The division bench of judicial member Kishore Vemulapalli and technical member Prabhat Kumar, while dismissing the application observed that an Arbitrator cannot direct parties who are not signatories to the arbitration agreement to have shares allotted to Chidanand.
In her application, Chidanand had sought the tribunal’s intervention to declare the resolution of December 2020 passed by the fintech company as null, void, bad in law and not binding on Respondent No 1 (Get Simpl Technologies Pvt Ltd).
Also, her petition sought to appoint an administrator or an independent committee and also sought direction to maintain the status quo with regard to the company’s shareholding pattern.
Primarily, Chidanand had argued in the tribunal that her co-founder Sharma and other shareholders deliberately diluted her shareholding and she was kept in the dark about the restructuring.
Co-founder of fintech Simpl, Chidanand, through counsel Nausher Kohli and Sushmita Gandhi of IndusLaw, argued that when the company initiated its reincorporation as Simple Inc. in the USA, she wasn’t given a chance to subscribe those shares at par with others that contained equal voting rights. Kohli further argued that the NCLT cannot refer the disputes to arbitration since the NCLT Petition involves parties that are not parties to the arbitration agreement. Advocate Shyam Kapadia, appearing for another co-founder Sharma argued that in December 2020, during the EGM, the shareholders of the company approved the transfer/sale of assets, where Chidanand had attended the EGM but abstained from voting on this resolution. Also, she didn’t remit the subscription money, so the restructuring had to be completed without her having subscribed to the shares of Simple Inc., a newly created company. However, dismissing the application filed by Sharma, the tribunal observed that whilst the petition is in the realm of a dressed-up petition so as to make a contractual dispute as disputes pertaining to oppression and mismanagement to avoid the binding arbitral clause, an Arbitrator cannot direct parties who are not signatories to the arbitration agreement to have shares allotted to Chidanand. Consequently, the NCLT dismissed Sharma’s application.