(b) That pending the hearing and final disposal of the arbitral proceedings
between the parties arising out of or in connection with the LLP Agreement and for
a period of at least 4 (four) weeks from the date of the passing of the Award, this
Hon'ble Court be pleased to order; direct and restrain the Respondents (either
individually or collectively) from making any monetary demands on the Applicant;"
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
4. Interim Application No.12 sought vacation of the 2023 Order,
which led to an order dated February 11, 2025 (" 2025 Order") refusing to
vacate the same. Both orders are impugned.
5. In the 2023 Order, the Learned Arbitral Tribunal squarely allowed
the relief sought in prayer clauses (a) and (b) of Interim Application No.2 (as
extracted above), thereby staying, as an interim measure, the demand for
Rs.54 crores made by Mayank and Vidhi LLP; and a demand for contribution
of losses purportedly suffered in a sum of Rs.25.99 crores.
6. The Agreement dated August 14, 2014 ("LLP Agreement") contains
Clause 12.2, which essentially provided that the partners other than Raju
would need to make contributions of capital as mutually decided in a general
meeting in accordance with Clause 9.4 of the LLP Agreement. The
contribution by Raju was specifically contracted purely as being in the form of
services alone, without having to bring any additional cash or cash equivalent
to the LLP. It was also explicitly contracted that the partnership stake of Raju
in Vidhi LLP would remain undiluted regardless of the level of cash
contribution by Mayank and the other partners. The day-to-day management
of Vidhi LLP was meant to vest in Raju as a working partner, with such powers
and duties as resolved at a general meeting of Vidhi LLP.
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
7. The demand for Rs.54 crores laid at Raju's doorstep by Mayank and
Vidhi LLP is essentially based on the premise that Mayank had contributed to
fund the expenditure by Vidhi LLP in the sum of approximately Rs.~215.28
crores in the past. With Rs.~215.28 crores being attributed to Mayank's
contribution at 80% and Raju being ascribed an obligation to contribute 20%,
the sum of Rs.54 crores was demanded as a capital call to adjust for the
contributions already said to have been made by Mayank.
8. Likewise, the sum of Rs. ~25.99 crores towards "contribution of
losses" was attributed by Mayank to losses arising out of interest accrued on
loans contracted by Vidhi LLP and the cost of servicing such loans. It is an
admitted position that such loans had not been obtained from completely
independent third parties, but from related parties of Mayank, who were
alluded to by Learned Advocate for Mayank as "sister concerns" of Mayank.
9. The capital call of Rs.54 crores was made by a resolution, which was
purportedly passed on April 19, 2022. While Raju's contention is that Clause
12.2 protected him from any dilution in his stake and from having to bring in
any cash into Vidhi LLP, Mayank's contention is that Clause 12.2 was
superseded by virtue of an addendum to the LLP Agreement ("Addendum")
dated August 31, 2015, necessitating contribution by Raju as well.
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
10. Mayank relied upon a portion of Clause 5 of the Addendum, which
too provides that further contributions, if any, required by Vidhi LLP would
need to be brought in by the "parties", but even that clause indicates that such
contributions would be "as may be mutually decided by the parties at the time
of making contribution".
11. The Learned Arbitral Tribunal has prima facie held that Clause 12.2
of the LLP Agreement has neither been modified nor superseded. In any case,
no further contribution was demanded from Raju all the way until April 2022.
Even Clause 5 of the Addendum requires a mutual decision by the partners,
which would include Raju's consent. Equally, throughout the period of time in
which the other partners contributed Rs.~215.28 crores, no contribution was
ever demanded from Raju, indicating how the parties understood the LLP
Agreement at all times relevant to the capital contributions. The principle of
ante litam motam (conduct before litigation started) is a strong pointer to how
the parties understood their respective positions and the prima facie finding of
the Learned Arbitral Tribunal cannot be faulted.
12. It is clear that the capital contribution demand came in after
disputes and differences between the parties broke out. As regards to
contribution of Rs.25.99 crores towards losses purportedly suffered by Vidhi
LLP, the Learned Arbitral Tribunal prima facie found that the redevelopment
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
project on the land owned by Vidhi LLP has not been taken up at all, and all
along, the interest liability owed to related parties of Mayank had always been
capitalised. These were not run through the profit and loss account to lead to
operating losses of Vidhi LLP. Therefore, before the litigation started, no
losses accrued in the books of account of Vidhi LLP. However, suddenly after
disputes broke out, the approach to accounting policy was changed and the
provisional balance sheet was drawn out; interest amounts stopped being
capitalised and were debited to the profit and loss account, leading to losses.
