[Cites 18, Cited by 0]
Bombay High Court
Mayank J Shah vs Raju V Shah on 10 April, 2026
2026:BHC-OS:9123
Judgment-CARBP-409-2025+F.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CHAITANYA ORDINARY ORIGINAL CIVIL JURISDICTION
ASHOK
JADHAV
Digitally signed by
CHAITANYA ASHOK
JADHAV
Date: 2026.04.10
IN ITS COMMERCIAL DIVISION
16:46:56 +0530
COMMERCIAL ARBITRATION PETITION NO. 409 OF 2025
Mayank J. Shah And Ors. ...Petitioners
Versus
Raju V. Shah And Ors. ...Respondents
Mr. Sanjay Jain a/w Hrushi Narvekar, Parag Kabadi, Drishti
Gudhaka, Vidhi Porwal, i/b OSK Legal, for the Petitioner.
Mr. Chetan Kapadia, Senior Advocate, a/w Malcolm
Siganporia, Counsel, Yuvraj Singh, Counsel, Rajesh Satpalkar &
Devansh Gadda, i/b Mulla & Mulla & Craigie Blunt and Caroe
for Respondent No.1.
CORAM : SOMASEKHAR SUNDARESAN, J.
DATE : APRIL 10, 2026.
JUDGEMENT :
Context and factual background
1. This is a Petition filed under Section 37(2)(b) of the
Arbitration and Conciliation Act, 1996 ("the Act"), seeking
interference with an order purportedly passed under Section 17 of the
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Act, by which an impleadment Application came to be allowed by the
Learned Arbitral Tribunal.
2. Ordinarily, an order of impleadment which is part and parcel
of procedural directions and indeed even affecting substantive rights of
the parties owing to joinder being allowed, would not be appealable
under Section 37(2)(b) of the Act. The jurisdiction under Section 37 is
one that entails an exhaustive listing of permissible appeals, which are a
creature of statute. Impleadment of a party would not constitute an
interlocutory protective measure as envisaged under Section 17 of the
Act.
3. However, the basis on which this Petition is sought to be
pursued is that the Respondents in this Petition led by Raju V. Shah (for
convenience, collectively termed ("Raju") filed an Application before
the Learned Arbitral Tribunal seeking impleadment of trustees of a
certain trust, among others, invoking Section 17 of the Act. The Learned
Arbitral Tribunal had also been presented with another Application
under Section 17 of the Act, and these came to be collectively disposed of
by way of the Impugned Order dated April 29, 2024. Therefore, the
Petitioners led by Mayank J. Shah (for convenience, collectively termed
"Mayank"), would contend that since the measure adopted by the
Learned Arbitral Tribunal and indeed the measure sought by Raju, both
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invoke Section 17 of the Act, the appellate review under Section 37(2)(b)
is indeed available.
4. Disputes between Mayank and Raju relate to control and
management of a limited liability partnership, Vidhi Research and
Development LLP ("LLP"), of which they are partners. Respondent
No.1 had entered into a Limited Liability Partnership Agreement dated
August 14, 2014 with Pravin Kotak, Jayeshkumar Kotak, Jateen Gupta
and Amit Gupta ("Kotaks & Guptas"). Thereafter, pursuant to the
execution of an Addendum dated August 14, 2015, Mayank was inducted
as partner of the LLP and Kotaks & Guptas ceased to be partners of the
LLP (for convenience, both agreements are collectively termed "LLP
Agreement"). The LLP holds property earlier held by Pfizer Ltd. and
the parties have serious conflict over a veto right in the hands of Raju
about the business decisions of the LLP, as contained in the LLP
Agreement.
5. For purposes of this Petition, what is relevant is that on June
17, 2019, Raju is said to have informed the partners of the LLP and
recorded in an email that Raju had created a trust by which, the benefits
of the 20% shares held by Raju in the LLP would vest in a trust titled
Raju V. Shah Trust, with his son as the beneficiary ("Trust").
