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NCLT Dismisses Arbitration Request in Simpl Founders' Dispute, Citing Oppression and Mismanagement Claims

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Mumbai: In a dispute between the two founders of fintech startup, Simpl, the National Company Law Tribunal [NCLT] has held that dispute arising out of Share Holding Agreement  


Nityanand Sharma’s [Nityanand] application to refer disputes with co-founder of Simpl, Chaitra Chidanad [Chaitra], for Arbitration was dismissed by a bench of [NCLT]. 

 

In 2020, Chaitra filed petition against Nityanand, alleging oppression and mismanagement u/s 241/242 of the Companies Act, in Get Simple Technologies, the parent company of Simpl. 

   

Nityanand claimed it was an malafide and vexatious petition filed with the intent to evade arbitration and sought dismissal of the petition and appointment of Arbitrator, as per the Share Holders Agreement.  

 

Chaitra argued that allegations of oppression and mismanagement can only be adjudicated upon by NCLT and cannot be arbitrated upon.  

 

After hearing the parties, the tribunal observed that non-adherence to the understanding of the Share Holding Agreement [SHA] appears to be the root of the dispute. The Tribunal held, an Arbitrator could not direct those who are not party to SHA, to have shares allotted to the Petitioners in terms of SHA. Further, this Tribunal also could not direct those who are not party to SHA, even if comes to the conclusion that the present petition is not a dressed up petition and has to be dealt with in accordance with Section 241-242 of the Companies Act, 2013.  


The tribunal held that as it was an issue arising purely from the SHA, and between Nityanand and Chaitra, which can be referred to the Arbitrator by either of the parties, and not by the Tribunal. The Tribunal  dismissed the Application.  

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