13. The Learned Arbitral Tribunal has held, and rightly in my opinion,
that there is no question of allowing the capital contribution to be made at the
interim stage. The subject matter of the arbitration agreement is the disputes
and differences under the LLP Agreement. Therefore, the Learned Arbitral
Tribunal took a view, and in my opinion rightly, that there was no strong
prima facie case to defend the sudden demand for capital contribution and the
contribution of losses as demanded by Mayank from Raju after the disputes
and differences broke out.
14. It is in this context that the Learned Arbitrator has come to the view
that the preservation of the subject matter of the arbitration agreement would
necessarily entail injuncting the capital call made on Raju. Not only was the
demand for capital contribution contrary to the LLP Agreement by demanding
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
funds from Raju, but would also necessarily have the effect of diluting Raju
against which, the LLP Agreement contains a specific protection for him. This
was the 2023 Order.
15. The 2025 Order simply refused to vacate the 2023 Order on the
ground that there was no change in circumstances necessitating a revisit of the
2023 Order. The ground for Mayank seeking to revisit the 2023 Order was
essentially that Raju had transferred his partnership interests to a trust for the
benefit of his son and that such transfer constituted a cessation of partnership
by Raju, with the trust becoming a partner.
16. The upshot of this submission is that with the cessation of Raju as a
partner and the induction of the trust as a partner, the protection extended
under the LLP Agreement was personal to Raju and is no longer applicable
because Raju has been replaced by the trust created by him, and therefore, the
2023 Order ought to be revisited.
Analysis and Findings:
17. I have heard Mr. Sanjay Jain, Learned Senior Advocate on behalf of
Mayank and Mr. Chetan Kapadia, Learned Senior Advocate for Raju. With
their assistance, I have examined the record.
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
18. Mr. Jain on behalf of Mayank would submit that at the time the
matter was argued before the Learned Arbitral Tribunal, the parties were
unaware that an explicit change in law had taken place permitting a trust to
become a partner of Vidhi LLP. He would submit that the LLP (Significant
Beneficial Owners) Rules, 2023 ("SBO Rules"), notified on November 9, 2023
had already specifically defined the term "Significant Beneficial Owner" in
Rule 3(1)(k), the relevant extracts of which read as follows:-
"3. Definitions.- (1) In these rules, unless the context otherwise requires,-
(k) "significant beneficial owner" in relation to a reporting limited liability
partnership, means an individual who acting alone or together or through one or
more persons or trust, possesses one or more of the following rights or entitlements
in such reporting limited liability partnership, namely:-
(i) holds indirectly or together with any direct holdings, not less than ten per cent
of the contribution;
(ii) holds indirectly or together with any direct holdings, not less than ten percent
of voting rights in respect of the management or policy decisions in such limited
liability partnership;
(iii) has right to receive or participate in not less than ten per cent of the total
distributable profits, or any other distribution, in a financial year through
indirect holdings alone or together with any direct holdings;
(iv) has right to exercise or actually exercises, significant influence or control, in
any manner other than through direct-holdings alone:
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
Explanation I.- For the purpose of this clause, if an individual does not hold any
right or entitlement indirectly under sub-clauses (i), (ii), (iii) or (iv), he shall not
be considered to be a significant beneficial owner.
Explanation II.- For the purpose of this clause, an individual shall be considered
to hold a right or entitlement directly in the reporting limited liability
partnership, if he satisfies any of the following criteria, namely:-
(i) the contribution in the reporting limited liability partnership representing
such right or entitlement are held in the name of the individual;
(ii) the individual holds or acquires a beneficial interest in the contribution of
the reporting limited liability partnership under sub-rule (2) of rule 22B of the
Limited Liability Partnership Rules, 2009 and has made a declaration in this
regard to the reporting limited liability partnership.
