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Issues: (i) Whether a non-signatory nominee who derived title from a signatory to the share purchase agreement was bound by the arbitration agreement and the arbitral award. (ii) Whether rectification of the company's register under the Companies Act was a proper mechanism to give effect to the award and whether the proceedings were barred by the Arbitration and Conciliation Act, 1996.
Issue (i): Whether a non-signatory nominee who derived title from a signatory to the share purchase agreement was bound by the arbitration agreement and the arbitral award.
Analysis: The agreement contemplated that the transferees chosen by the signatory would accept its terms, including the dispute resolution clause. The subsequent letter expressly referred to the same agreement, described the transferees as group companies, and sought transfer of shares in pursuance of that arrangement. In such a setting, the Court applied the principle that an arbitral agreement and the award may bind persons claiming under a party where the transaction and conduct show a mutual intention to be bound, including in appropriate cases a non-signatory within the same commercial arrangement.
Conclusion: The non-signatory appellant was bound by the arbitration agreement and the arbitral award, and the challenge to enforcement on the ground of non-signature failed.
Issue (ii): Whether rectification of the company's register under the Companies Act was a proper mechanism to give effect to the award and whether the proceedings were barred by the Arbitration and Conciliation Act, 1996.
Analysis: The award had attained finality and required transmission of shares. Such transmission could be effectuated only by rectification of the register, since mere delivery of share certificates would not complete the transfer. The Court held that the award was enforceable as if it were a decree and that the tribunal seized of the rectification petition had jurisdiction to grant the consequential relief. Section 42 did not assist the appellant because the rectification proceeding was the statutory means of implementing the final award, not a fresh challenge to the arbitral process.
Conclusion: The rectification proceedings were maintainable and the NCLT and NCLAT rightly granted relief.
Final Conclusion: The appeals failed, and the award was upheld and given effect through rectification of the register.
Ratio Decidendi: A non-signatory who, by conduct and express reference to the underlying agreement, claims through a signatory and accepts the benefit of the composite transaction may be bound by the arbitration agreement and award, and a final award directing transmission of shares may be implemented through statutory rectification of the company's register.
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