According to Mayank, this constituted a significant change arising out of
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the assignment of interests by Raju to the trustees of the Trust, but this
stance was taken much later in November 2022, when the parties were
in litigation. Raju would contend that while transfer of a share in the
LLP would make the transferee a new partner, transfer of just the
benefits in the profits of the LLP would not constitute any change in
partnership.
6. Faced with this contention, Raju filed an application on
August 28, 2023 before the Learned Arbitral Tribunal praying that out
of abundant caution, Raju V. Shah and Kalpana D. Shah, in their
capacity as the trustees of the Trust, be joined as fellow Claimants with
Raju already being the Claimant in his individual capacity. The
Impugned Order allows the Application.
Analysis and Findings:
7. I have heard at length, Mr. Sanjay Jain, Learned Advocate on
behalf of the Mayank and Mr. Chetan Kapadia, Learned Senior Advocate
on behalf of the Raju. With their assistance, I have examined the
record.
8. At the threshold, one must deal with Mr. Kapadia's
preliminary objection that no appeal is maintainable over an order
permitting joinder of parties since that is not subject matter of an
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appealable order under Section 37 of the Act. Mr. Jain would submit
that it is a well-settled principle of appellate jurisprudence that the right
to appeal is determined by what the trial Court "did or purported to do"
and not what it "ought to have done". Therefore, he would submit that
while the decision may be one of joinder, since Raju sought the joinder
as a protective measure invoking Section 17 of the Act, and the Learned
Arbitral Tribunal too purported to take the decision under Section 17 of
the Act, and even repelled Mayank's contention that a joinder cannot be
pursued under Section 17 of the Act, an appeal under Section 37 would
indeed be maintainable.
9. Therefore, Mr. Jain would contend that an appeal against an
order purportedly passed under Section 17 would be maintainable even
if the Learned Arbitral Tribunal was legally incorrect in invoking that
provision. He would contend that the power purportedly exercised
under a certain provision, which brings within its scheme a statutory
right to appeal cannot be left without a check and balance, in the teeth
of a statutory right to appeal.
10. Towards this end, Mr. Jain would rely upon a judgement of a
Learned Division Bench of this Court in Antikeros1, which in turn
1 Antikeros Shipping Corporation v. Adani Enterprises Ltd. - 2020 SCC OnLine
Bom 277
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relies upon a number of judgements2, where the Court was presented
with a situation where a Learned Single Judge had exercised jurisdiction
under Section 11 of the Act to appoint an arbitrator despite the
jurisdiction under Section 11 lying in the Supreme Court, one of the
parties being a foreign company. The Arbitral Tribunal went on to settle
the issues that arose for determination in the dispute. Evidence was
recorded and various hearings were held. A few years later, Adani
Enterprises, filed a Review Petition in the High Court, seeking review of
the original order by which the Arbitrator was appointed under Section
11 of the Act. The delay of 2,690 days in filing the review was condoned
and the Review Petition was allowed. This decision was challenged in an
appeal before the Learned Division Bench. The reasoning of the Learned
Single Judge was that the power of procedural review was inherent and
plenary in the Court and the High Court being a Court of record had a
duty to correct the record and remedy palpable errors that had been
committed.
11. In the Appeal before the Learned Division Bench, a
preliminary objection as to maintainability was raised. It was
contended that only such appeals as are maintainable against orders
2 Muthiah Chekttiar v. Govinddas Krishnadas - (1947) 1 Mad LJ 292;
Somasundaramma v. Seshagi - AIR 198 Mad 245; Oor Nayakkan @ Krishnaswami
Naidu - AIR 1962 Ker 17, Parvathi Pillai v. Kuttan Pillai - AIR 1962 Ker 17 and,
Hurrish Chunder Chowdhry v. Kali Sundari Debi - ILR (1882) 9 PC 48
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enumerated in Section 37 could be maintained and an order passed by
the Learned Single Judge in exercise of inherent jurisdiction of review
would not be appealable. This was countered on the premise that since
the power of review had been exercised based on inherent powers, an
Appeal would lie, under Order XLVII Rule 7 of the Code of Civil
Procedure, 1908 ("CPC"). The Learned Division Bench held that
when a Court acts under an appealable provision of law and passes an
order, a party affected by it would not be deprived of the right to appeal,
even if, on facts, the order ought not to have been passed under that
provision. Therefore, the Learned Division Bench held that the appeal
would be maintainable and went on to allow the appeals on merits, and
set aside the order recalling the appointment of the arbitral tribunal,
with costs. Mayank would rely on this position to indicate that the
appeal under Section 37 of the Act is maintainable.