Explanation III.- For the purpose of this clause, an individual shall be considered
to hold a right or entitlement indirectly in the reporting limited liability
partnership, if he satisfies any of the following criteria, in respect of a partner of
the reporting limited liability partnership, namely: -
(i) where the partner of the reporting limited liability partnership is a body
corporate (whether incorporated or registered in India or abroad) other than
a limited liability partnership, and the individual,-
(a) holds majority stake in that partner; or
(b) holds majority stake in the ultimate holding company (whether
incorporated or registered in India or abroad) of that partner;
(ii) where the partner of the reporting limited liability partnership is a Hindu
undivided family (through karta), and the individual is the karta of the Hindu
undivided family;
(iii) where the partner of the reporting limited liability partnership is a
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
partnership entity (through itself or a partner), and the individual,-
(a) is a partner; or
(b) holds majority stake in the body corporate which is a partner of the
partnership entity; or
(c) holds majority stake in the ultimate holding company of the body
corporate which is a partner of the partnership entity.
(iv) where the partner of the reporting limited liability partnership is a trust
(through trustee), and the individual,-
(a) is a trustee in case of a discretionary trust or a charitable trust;
(b) is a beneficiary in case of a specific trust;
(c) is the author or settlor in case of a revocable trust.
(v) where the partner of the reporting limited liability partnership is,-
(a) a pooled investment vehicle; or
(b) an entity controlled by the pooled investment vehicle, based in member
State of the Financial Action Task Force on Money Laundering and the
regulator of the securities market in such member State is a member of the
International Organisation of Securities Commissions, and the individual in
relation to the pooled investment vehicle,-
(A) is a general partner; or
(B) is an investment manager; or
(C) is a chief executive officer where the investment manager of such
pooled vehicle is a body corporate or a partnership entity.
Explanation IV - Where the partner of a reporting limited liability partnership is,
(i) a pooled investment vehicle; or
(ii) an entity controlled by the pooled investment vehicle, based in a jurisdiction
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
which does not fulfil the requirements referred to in clause (v) of Explanation III,
the provisions of clause (i) or clause (ii) or clause (iii) or clause (iv) of
Explanation III, as the case may be, shall apply.
Explanation V.- For the purpose of this clause, if any individual, or individuals
acting through any person or trust, act with a common intent or purpose of
exercising any rights or entitlements, or exercising control or significant influence,
over a reporting limited liability partnership, pursuant to an agreement or
understanding, formal or informal, such individual, or individuals, acting through
any person or trust, as the case may be, shall be deemed to be "acting together".
[Emphasis Supplied]
19. Based on sub-clause (ii) of Explanation II, Mr. Jain would submit
that the SBO Rules now provide for disclosure of any individual who holds or
acquires a beneficial interest in the contribution of the reporting LLP under
Rule 22B(2) of the LLP Rules 2009 ("LLP Rules") and has made a declaration
in this regard to the LLP. Rule 22B of the LLP Rules, 2009 reads thus:-
"22B. Declaration in respect of beneficial interest in any contribution.-
(2) Every person who holds or acquires a beneficial interest in contribution of a
Limited Liability Partnership but his name is not registered in the register of
partners (hereinafter referred to as "the beneficial partner") shall file with Limited
Liability Partnership, a declaration disclosing such interest in Form 4C within a
period of thirty days after acquiring such beneficial interest in the contribution of
the Limited Liability Partnership specifying the nature of his interest, particulars of
the partner in whose name the contribution stand registered in the books of the
limited liability partnership:
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
Provided that where any change occurs in the beneficial interest in such
contribution, the beneficial partner shall, within a period of thirty days from the
date of such change, make a declaration of such change to the limited liability
partnership in Form 4C.
Provided further that if the beneficial interest of registered partner is limited to the
contribution stated against his name in the register of partners but he does not hold
beneficial interest in contribution against any other registered partner, then, he
shall not be required to file such declaration."
[Emphasis Supplied]
20. I have examined and considered these provisions. To my mind, a
plain reading of the foregoing provisions would indicate that where the
beneficial interest is not fully or partly held by a partner whose name is
entered in the Register of Partners, such partner must file a declaration to that
effect in the stipulated form. This declaration would only indicate who holds
the beneficial interest in respect of such partnership. Every time there is a
change in such holder of beneficial interest, it is the registered partner who
has to keep intimating the LLP.
