Put option shareholder exits remain enforceable where stamping, SCRA, FEMA, and public policy objections fail.

A shareholder put option deed and escrow arrangement were held to be enforceable despite objections on stamping, securities law, FEMA, and public policy. The stamping challenge failed because the document had been acted upon for years, admitted in arbitration, and could not be reopened at the enforcement stage. The SCRA challenge failed because the option was treated as a shareholder exit mechanism, not a prohibited speculative or derivative contract, and the statutory and regulatory history supported such arrangements. The FEMA objection failed because FEMA is regulatory in nature and any remittance compliance issue did not void the bargain. The foreign awards were therefore found not to offend Indian public policy and were enforced as decrees.

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Issues: (i) whether the Put Option Deed and Escrow Agreement were unenforceable for want of adequate stamping; (ii) whether the Put Option Deed was illegal or unenforceable under the Securities Contracts (Regulation) Act, 1956 and the notifications issued thereunder; (iii) whether the Put Option Deed was illegal or unenforceable under the Foreign Exchange Management Act, 1999 and its regulations; and (iv) whether the foreign awards were opposed to the public policy or fundamental policy of Indian law.

Issue (i): whether the Put Option Deed and Escrow Agreement were unenforceable for want of adequate stamping.

Analysis: The Put Option Deed was acted upon by the parties for years, stamp duty was shown as paid by the promoters, and the document was admitted and relied upon in the arbitration without any timely objection. Once the document had been received in evidence and the arbitral tribunal proceeded upon it, the stamp objection could not be reopened in enforcement proceedings. The belated plea was also inconsistent with the respondents' own prior conduct and representations.

Conclusion: The stamping objection failed and was rejected.

Issue (ii): whether the Put Option Deed was illegal or unenforceable under the Securities Contracts (Regulation) Act, 1956 and the notifications issued thereunder.

Analysis: The arrangement was a shareholder exit mechanism arising out of the subscription transaction and not a speculative market contract. The Court held that the deed was not a mere derivative or forward contract in the sense urged by the respondents. The statutory history showed deletion of the earlier prohibition on options, introduction of the derivative regime, and later express recognition of shareholders' agreements containing options for purchase or sale of securities. The 03.10.2013 notification, read holistically, recognised such option-based shareholder arrangements and did not invalidate them merely because they pre-dated the notification. The contract became capable of performance only upon exercise of the option, and the respondents' SCRA challenge misconstrued the nature of the bargain.

Conclusion: The Put Option Deed was not hit by the Securities Contracts (Regulation) Act, 1956 and remained legally enforceable.

Issue (iii): whether the Put Option Deed was illegal or unenforceable under the Foreign Exchange Management Act, 1999 and its regulations.

Analysis: FEMA was held to be a regulatory statute concerned with foreign exchange management and not a statute that voids contracts. The option structure did not confer an open-ended assured return; payment was tied to fair market value and the contractual mechanism contemplated compliance with applicable pricing norms and any further regulatory requirements for remittance. The Court held that even if post-award remittance required regulatory compliance or permission, that would not render the award or the underlying bargain void. The reliance placed by the respondents on later regulatory changes did not establish illegality of the contract or a bar to enforcement.

Conclusion: The Put Option Deed was not unenforceable under FEMA and the regulations.

Issue (iv): whether the foreign awards were opposed to the public policy or fundamental policy of Indian law.

Analysis: In enforcement of a foreign award, public policy has a narrow scope. Mere contravention of domestic law is not enough; refusal is warranted only where enforcement would offend the fundamental policy of Indian law, the interests of India, or justice or morality. Since the objections under stamping, SCRA, and FEMA all failed, the awards did not transgress any basic legal principle or the core public policy standard governing foreign award enforcement.

Conclusion: The awards were not opposed to the public policy or fundamental policy of Indian law.

Final Conclusion: The foreign awards were declared binding and enforceable as decrees of the Court, and both enforcement petitions succeeded.

Ratio Decidendi: In enforcement of a foreign award, a shareholder put option linked to an investment exit is enforceable unless the objecting party shows a narrow Section 48 ground such as a real violation of fundamental policy, public policy, or a legally fatal defect; regulatory non-compliance or a belated stamping objection does not by itself render the underlying contract or award void.

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