It is important to note that prior to the execution of the SHA and SPA with Reuters in 1996, an unpublished Memorandum of Understanding (« MoU ») was concluded by the family. The above-mentioned moU contained an arbitration clause (clause 12) which provides for the appointment of an individual arbitrator in accordance with the provisions of the Arbitration Act of 1940 or any other regulation or amendment to the law. 20. The applicant`s experienced lawyer relied on the judgment of the Company Law Committee in Bhadresh Kanti Lal Shah v Magotteaux International and Ors 2000 (2) CLJ 323 (CLB), which is in their favour, because it bases the assertion that, if the parties are not the signatory parties to the arbitration agreement, the application of the Arbitration Act cannot be accepted in accordance with paragraphs 8 or 45 of the Law on arbitration and that the matter cannot be referred to arbitration. The report of the judgment is that if an enterprise is not a party to the arbitration agreement, the above-mentioned agreement is not binding on the company. Counsel referred to Gowri Spinning Mills Ltd. vs. Adimoolam and Anr. 2002 Supp. 375 Arbit LR (Madras) which stipulates that if all shareholders have not signed the agreement, some of these shareholders cannot arbitrarily bind the company.
In addition, it was also argued that, since the proposed procedure was an international commercial arbitration procedure (given that the seat was at SHA London), the Supreme Court would be the High Court in accordance with the provisions of section 11(9) of the Act and not the Delhi High Court. In light of the above, there appears to be an arbitration clause in securities disputes. However, SEBI itself has adopted certain standards that promote arbitration in such disputes. It issued a circular establishing procedures and guidelines for arbitration procedures for the settlement of investor complaints. In addition, the statutes of SEBI also provide for an arbitration procedure for the settlement of disputes arising from trade between members. The statutes of the National Stock Exchange also contain similar provisions. It should be noted that disputes that are explicitly arbitrated by securities laws and regulations in India are rights in person. It therefore seems clear that both company law in India and securities law in India will come to the same conclusion – that the rights concerned, as long as they are personal, will be referred to arbitration when an agreement so requires. Readers are advised that any limitation on the transfer cannot be imposed by a shareholders` agreement unless it is included in the articles of association, as the Companies Act 2013 attempts to validate any transfer that meets the criteria set out in the articles. . . .