21. To my mind, nothing turns on these provisions in the manner
canvassed on behalf of Mayank. The SBO Rules provide for disclosures of a
"significant beneficial owner". The threshold of significance is 10% ownership.
All this requires is a disclosure. The entire framework extracted above is only
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
a means of stipulating how to identify who is to be regarded as the significant
beneficial owner and in what circumstances a disclosure would have to be
made. Nothing in this framework supplants the actual registered partner and
that too when the partner in question is the trustee of the trust in which the
beneficial interest is vested.
22. The farthest that sub-clause (ii) of Explanation II would take
Mayank is to identify Raju's son as a beneficiary of the trust, where the trustee
is none other than Raju. That would entail identifying a disclosure of
significant beneficial ownership, which is still not legal ownership which vests
only in Raju. Sub-clause (ii) of Explanation II of Rule 3(1)(k) only creates a
deeming fiction of a direct ownership, which in turn is solely for purposes of
Clause 3(1)(k). The very opening phrase of Explanation II is " for the purpose
of this clause" - therefore, apart from subserving the purpose of the clause i.e.
to identify who is a significant beneficial owner, Explanation II does nothing
else.
23. The reference to Rule 22B(2) of the LLP Rules too does not take the
case any further. All it does is create another concept called "beneficial
partner" for the sole purpose of identifying the disclosure requirement. The
farthest that the reference to Rule 22B(2) of the LLP Rules in Rule 3(1)(k) of
the SBO Rules would take Mayank is to identify Raju's son as the beneficial
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
holder; with Raju's stake being 20%, this merely triggers the disclosure
obligations. That, by no stretch would have any consequences for the
interlocutory relief under the 2023 Order or the 2025 Order - which
essentially identified the provisions of the LLP Agreement that protect Raju
from contributing capital and from dilution of his partnership interest.
24. I have already dealt with how Indian law entails two estates to every
property - the legal estate and the beneficial estate - in a judgement dated
April 10, 2026, disposing of another appeal under Section 37 of the Act filed by
Mayank, challenging permission to impugn the trustees of the trust as parties.
I had occasion to articulate the following:
"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 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.
"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 consti-
tute 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 dis-
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
putes had begun that Mayank proposed to unilaterally resolve that Raju's partner-
ship 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.
"Against this backdrop, out of abundant caution, Raju applied for making the trust-
ees 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 particu-
lar, 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 prop-
erty ownership has two distinct components - the legal estate and the beneficial es-
tate. 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 in-
dependent 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."
[Emphasis Supplied]
25. It is because a trust is not a legal entity with a distinct legal
personality, and is in fact a fiduciary relationship, that Section 5 of the Limited
Liability Partnership Act, 2008 (" LLP Act") recognises only individuals and
bodies corporate to be partners in an LLP. It is in the course of ascertaining
beneficial ownership that the LLP Act, the LLP Rules and the SBO Rules create
a framework for disclosure of beneficial interest and ownership of a significant
size (threshold drawn is 10%). This has nothing to do with legal ownership.
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
Therefore, the provisions of the aforesaid subordinate legislation which only
create a framework for ascertaining beneficial interest (as if such interest were
direct) cannot by any stretch change the position in law and create a new legal
owner and partner, and thereby necessitate revisiting the 2023 Order, which
had originally remained unchallenged.
26. Mr. Jain would also analyse the ingredients of Section 17 of the Act
to contend that the plain language of the provision does not bring within the
ambit of the Section 17 jurisdiction the power to prevent capital calls being
made on a partner. This contention does not appeal to me at all, inasmuch as
the Learned Arbitrator has indeed returned an outcome that would point to
the subject matter of the arbitration agreement being worthy of protection for
purposes of balancing the competing interests of the parties pending the
conduct and completion of the arbitration.
27. Likewise, Mr. Jain would allege that the three-pronged test of prima
facie case; grave, irreparable injury and balance of convenience has not been
spelt out in the 2023 Order, rendering the said order perverse. This contention
too does not appeal to me, inasmuch as what is writ large on the face of the
record and indeed the 2023 Order is that the Learned Arbitral Tribunal has
clearly perceived a threat to the very subject matter of the arbitration
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
agreement. Therefore, the protection granted by the Learned Arbitral
Tribunal is unworthy of interference.