12. A few words on first principles would be in order. The
application for joinder is not really an application for joinder of a non-
signatory party to the arbitration agreement. The application was
necessitated in the context of the peculiar position adopted by Mayank
years into the arbitration, based on a declaration of the Trust made by
Raju in 2019. Under Section 5 of the Limited Liability Partnership Act,
2008 ("LLP Act"), an individual or a body corporate may be a partner
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of the LLP. Therefore, natural persons or artificial legal persons alone
can be partners. This is quite similar to the position in law for being a
member of a company - indeed, the LLP itself is a body corporate and
an artificial legal person under Section 3 of the LLP Act.
13. As a partner of the LLP, Raju is admittedly a party to the
arbitration agreement. In 2019, Raju had indicated that the benefit of
his shareholding in the LLP constitute trust property for the benefit of
his son, the beneficiary of the Trust. No issue was raised
contemporaneously about this development. It was much later when
disputes had begun that Mayank proposed to unilaterally resolve that
Raju's partnership in the LLP had come to an end and that the
transferee of Raju's interest in the LLP would have to be made a
partner. The unilaterally passed resolutions had already been injuncted
by the Learned Arbitral Tribunal.
14. Against this backdrop, out of abundant caution, Raju applied
for making the trustees a party to the arbitration proceedings as co-
Claimants. This has been allowed in the Impugned Order. In view of the
legal framework governing the LLP, in particular, Section 5 permitting
only individuals and bodies corporate to be partners, the partner in the
LLP continues to be Raju. It is a matter of first principles that property
ownership has two distinct components - the legal estate and the
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beneficial estate. The legal estate is the registered title to ownership
while the beneficial estate is the right to enjoy, use and receive benefits
from the property. When a registered owner creates a trust, the legal
ownership can either be transferred by him to an independent and new
third party who would act as a trustee, or the very same legal owner may
proceed to don the hat of the trustee, continuing to hold the very same
property as a trustee for the benefit of the beneficiaries declared as the
beneficiaries of the trust.
15. On the face of it, this is what has been done by Raju. In my
view, the issue of maintainability need not be viewed in the manner in
which one would view any other routine decision of joinder of parties.
Raju, a vested owner of a partnership in the LLP is sought to be ousted
from being regarded as a partner for no reason other than having
declared that the benefits of his ownership of a share in the LLP would
flow to his son, the beneficiary of a trust set up by him. Raju continues
to be the owner and in the capacity as a trustee. In that light, already
having injuncted the unilateral resolutions purporting to record
termination of Raju's partnership, the Learned Arbitral Tribunal has
gone a step further to also allow the joinder, still keeping the larger
question of partnership open for adjudication.
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16. Therefore, in my opinion, this is not even a case of a "joinder"
of a third party but a purported joinder of none other than a person who
is already a party to the arbitration agreement and is actively involved in
the arbitration proceedings. Therefore, even treating the Impugned
Order as an interlocutory measure of protection rather than a
conventional order on joinder i.e. even treating the challenge as being
maintainable, in my opinion the challenge is totally devoid of merit.
17. I am conscious about the stage at which these proceedings
have been brought to this Court. All observations in this judgement are
in furtherance of considering the merits of the challenge at this stage
and are not intended to be final declarations of adjudication, which
squarely fall within the domain of the Learned Arbitral Tribunal, which
in turn, has indeed reserved adjudication on these issues for a later
stage.
18. The dispute between Mayank and Raju are about ownership,
control and management of the LLP. Raju appears to have created the
Trust in November 2018 and intimated the LLP in June 2019. Mayank
claims that Raju had ceased to be a partner in the LLP and it was only
due to oversight that the LLP did not give effect to the purported
cessation of Raju's partnership until much later, but that nevertheless
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Raju had become disentitled to participate further in the arbitral
proceedings.
