In a decisive ruling, the Delhi High Court has confirmed that arbitral tribunals, including those sitting abroad, can order the transfer of shares in joint venture companies when such action arises from contractual commitments outlined in a shareholders’ agreement.
Justice Prathiba M Singh clarified that these remedies do not infringe upon the statutory domain of company law tribunals, as long as the relief is grounded in private agreements between shareholders rather than statutory claims. The judgment, delivered on September 1, 2025, delineates the line between arbitral authority and the jurisdiction of company tribunals.
“The Arbitral Tribunal, deriving its authority from the shareholders’ agreement itself, was fully empowered to direct the transfer of shares, as this relief is directly tied to the contractual arrangement between the parties,” the Court observed, dismissing the claim that only company tribunals could order such transfers.
The case traces back to a 1998 joint venture between British businessman Roger Shashoua and Indian entrepreneur Mukesh Sharma, who together formed International Trade Expocentre Limited (ITEL) to develop an exhibition center in Noida. While both held equal 50% shares and board representation, tensions erupted when Shashoua alleged that Sharma had manipulated the shareholding structure, diluting his control despite a far larger investment.
A series of disputes followed, including the incorporation of a rival company by Shashoua in 2004, triggering arbitration under the agreement’s dispute resolution clause. ICC arbitration proceedings in London between 2005 and 2011 ultimately found Sharma in breach of the agreement and directed the transfer of shares back to Shashoua’s group.
Sharma opposed enforcement in India, arguing that allegations of oppression and mismanagement should fall under the National Company Law Tribunal, not an arbitral tribunal. The High Court rejected this, drawing a clear distinction between contractual disputes suitable for arbitration and statutory claims under the Companies Act.
“The disputes here went beyond simple allegations of oppression or mismanagement. They involved control of the company and share transfers conducted without following the agreed contractual process,” Justice Singh noted.
The Court emphasized that the shareholders’ agreement, which mandated equal representation and powers for both parties, provided the arbitral tribunal the authority to resolve deadlocks when contractual mechanisms failed. It further rejected claims that enforcing the share transfer order violated public policy, noting that Sharma’s actions deliberately obstructed the arbitral process.
Ultimately, all objections to enforcing the arbitral awards were dismissed, and ₹5 lakh in costs were imposed on Sharma and ITE India Private Limited for prolonging proceedings across multiple fora. The judgment underscores the principle that arbitral tribunals must be able to grant practical, effective remedies grounded in contractual fairness rather than mere theoretical relief.