28. Mr. Kapadia had indicated that final hearing in the arbitration has
been completed and the award is due, suggesting that this challenge is nearly
infructuous. Mr. Jain would counter that to submit that such a factual
position is no basis for not hearing the statutory appeal provided for under
Section 37 of the Act against a Section 17 Order. It is clear to my mind that the
statutory jurisdiction under Section 37 would indeed need to run its course.
While I completely agree with Mr. Jain in this regard, I have applied my mind
as an Appellate Court over the Section 17 jurisdiction.
29. In doing so, considering the jurisdiction of this Court is co-
extensive with the Section 17 jurisdiction, I have examined the matter and
discerned a strong prima facie case made out from the provisions of the LLP
Agreement. The grave and irreparable injury that would have been occasioned
to Raju if he were forced to contribute capital in the teeth of a specific
protection against contribution and dilution, explicitly contracted in the LLP
Agreement, is also writ large. The balance of convenience indeed lies in favour
of Raju, inasmuch as should the arbitration outcome go against Raju, he can
always be directed to make the capital contribution. Indeed, the declaration of
trust in respect of Raju's share in Vidhi LLP is not of any consequence for
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
review of the 2023 Order and there is nothing wrong in the 2025 Order
warranting interference.
30. On the other hand, the onus was on Mayank to demonstrate the
irreparable injury that would be occasioned to him and Vidhi LLP if the capital
contributions were not made. In fact, throughout the contribution of
Rs.~215.28 crores, never was a capital call made since Mayank clearly
understood how Clause 12.2 of the LLP Agreement would operate. Implicit in
the analysis by the Learned Arbitral Tribunal, the trinity test was entirely met.
31. Therefore, neither of the Impugned Orders is perverse, nor has the
trinity test been missed. That apart, the new argument which was not
canvassed before the Learned Arbitral Tribunal in relation to Rule 3(1)(k) of
the SBO Rules read with Rule 22B(2) of the LLP Rules does not render the
2023 Order worthy of any interference.
32. It is also evident that the Section 37 challenge to the 2023 Order
had been filed in time but was not pursued, and in fact, came to be dismissed a
year later on August 26, 2024. Even thereafter, Mayank did not forthwith
rush to Court to have the same restored and instead the restoration took effect
only on May 8, 2025. Therefore, even from the perspective of the principles
applicable to interlocutory relief, the change in circumstances cited by Mayank
does not result in the 2023 Order having to be revisited. The Interim
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
Application No.12 made no reference to the change in law, although the 2025
Order was passed well after the introduction of the SBO Rules.
33. Between the time the 2023 Order was passed (September 27, 2023)
and the restoration on May 8, 2025, it is common ground that the Learned
Arbitral Tribunal heard the matter from time to time and the judgement is
indeed reserved. While the eventual arbitral award may be imminent and that
would not matter for discharge of the statutory appellate jurisdiction under
Section 37(2)(b) of the Act, it cannot be ignored that the Learned Arbitral
Tribunal had before him multiple Interim Applications taken out in the
arbitration proceedings. Many of these are interrelated and just because a
barrage of applications is presented to the Learned Arbitral Tribunal from
time to time, it is not for the Arbitral Tribunal to reiterate and record each and
every facet all over again, thereby unnecessarily discharging an excessively
burdensome requirement in the course of dealing with these Interim
Applications.
34. Suffice it to say, no change in circumstances is evident in the factual
matrix for the 2025 Order to be faulted for not interfering with the 2023
Order. In these circumstances, both the captioned Petitions are dismissed for
the reasons set out above, as in my opinion, no fault can be found with the
May 18, 2026
Ashwini Vallakati
J-11-CARBP-444-2025+.doc
approach of the Learned Arbitral Tribunal to warrant any interference with
either of the Impugned Orders.
35. The captioned Petitions are therefore dismissed. The costs for this
round of litigation shall be factored in by the Learned Arbitral Tribunal in the
course of its final adjudication of costs in the matter. The statement of costs
filed by the parties in these proceedings shall be deposited with the Learned
Arbitral Tribunal within a period of two weeks from the upload of this order
on the Court's website.
36. 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.]
May 18, 2026
Ashwini Vallakati
