The Delhi High Court upheld the enforcement of international arbitral awards directing the transfer of shares in a joint venture company, dismissing all objections raised by the respondents and affirming the broad jurisdiction of the arbitral tribunal.
The petitioners sought enforcement of two ICC arbitration awards arising from a dispute under a 1998 Shareholders’ Agreement (SHA) in International Trade Expocentre Limited (ITEL). The 1998 SHA stipulated equal shareholding and joint management between the two principal shareholders, Mukesh Sharma and Roger Shashoa, with an arbitration clause covering any disputes.
Over years, disputes arose including alleged unauthorized share allotments and business competition. Petitioners emphasized that the SHA was a binding contract with a broad arbitration clause covering all disputes related to validity, interpretation, and implementation. Respondents argued that the SHA was a preliminary document, lacked finality, and statutory jurisdiction for share transfers rested exclusively with company law tribunals.
The awards ordered respondents to transfer shares and pay damages for breach of the SHA. The petitions were filed under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996, targeting compliance with the arbitral rulings.
Prior to enforcement, the respondents had challenged the existence and validity of the SHA and the arbitration clause in various courts and repeatedly sought injunctions to stall proceedings. Multiple interlocutory orders, appeals, and petitions in Indian courts as well as UK-based arbitration were passed, establishing the tribunal’s jurisdiction and progress of arbitration despite respondent opposition.
The Bench comprising Justice Prathiba M. Singh conclusively held that the SHA constituted a valid and binding arbitration agreement encompassing the parties and their assignees, with disputes referred correctly to the ICC tribunal whose jurisdiction was upheld. It found no merit in challenges alleging denial of natural justice or invalidity of SHA.
The Court held that awards directing share transfer and compensation were enforceable and consistent with contractual rights and equitable considerations arising from a joint venture.
The respondents’ contention that share transfer powers lie exclusively with company law authorities was rejected, as tribunals can grant contractual remedies if not barred statutorily. The Court recognized that while company law forums have jurisdiction over oppression and mismanagement claims, contractual disputes on SHA interpretation and breaches, including ordering share transfers, fall within arbitral jurisdiction.
The Court’s observations underscore the importance of respecting the express terms of an arbitration agreement and reinforce the limited basis for judicial interference in arbitral awards. The decision recognises arbitration as a substantive remedy capable of effective and equitable relief, particularly in international commercial partnerships involving foreign investment.
The enforcement petitions were allowed with costs imposed on respondents, pronouncing the arbitral awards binding and executable in India, further cementing arbitration’s role as a decisive and efficacious dispute resolution mechanism.
Cases relied on:
1. Furest Day Lawson Ltd. v Jindal Exports Ltd. (MANU/DE/0141/1999)
2. Government of India v. Vedanta Limited (Formerly Cairn India Limited) and Ors., [(2020) 10 SCC 1]
3. Bhatia International v. Bulk Trading S.A. and Anr. [(2002) 4 SCC 105]
4. Balco v. Kaiser Aluminium Technical Services Inc. [(2012) 9 SCC 552]
5. Union of India v. Reliance Industries Ltd. [(2015)10 SCC 213]
6. National Aluminum Co. Ltd. v. Pressteel & Fabrications (P) Ltd. & Anr. [(2004) 1 SCC 540]
7. AFCONS Infrastructure Ltd. v. The Board of Trustees of the Port of Mumbai (MANU/MH/1398/2013)
8. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain (India) Co. [(2008) SCC OnLine Del 1271]
9. Avitel Post Studioz Limited & Ors. v. HSBC PI Holdings (Mauritius) Limited (2024 INSC 242)
10. Jagdish Chander v. Ramesh Chander [(2007) 5 SCC 719]
11. Khardah Co. Ltd. v. Raymon & Co. (India) (P) Ltd. [(1962) SCC OnLine SC 28]
12. Neilan International Co. Ltd. vs Powerica Ltd. [(2024) SCC OnLine Bom 3654]
13. Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Limited and Another [(2022) 1 SCC 753]
14. Mahanagar Telephone Nigam Limited v. Canara Bank and Others [(2020) 12 SCC 767]
15. Sangramsinh P. Gaekwad and Others v. Shantadevi P. Gaekwad and Others [(2005) 11 SCC 314]
16. Renusagar Power Co. Ltd. v. General Electric Co. [AIR 1994 SC 860]
17. Shri Lal Mahal Ltd. v. Progetto Grano Spa [(2014) 2 SCC 433]
18. DMRC v. Kone Elevators India (P) Ltd. [(2021 SCC OnLine Del 5048]
19. Batliboi Enviornmental Engineers v. Hindustan Petroleum Corpn. Ltd. & Ors. (MANU/SC/1043/2023)
Appearances:
For the Petitioners: Mr. A.K. Airi, Sr. Adv with Mr. Gaurav M Liberhan, Mr. Neeraj Gupta, Mr. Arun Rawat, Ms. Akriti Gupta, Mr. Mudit Rahalla, Mr. Vishal Shayak Kumar, Advs. (M: 7428710105) with Mr. Harpreet Singh Chaddha, Nominee director of Stancroft Trust Ltd.
For the Respondents: (R-1) Mr. Akhil Sibal, Sr. Adv. with Mr. Abhinav Hansaria, Mr. Sarthak Sharma & Mr Sugandh Shahi, Advs.; (R-3) Mr. Deepak Kumar Vijay, Adv.