19. Indeed, the Learned Arbitral Tribunal disposed of two
applications, framing a common issue as to whether Raju had ceased to
be a partner of the LLP. The Learned Arbitral Tribunal has squarely
dealt with Mayank's contention that Raju had assigned his rights in the
LLP to the Trust, and therefore ceased to be a partner. The Learned
Arbitral Tribunal also examined Raju's contention that there was no
transfer of his share in the LLP and only the enjoyment of profits of his
share in the LLP would flow to the beneficiary of the Trust, with Raju
continuing to be the registered owner of the share in the LLP.
20. Raju sought to lead oral evidence on the issue to make it clear
that there was no cessation of Raju's interest in the LLP. The Learned
Arbitral Tribunal noted that the parties' respective contentions had
remained identical to contentions raised on earlier occasions in respect
of earlier Interim Applications raising the same issue, in particular
Interim Application No. 3, which had been dealt with by the Learned
Arbitral Tribunal by an order dated September 27, 2023.
21. The Learned Arbitral Tribunal took note of Raju's contention
that any assignee of rights, whether of profits or of the share itself,
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would be bound by the eventual Arbitral Award in terms of Section 35 of
the Act. On the other hand, Mayank had contended that the Learned
Arbitral Tribunal had no power to permit joinder of additional parties
on the premise that there was no jurisdiction to entertain such a request
and no power was available to the Learned Arbitral Tribunal. In this
context, the judgement of the Constitutional Bench of the Supreme
Court in Cox and Kings3 was extensively quoted and analysed in
particular in relation to the phrase "claiming through or under" used in
Section 8 and Section 11, and interpreted in that judgement. After
extensive extraction, the Learned Arbitral Tribunal held that the
Tribunal indeed had the power to implead and join third parties to the
arbitration and the non-signatories could also be included as parties to
the arbitration. The Tribunal held that it would have to consider oral
and documentary evidence on facts as well as law to give a definitive
conclusion on the point and specifically stated that it was apparent that
Raju could either maintain the proceedings in his individual capacity, or
participate in his capacity as a trustee of the Trust, considering the
provisions of Section 35 of the Act.
22. In other words, the Learned Arbitral Tribunal did not give a
definitive answer on whether only the profits had been assigned or a
3 Cox & Kings Ltd. v. SAP India (P) Ltd. - (2024) 4 SCC 1
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share in the LLP had been assigned, and left that issue open. Towards
that end, it stated that for adjudication of the same, the trustees should
be allowed to participate, in keeping with the principles of natural
justice, fair play and good conscience. This is what is objected to in the
Appeal on the ground that such a direction is wholly without jurisdiction
and that Arbitral Tribunals have no power whatsoever to grant such
relief to a third party to become a claimant - even while it may be
possible to make a non-signatory party a respondent.
23. Specifically, in allowing the Interim Application, the Learned
Arbitral Tribunal has permitted the following:-
"24. At the stage when the Trust was formed, and assignment was made -
the Claimant was the only Trustee. The Applicant No.2 has been added as a
Trustee later on. It is settled law, the Trust properties can be held in the
name of any one or more of the Trustees. In the circumstances, I deem it
appropriate to allow the Interim Application No.9 partly i.e.
(i) to implead the Applicant No.1, on an alternative and without prejudice
basis, also in his capacity as a Trustee of Raju V. Shah Trust;
(ii) as also to carry out consequential amendments set out in paragraphs
99A to 99J of the Schedule of Amendment; and
(iii) as also to add prayers clause (j2) set out in the Schedule of
Amendment.
25. The aforesaid course of action would also assist the Tribunal in doing
final and conclusive determination of the Point No.5 in a comprehensive
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manner, including as to the constitution of the Respondent No.1 (LLP) and
inter se rights of the parties."
