Bombay High Court Rules LLP Partners Not Personally Liable Under Arbitral Award
Arbitral Award Against Proteus Ventures LLP Upheld with Modification Limiting Liability to LLP Only
The Bombay High Court ruled that partners of a Limited Liability Partnership (LLP) cannot be held personally liable under an arbitral award, while upholding the award requiring Proteus Ventures LLP to pay over ₹88 lakh in unpaid dues to Archilab Designs. Justice Somasekhar Sundaresan struck down the tribunal’s order imposing joint and several liability on Proteus’ designated partners, emphasizing that liability under an LLP structure rests only with the LLP entity itself.
The dispute arose from work executed by Archilab Designs on Proteus’s co-working spaces, where a substantial unpaid balance remained despite partial payments. The arbitral tribunal had awarded compensation including interest and damages for hardship and mental agony, which the Court upheld.
The Court also rejected challenges to the arbitrator’s legal qualifications, stressing the importance of domain expertise—here, the arbitrator was a principal of an architecture college appointed by the Council of Architecture, ideally suited to resolve architectural disputes.
The ruling clarified that liabilities in LLPs cannot be extended to individual partners personally, reaffirming limited liability protections. Deposits made with the registry were ordered to be released within four weeks.