Whether Delhi Court have territorial jurisdiction under LLP Act for simple reason that company have its clientage and customers in Delhi?

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Shubham Budhiraja[1]

 


Mr. A, Partner in LLP filed suit against Partner B praying access to the business accounts of few clients. The commercial court rejected Order 7 Rule 11 application challenging jurisdiction. The Delhi High Court under Article 227 set aside the order and held that parties by agreement cannot confer jurisdiction if it inherently lacks. Mere because some of business is in Delhi, that per se will not confer jurisdiction especially when dispute is with regard to business accounts. An LLP may have clients or business in any part of the country. The registered address is not in Delhi and nor the Books of accounts kept in Delhi. Hence, there is no jurisdiction on Delhi court. Also, the NCLT will not have jurisdiction either because matter doesn't relate to merger, etc. under section 61 of LLP Act. Section 9 CPC applies and civil court is competent to entertain the suit[2].

 

(I)            Section 13 of the LLP Act provides that every LLP shall have a registered office, where all communications and notices may be addressed and shall be received. In terms of Sections 11 and 36 of the LLP Act, documents in respect of the LLP, including the incorporation document, the statement of account, annual return, etc., shall also be available for inspection with the Registrar of the concerned State in which the LLP is registered. In terms of Section 34(1) of the LLP Act, the books of account in respect of an LLP shall be maintained at the registered office.

 

(II)          The disputes raised in the present suit do not pertain to Sections 60, 61, 62 and 63 of the LLP Act in respect of which jurisdiction has been vested with the NCLT. Sections 60, 61 and 62 of Chapter XII of the LLP Act pertain to compromise, arrangement or reconstruction of LLPs, while Section 63 of Chapter XIII of the LLP Act deals with the winding up and dissolution of LLPs, none of which form the subject matter of the present suit. The disputes raised in the present petition pertain to inter se disputes of the partners of the LLP with regard to business accounts of the LLP and therefore, the remedy of the aggrieved partner would be to file a commercial suit in terms of the provisions of the Commercial Courts Act, 2015.

 

(III)         Section 9 of the CPC states that Courts shall have the jurisdiction to try all suits of a civil nature, excepting suits of which their cognizance is either expressly or impliedly barred. Merely because the definition of the “body corporate” under Section 2(1)(d) of the LLP Act includes an LLP, it is not automatically implied that the NCLT would be the competent forum for deciding all disputes inter se the partners of an LLP. Unlike Section 430 of the Companies Act, 2013, there is no bar on the jurisdiction of the Civil Courts under the provisions of the LLP Act. Therefore, in terms of Section 9 of the CPC, the suit shall be maintainable in a Civil Court


[1] Advocate, Delhi High Court, (LLB, ACS, BCOM(H)), Shubhambudhiraja02@gmail.com

[2] CM(M) 1086/2021, 25.02.2022, Aanchal Mittal v. Ankur Shukla, Delhi High Court 

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