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

-

 

 

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 

Comments

Post a Comment

Popular posts from this blog

Whether a person can be appointed as an arbitrator if his daughter is married to the son of the eldest brother of one of the parties in the arbitration proceedings?

-
Image
    Shubham Budhiraja [1] Two brothers running a family business in the form of a company and dispute arise between them and both decide to resolve through arbitration. During course of arbitration proceedings, one of party filed Section 14(2) r/w Section 15 Petition filed challenging mandate of arbitrator as being terminated because son of arbitrator is married to daughter of eldest brother of one of party and thus should be disqualified under Section 12(5) being ‘close family relationship’. The Hon’ble Delhi High Court declined the relief and held that neither the Seventh Schedule of the A&C Act nor the IBA Guidelines define the expression ‘close family relationship’. The plain language of Entry no. 9 indicates that it is not the legislative intent to render a distant relative of the parties to be ineligible for being appointed as an arbitrator, if both the parties so agree. It is not sufficient that the arbitrator is related to any one of the parties; the relationship must
Read more

ELECTRONIC EVIDENCE: THE UNFERTILE CROP

-
Image
ELECTRONIC EVIDENCE: THE UNFERTILE CROP SHUBHAM BUDHIRAJA [1] Digital images are no different from the droplets of rain that fall, merge, and then divide: there is no telling whether the droplets that split are identical to the droplets that came together to form the larger droplet [2] . INTRODUCTION Law may be divided into substantive and procedural laws. The laws by which rights, duties and liabilities are defined are called substantive law whereas laws which prescribe mode by which application of substantive law is regulated are called procedural law. Law of Evidence is a judicial recognition to the system of logical reasoning. The Indian Evidence act, 1872 is a bunch of 167 sections divided into 11 chapters and 3 parts. Part II, Chapter V is headed as “of Documentary Evidence” is of relevance for our discussion in this article. At the threshold, it is submitted that the proving of oral evidence are in contrast to the proving of documentary
Read more

REPUGANCY UNDER ARTICLE 254 & TEST OF VALIDATING LAW

-
Image
  Shubham Budhiraja [1] [1] Company Secretary, LLB Final Year,DU & Bcom (H) The land acquisition falls in concurrent list and parliament in year 2013 has introduced a new act which provides for rehabilitation, compensation and procedure on land acquisition of property. The State of T.N has made 3 different state laws w.r.t. land acquisition which was struck off by the High Court. Thereafter, state of TN in year 2019 enacted the same law but with president assent under Article 254 to avoid the repugnancy with 2013 act under Article 254. The appeal filed before apex court w.r.t. repugnancy of 2019 state law with 2013 central law & test of validating the struck off law. The Supreme Court observed as: VALIDATING A LAW WITH RETROSPECTIVE EFFECT Case Law Relevant Remarks National  Agricultural  Cooperative  Marketing  Federation  of India Ltd. & Anr. vs. Union of India & Ors, (2003) 5 SCC 23 The legislati
Read more