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Informist, Tuesday, May 27, 2025

 

NEW DELHI – The Delhi High Court has set aside an arbitral award that asked Bharat Forge Ltd. and its wholly-owned subsidiary BF Infrastructure Ltd. to pay INR 770 million to Tarsem Jain, owner of the entire share capital of many companies incorporated in India. Consequently, the court dismissed Jain's petition seeking enforcement of the arbitral award.

 

The high court noted that the arbitrator was unilaterally appointed by Jain and hence the proceedings conducted by the arbitrator were a nullity. "It can be observed that the appointment of the arbitrator was not consensus ad idem as provided under Section 11 of the 1996 Act (Arbitration and Conciliation Act, 1996)," the court said.

 

The case has its genesis from BF Infrastructure entering into a share purchase agreement in 2010 with Jain, who represented himself as the beneficial owner of Coal Columbia SAS, Mines and Minerals Company Colombia SAS, Multitex Africa SA, and 99% of the paid-up equity share capital of Aggressive Projects Pvt. Ltd. In the agreement, Jain agreed to transfer 100% of the total equity share capital of Coal Columbia SAS, Mines and Minerals Company Colombia SAS, and Multitex Africa SA to Aggressive Projects. Subsequently, 90% nominal value of equity shares of Aggressive Projects were to be transferred to BF Infrastructure Ltd.

 

BF Infrastructure said Jain did not perform the condition precedent, which is a condition or an event that must occur before a right, claim, duty, or interest arises, under the agreement. BF Infrastructure said the agreement would automatically cease to operate if any conditions were not performed under it and the parties would be relegated to their respective original positions.

 

Since disputes arose between the parties, BF Infrastructure terminated the agreement in 2012. Jain then invoked arbitration against BF Infrastructure in 2013 and called upon the latter to appoint an arbitrator with his consent. Later, Jain unilaterally appointed the arbitrator in the case and made BF Infrastructure and its parent company, Bharat Forge, respondents. The petitioners were compelled to participate in the proceedings under protest, despite objecting to the arbitrator's appointment. When the arbitrator passed an award against them, the petitioners moved the high court.

 

Tuesday, shares of Bharat Forge ended slightly higher at INR 1,250.40 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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