Introduction

The Delhi High Court has upheld the power of arbitral tribunals to direct the transfer of shares in joint venture disputes, reaffirming that such directions fall within the scope of arbitration when explicitly provided in a Shareholders’ Agreement (SHA). The ruling strengthens India’s position as a pro-arbitration jurisdiction and clarifies the boundary between arbitral authority and statutory company law.

Background

The case stemmed from a breakdown in a joint venture, where allegations of unauthorized share transfers, misuse of managerial authority, and corporate deadlocks arose between partners.
One party challenged the arbitral tribunal’s direction for share transfer, arguing that such matters lie exclusively within the jurisdiction of the National Company Law Tribunal (NCLT) under the Companies Act.

Court’s Reasoning

The Delhi High Court ruled that arbitration derives its strength from the contractual consent of parties. Since the SHA expressly

empowered the tribunal to issue orders concerning share transfers, the tribunal’s actions were within its jurisdiction.

The Court emphasized:

• The arbitral award did not amend or override company law, but merely enforced the commercial terms agreed between the parties.

• Public policy and jurisdictional objections were rejected, with the Court warning that a restrictive approach to arbitral powers would undermine investor confidence and India’s arbitration-friendly stance.

Implications

The judgment reinforces confidence among domestic and foreign investors, assuring that arbitral tribunals can provide effective remedies in joint venture disputes.
It also underlines the importance of well-drafted SHAs that clearly delegate authority to arbitrators. The ruling contributes to India’s evolving pro-arbitration jurisprudence, enhancing predictability and trust in commercial dispute resolution.

Conclusion

By affirming the arbitral tribunal’s authority to direct share transfers, the Delhi High Court has drawn a clear line supporting contractual autonomy and commercial efficiency in arbitration. The decision marks another step in India’s commitment to becoming a global arbitration hub.