JUDGMENT :

Moushumi Bhattacharya, J.

1. The present application is for enforcement of a foreign Arbitral Award dated 19th June, 2020 and an addendum of 26th October, 2020, passed in ICC Arbitration case no. 23705/HTG initiated by the petitioner EIG (Mauritius) against the respondent and its wholly owned subsidiary, McNally Sayaji Engineering Limited (MSEL). McNally Bharat Engineering Company Limited (MBECL) is the Award Debtor in the present case.

2. The issue which arises for consideration is the scope of inquiry for resisting the enforcement of a foreign award under Section 48 (2)(b) in Part II of The Arbitration and Conciliation Act, 1996. In essence, the respondent Award debtor opposes the prayer in the execution case on the ground that the enforcement would be contrary to the public policy of India, specifically the fundamental policy of Indian law, since enforcing a Put Option available to the petitioner violates The Foreign Exchange Management Act, 1999 and the Securities Contracts (Regulation) Act, 1956.

Brief Facts :

The transaction:

3. The transaction which forms the nub of the dispute consists of several Agreements entered into between the parties including a Shareholder’s Agreement and an Agreement related to EIG’s (the petitioner before this court and the claimant before the Arbitral Tribunal) Put Right, which were executed on 9th October, 2009. The Shareholder’s Agreement provided for EIG to acquire shares in MSEL from the respondent MBECL. Both the Agreements contained specific obligations on the respondent and MSEL and a series of exit mechanisms for the benefit of the petitioner EIG. The admitted factual position before the Arbitral Tribunal was that the petitioner EIG acquired 14.91% of the shares in MSEL and that the latter’s shares were never listed on certain stock exchanges in India. The Share Purchase Agreement and the Letter Agreement dated 9th October, 2009 formed the primary documents of the transaction for EIG’s acquisition of shares in MSEL. Shareholder’s Agreement required the respondents before the Arbitral Tribunal to list the shares of the second respondent MSEL on the Bombay Stock Exchange or the National Stock Exchange or to make a public offer of MSEL’s shares on these exchanges by 30th June, 2012. On the failure to effect such listing, the Shareholder’s Agreement also provided the petitioner EIG the option to exercise a “Put Right” on the event of the “Put Event” by exercising a “Put Notice” and required the first respondent MBECL, if legally able or otherwise, to arrange for a third party to purchase, at the option of EIG, a portion of the shares held by EIG at the “Put Price”. The “Put Price” was the total amount invested by EIG for the Put Shares plus an amount equal to 22% compounded annual rate of return on the invested amount. The valuation was to be done for the Put Shares and if the petitioner’s Put Right was not acted upon, the petitioner had the right to require the respondent to transfer the Put Shares to another party. The parties represented that performance of the Shareholder’s Agreement would not be in conflict with any applicable law.

The events:

4. The shares of MSEL had not been listed on the BSE or the NSE by 1st July, 2012 and a public issue was also not made on these Stock Exchanges for the shares held by the petitioner. These aforesaid events constituted a “Put Event” under the Shareholder’s Agreement. The parties, thereafter, renegotiated the terms of the exit mechanisms in the Shareholder’s Agreement in April 2013 and executed an amended Share Purchase Agreement under which MSEL was to buy back the Put Shares from EIG. After abortive negotiations, the petitioner informed the respondent and MSEL that it was exercising its Put Right by a Notice dated 14th July, 2017 and requested the respondent to engage, a merchant banker for valuation of the Put Shares within seven days. On 21st July, 2017, the respondent informed EIG that it would not recognize the Put Notice as it was contr