ABSTRACT
This article examines the complex interface between arbitration and the National Company Law Tribunal (NCLT) in India’s corporate dispute resolution framework, focusing on conflicts arising from Shareholders’ Agreements (SHAs), Share Subscription Agreements (SSAs), and Share Purchase Agreements (SPAs). It addresses the jurisdictional tension between party autonomy—central to arbitration’s contractual nature—and the NCLT’s statutory mandate over matters involving corporate governance, public interest, and insolvency. While arbitration offers efficiency and confidentiality for resolving commercial disputes, the NCLT retains primacy in cases affecting collective stakeholder rights, structural governance issues, or statutory compliance, creating a nuanced legal dichotomy.
The analysis highlights critical determinants of arbitrability, distinguishing disputes grounded purely in contractual obligations from those engaging statutory remedies or third-party interests. Matters requiring corporate restructuring, minority shareholder protection, or systemic reforms typically fall under the NCLT’s domain, reflecting India’s prioritization of public policy and institutional oversight. Comparative insights from jurisdictions like Canada and the UK illustrate frameworks where arbitration coexists with judicial oversight, particularly in balancing private resolution with statutory safeguards.
The article proposes an integrated approach to reconcile these pathways, advocating for context-driven adjudication that respects arbitration clauses in commercial agreements while reserving NCLT intervention for disputes implicating governance failures or public welfare. Emphasizing legislative clarity on arbitrability boundaries, it recommends institutional coordination to streamline jurisdictional overlaps and minimize procedural delays. By aligning the kompetenz-kompetenz principle with the NCLT’s specialized expertise, this framework aims to enhance legal predictability, corporate accountability, and investor confidence. Ultimately, the study underscores the necessity of harmonizing arbitration’s efficiency with statutory protections to foster a robust, equitable ecosystem for corporate dispute resolution in India.
KEYWORDS
NCLT V. ARBITRATION, ARBITRATION V. NCLT, OPPRESSION AND MISMANAGEMENT, OPPRESSION, MISMANAGEMENT, ARBITRATION AND INSOLVENCY, INSOLVENCY AND ARBITRATION, SHA, SSA, SPA, STA.
Introduction
India’s approach to resolving corporate disputes has evolved considerably over the last decade. As businesses and investors increasingly rely on intricate contractual frameworks such as Shareholders’ Agreements (SHA), Share Subscription Agreements (SSA), and Share Purchase Agreements (SPA) to govern their relationships, here, the question of how disputes arising from these agreements should be resolved has become a focal point of legal discourse. The jurisdictional conflict between Arbitration (which is based on the principle of party autonomy, as it underscores the importance of minimal judicial intervention and the promotion of efficient dispute resolution mechanisms) and the National Company Law Tribunal (NCLT), especially when matters of corporate governance or statutory compliance are involved. Thus, the question persists about whether disputes arising from corporate agreements should be resolved through Arbitration or if they fall within the purview of the NCLT, particularly in matters of operational mismanagement or statutory compliance. This tension was recently exemplified in the NCLT Mumbai case of Chaitra GowdarChidanand vs. Get Simpl Technologies Private Limited & Ors[1]., where the tribunal grappled with the question of arbitrability in disputes involving SHA-related issues, ultimately emphasizing the NCLT’s jurisdiction in matters of corporate governance despite the presence of an Arbitration clause.
This article explores the evolving interplay between Arbitration and NCLT jurisdiction, analyzing key case laws and international perspectives. Through this examination, it aims to decode the pathways of dispute resolution in India, offering insights into how a balanced approach can enhance corporate governance and investor confidence and analyze the key address issue, explaining when disputes can or cannot be resolved through Arbitration.
[1] CA-67/2022 IN CP.09(MB)2022.