Section 37 challenge to interim restraint fails

The Bombay High Court, per Justice Somasekhar Sundaresan, dismissed a Section 37 petition challenging a Section 17 interim order passed by the arbitral tribunal on 20 September 2025.

The dispute arose within Vidhi Research and Development LLP, where the parties are partners and the LLP owns the Subject Land, measuring about 2,18,122 square metres. The controversy concerned control and management of the LLP, and in particular a proposed sale of about 1,00,000 square metres of land at an indicated rate of Rs. 1.25 lakh per square metre.

Mayank Shah contended that the tribunal’s restraint on dealing with the Subject Land was unnecessary. He argued that the majority principle, the LLP Act, and the LLP Agreement permitted the majority to proceed with the transaction. He also said the tribunal had misread its own earlier order dated 20 July 2022.

Raju Shah’s case before the tribunal was that Mayank had issued a letter dated 7 July 2025 seeking a circular resolution and threatening to proceed with the sale without further recourse if no response was received. The tribunal had earlier directed disclosure of all documents underlying that letter, so that any decision on the proposal would be informed. The High Court noted the complaint that there had been no compliance with that disclosure direction.

On the merits, the Court examined the challenge through the lens applicable to appeals against discretionary interim orders. It referred to Wander vs. Antox and reiterated that interference is not justified merely because another view is possible. The question is whether the tribunal exercised its discretion reasonably and in a judicial manner.

Applying that standard, the Court found no basis to interfere with the impugned order. It held the petition to be devoid of merit and dismissed it. The Court also observed that, given the volume of interim applications in the arbitration, the tribunal should consider detailed statements of costs across the rounds of litigation when it assesses costs in the arbitration.

Practical takeaway: Section 37 challenges to Section 17 orders will fail unless the tribunal’s discretion is shown to be unreasonable or perverse.