The Delhi High Court recently decided not to exclude Beanly Beverages Private Limited from arbitration proceedings related to a share transfer conflict involving Chirag Jain, known in the entertainment world as Papa CJ. In the case of Chirag Jain Vs Rahul Jain & Anr, Justice Mini Pushkarna appointed Advocate Veena Ralli as the sole arbitrator for two petitions filed by Jain against Beanly’s promoters, Rahul Jain and Samayesh Khanna.
Central to the dispute are two Share Purchase Agreements (SPAs) dated April 27, 2024, wherein Jain agreed to buy 70 equity shares from each promoter at ₹1,225 per share, totaling ₹1.71 lakh. Jain contends that despite paying the full amount, the sellers failed to provide the signed share transfer deeds and physical share certificates. Further complicating matters, Jain alleges Beanly issued new shares to third parties, thereby diluting his rights under the agreement.
The sellers agreed to arbitration before a sole arbitrator, even though the SPAs stipulated a three-member tribunal. Beanly, however, objected to its involvement, arguing it was not a signatory to the SPAs, had not consented to arbitration, and should not be part of the private dispute between Jain and the promoters.
The Court, however, declined to exclude Beanly from arbitration at this stage, noting Jain’s assertion that Beanly’s corporate operations were integral to the dispute. The shares in question belonged to Beanly, and their transfer would necessitate entries in Beanly’s register and alleged board approval. Although Jain pointed to a clause suggesting the company had affixed its common seal to a duplicate SPA, Beanly denied such action.
Justice Pushkarna highlighted the need for evidence to resolve these issues, stating, “The question whether a non-signatory can be treated as a party to the Arbitration Agreement, in the facts and circumstances of the present case, would require a more comprehensive enquiry, which may not be appropriate at this stage. Such an exercise is best left to the Arbitral Tribunal.”
Beanly also argued that it had not received any notice under Section 21 of the Arbitration Act to invoke arbitration. The Court dismissed this objection, holding that “Non-issuance of notice under Section 21 of the Arbitration Act, specifically to respondent no. 2, cannot act as an impediment for referring it to arbitration.”
Representing the petitioner Chirag Jain were Senior Advocate Satvik Varma, Advocate Farheen Penwale, and Advocates Wasim Beg, Harshita Rawat, Shantanu Parmar, Balaram, and Aditya Tewari. Representing Rahul Jain and Samayesh Khanna were Advocates Ishaan S Sharma, Shambhavi Sharma, Shubham Shukla, Ayush, and Mukund Ranjan. Senior Advocate Anurag Ahluwalia, along with Advocates Vidhit Gupta, Kartik Dey, and Dipanshu Gaba, appeared on behalf of Beanly Beverages Private Limited.
[Read Judgment]