[Emphasis Supplied]
24. The realisation that advisedly dawned on Mayank in
November 2022 for the declaration made by Raju in 2019 has been
fairly dealt with by the Learned Arbitral Tribunal. The Trust being the
characterization and name of a contractual relationship - the
relationship between the trustee and the beneficiary in connection with
the trust property - is not a legal entity at all, for it to have capacity to
sue and be sued. Raju, in his capacity as a trustee of the Trust is being
permitted to be added out of abundant caution to deal with Mayank's
contention about Raju's partnership having ceased, which too has been
protected against already by the Learned Arbitral Tribunal.
25. No real third-party trustee having been introduced, the
Learned Arbitral Tribunal's approach cannot be faulted. In my opinion,
Cox and Kings may not even have been relevant but this is for the
Learned Arbitral Tribunal to decide eventually. Therefore, Mr. Jain's
contention that having noticed that judgement, the Learned Arbitral
Tribunal ought to have positively declared that the trustees were
veritable parties also does not inspire any confidence on merits. The
very same partner of the LLP is now a trustee. This principle on the face
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of it, would address Mayank's contention about the need to declare that
a newly joined party is a veritable party.
26. The Learned Arbitral Tribunal has already formulated Point
No. 5 for determination on July 7, 2023 and has squarely framed the
issue of whether Raju could be said to have ceased to be a partner of the
LLP and if so, the date from which he would cease to be a partner, and
the effect and consequences on the constitution of the LLP and the inter
se rights of the parties. In the Impugned Order, the Learned Arbitral
Tribunal has extracted from its order dated September 27, 2023,
granting protection on this very point.
27. Even with the Impugned Order, one cannot lose sight of Mr.
Kapadia's valid point that although the Impugned Order was passed on
April 29, 2024, an Interim Application in the captioned proceedings had
been served on Raju only on May 6, 2025, and that too without serving
the captioned Petition which had already been dismissed for non-
removal of objections. Various further actions have already transpired
before the Learned Arbitral Tribunal between April 29, 2024 and May 6,
2025. During this period of 13 months, the Petition had not even been
served on Raju, and was even dismissed and came to be restored
without prejudice to the rights and contentions of the parties. The
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jurisdiction invoked being interlocutory in nature (Section 17 of the Act)
even this delay is relevant for equitable considerations in adjudicating
this Petition. No case for any interference is warranted.
28. As stated earlier, all my observations in this judgement are
prima facie observations without meaning to preclude the Learned
Arbitral Tribunal from arriving at its own findings, considering that he
has reserved these issues for ruling on Point No. 5 in the Points for
Determination framed by it. I have no doubt the Learned Arbitral
Tribunal would do so in accordance with law on merits.
29. Before parting, I must say that there are parallels between
this case and Antikeros, which is cited on behalf of Mayank. In the
midst of arbitration, the contention about Raju's entitlements to
partnership having come to an end is indeed the "torpedo" intended to
sink the ship (to borrow the Learned Division Bench's phraseology used
in Antikeros). The Learned Arbitral Tribunal could have adjudicated
whether this "torpedo" was a "dud" (again to borrow from Antikeros)
but the Learned Arbitral Tribunal's entitlement to determine this at a
later stage and upon being more satisfied with all facets of the matter.
This is purely the Learned Arbitral Tribunal's prerogative. Meanwhile
to adjust and best preserve the positions of the two sides, the Learned
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Arbitral Tribunal has considered it fit to also allow the without-
prejudice and out-of-abundant-caution prayer for enabling the same
partner, now as a "trustee" to be a co-Claimant. I see nothing wrong in
this approach that leads to any perversity or error of law, necessitating
intervention under Section 37 of the Act.
30. For quite similar reasons as articulated in Antikeros,
considering the nature of the grievances raised and the unreasonable
stance adopted on behalf of Mayank, this too represents a fit case for
imposition of costs. However, considering that the Learned Arbitral
Tribunal is said to be at the fag end of the proceedings, I leave the
adjudication and consideration of costs for this round of proceedings to
the Learned Arbitral Tribunal when making its final adjudication.
31. All actions required to be taken pursuant to this order shall
be taken upon receipt of a downloaded copy as available on this Court's
website.
[ SOMASEKHAR SUNDARESAN, J.]
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