisions of the LLP Agreement and the Arbitration Act. Therefore, the objection about the form or validity of the notice cannot defeat the Petition. Any question about limitation arising from the date or contents of the notice may be raised before the Arbitral Tribunal.

The reliance upon Arif Azim Co. and BSNL, needs to be considered. Those decisions deal with limitation and the need for a live dispute at the referral stage, on the facts of those cases. They do not mean that every objection to the form of a Section 21 notice or every claim of full and final settlement must be decided against the claimant at the Section 11 stage. The later explanation in Krish Spinning and R.Z. Malpani makes it clear that once an arbitration agreement prima facie exists, questions of accord and satisfaction and limitation are ordinarily for the Arbitral Tribunal. In the present case, the Petitioner sent the notice and the Respondents replied. The Respondents refused to agree to appointment on the ground that no arbitrable dispute remains. Therefore, their refusal to appoint an Arbitrator gives the Court reason to exercise its power under Section 11, subject to the procedure under the Act.

It is necessary to see whether the Petitioner has shown a dispute which is prima facie connected with the LLP Agreement. She relies upon the screenshots of social media platforms and reviews in Exhibits E and F, the later advertisement in Exhibit L, the Google page in Exhibit M, the advertisement about restarting business in Exhibit N, and the present status of social media pages in Exhibit O. According to the Petitioner, these documents show that the earlier business connections and online resources continued to be used after dissolution. These documents alone do not prove ownership of every page or account, misuse of goodwill or the amount of loss suffered by the Petitioner. The Court cannot now say that using the name “IMPEL STUDIO” amounts to breach of the LLP Agreement. However, the documents and pleadings show that the dispute is not imaginary or unrelated to the former business. There is a real disagreement about the use and treatment of the resources, goodwill and business connections developed during the partnership.

Whether the Petitioner has a personal right to claim part of the value of goodwill, whether that goodwill was an asset of the LLP, whether the assets were dealt with according to Clause 3 of the Deed of Dissolution, whether the accounts were settled, whether an oral assurance was given and whether the Respondents must give an account of benefits received from the business connections or resources of the LLP are matters for the Arbitral Tribunal. The written Agreement and the Deed of Dissolution provide enough material for a prima facie finding that disputes have arisen from the earlier contrrelationship between the parties. A final finding on whether the allegations are true, how much money may be payable or who owns each intangible asset would go beyond the proper scope of the present Petition.

In the aforesaid circumstances, the present Application under Section 11 of the Act deserves to be disposed of by passing the following order:

The learned Sole Arbitrator shall be at liberty to adjudicate upon the claims and counterclaims, if any, and to decide all questions relating to the merits of the disputes, in accordance with law. All contentions of the parties on the merits of their respective claims and defences are expressly kept open for consideration by the Arbitral Tribunal.

The Petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, shall stand converted into an application under Section 17 of the said Act. The learned Arbitral Tribunal shall consider and decide the same on its own merits, in accordance with law.

All actions required to be taken pursuant to this Order may be taken on the basis of a downloaded copy of the Order made available on the official website of this Court.

The Arbitration Application stands disposed of in the aforesaid terms.