Arbitral tribunals can order share transfers in joint ventures: Delhi High Court

Arbitral tribunals, including those seated abroad, have jurisdiction to direct a transfer of shares in joint venture companies when such relief flows from contractual arrangements in a shareholders’ agreement, the Delhi High Court has ruled [Roger Shashoua Vs Mukesh Sharma]..Justice Prathiba M Singh clarified that such relief does not encroach upon the statutory domain of company law tribunals, particularly when it is simply the enforcement of private bargains between shareholders.The Court delivered the judgment on September 1, 2025, clarifying the boundaries between arbitral and company tribunal jurisdiction."The Arbitral Tribunal, deriving its authority from the SHA itself, was fully empowered to direct transfer of shares of the Respondent No. 3 (joint venture), as such relief is inherently linked to and arises out of the contractual arrangement between the parties," the Court held, rejecting an argument that such share transfers can only be ordered by company tribunals. .The dispute originated from a 1998 Shareholders Agreement between British businessman Roger Shashoua and Indian entrepreneur Mukesh Sharma for a joint venture to develop an exhibition center in Noida through International Trade Expocentre Limited (ITEL). The agreement provided for equal 50 per cent shareholding and board representation between the parties.The commercial relationship deteriorated when Shashoua alleged that Sharma had manipulated the shareholding structure despite their equal partnership arrangement. Shashoua had invested ₹24.79 crores in the venture compared to Sharma's ₹3.50 crores, yet found his control diluted from 50 per cent to approximately 25 per cent through various share allotments to entities connected with Sharma.In 2004, disputes escalated when Shashoua incorporated a competing company, leading to allegations of breach of the joint venture agreement. ITEL filed suit seeking an injunction against Shashoua's competing business, but the matter was referred to arbitration under the agreement's dispute resolution clause.The parties engaged in ICC arbitration proceedings in London from 2005 to 2011, resulting in four separate awards. The arbitral tribunal found Sharma in breach of the shareholders' agreement and directed the transfer of shares held by Sharma and related entities to Shashoua's group, along with costs and other relief.Shashoua then moved the High Court seeking the enforcement of the arbitral awards in his favor. Sharma, meanwhile, objected to any such enforcement on various grounds, including that the case involved allegations of oppression and mismanagement that should have been examined by a company law tribunal and not an arbitral tribunal. .To decide on the matter, the High Court drew a crucial distinction between arbitral jurisdiction over contractual disputes and the National Company Law Tribunal's statutory jurisdiction over oppression and mismanagement claims under the Companies Act."The submission that the disputes were in the nature of allegations of oppression and mismanagement under the Companies Act and hence, the jurisdiction of the Arbitral Tribunal was excluded, may at first blush appear to be an appealing argument. However, a deeper probe would reveal that the disputes between the Petitioners' group and the Respondents' group were beyond simple allegations of oppression and mismanagement," Justice Singh observed.The Court found that the disputes involved control of the company and allegations of misconduct through unauthorized share transfers without following proper procedures under the shareholders' agreement..The Court emphasized that there was a contractual basis for the tribunal's authority to resolve the commercial deadlock between the parties."EQUAL REPRESENTATION, EQUAL CONTROL AND EQUAL POWERS of the Petitioner No.1 and Respondent No.1 either by themselves or through their nominees or entities controlled by them was the essence of the SHA," the Court noted.It added that when the contractual mechanisms for consensus-building failed completely, arbitration became the designated solution under the agreement's deadlock resolution provisions..The Court also rejected Sharma's argument that the share transfer order violated public policy, by applying a narrow interpretation of India's public policy exception for foreign arbitral awards."The conduct of Respondent No.1 (Sharma) clearly demonstrates a deliberate attempt to frustrate the arbitral process and evade the binding directions of the Tribunal. The Arbitral Tribunal's findings were the result of a comprehensive evaluation of the parties' conduct, contractual obligations, and the factual matrix, and were aimed at providing a resolution, to what had become a commercially unworkable and irreconcilable deadlock," Justice Singh concluded.The Court found no grounds to suggest that the awards conflicted with fundamental policy of Indian law or basic notions of justice. and .The judgment further emphasized the need for arbitral tribunals to provide effective commercial remedies rather than theoretical relief."If Arbitral Tribunals cannot keep fairness and equity in mind, while granting relief, the same would be contrary to fundamental tenets of law," the Court observed, adding that such considerations must remain within the contractual framework.The Court proceeded to dismiss all objections to the enforcement of the arbitral awards and imposed costs of ₹5 lakh on the respondents (Sharma and ITE India Private Limited, of which Sharma is CEO) on noting how the proceedings had been protracted over several years and litigations in various fora..The petitioners (Roger Shashoua and the company he founded, Rodemadan Holdings Limited) were represented by Senior Advocate AK Airi with Advocates Gaurav M Liberhan, Neeraj Gupta, Arun Rawat, Akriti Gupta, Mudit Ruhalla, Vishal and Shayak Kumar..The respondents (Sharma and ITE India Private Limited) were represented by Senior Advocate Akhil Sibal with Advocates Abhinav Hansaria, Sarthak Sharma and Sugandh Shahi..[Read Judgment]