The Delhi High Court has ruled on a petition filed by Vivek Tiwari, co-founder and CEO of Medikabazaar, under Section 9 of the Arbitration and Conciliation Act, 1996.

The petition challenged a termination letter dated August 23, 2024, and sought to affirm Tiwari’s promoter rights in the company.

In April, the co-founder of the company was terminated by the company over allegations of misreporting of financials.

The court acknowledged the connection between the Shareholders Agreement (March 17, 2022) and the Employment Agreement (September 1, 2021), both of which include arbitration clauses.

Tiwari nominated retired Justice Rajiv Shakdher as his arbitrator, while the respondents – which include the shareholders of Medikabazaar – nominated retired Justice G.S. Sistani. Both were accepted, and they will now appoint a presiding arbitrator.

The court allowed Tiwari to seek consolidation of arbitration proceedings under both agreements and clarified that no decision was made on the merits, leaving all rights and arguments to be addressed during arbitration.

🔗 Source: Medikabazaar

🧠 Food for thought

1️⃣ Rise of arbitration in resolving corporate governance disputes

The Tiwari case reflects a growing global trend where companies increasingly prefer arbitration for resolving complex internal disputes rather than traditional litigation.

Arbitration in corporate settings has evolved significantly from its historical roots to becoming a preferred method for resolving business conflicts, particularly those involving governance and shareholder rights 1.

The confidentiality aspect of arbitration makes it particularly attractive for corporate disputes, as evident in the ClientEarth v. Shell’s Board case, where shareholders raised concerns about climate strategy without exposing sensitive corporate information to public scrutiny 2.

For family-owned or closely-held companies, arbitration provides additional benefits by preventing the airing of “dirty laundry” that could damage reputations and business relationships, a factor likely relevant in Medikabazaar’s case given its status as a growing startup 3.

Statistics from dispute resolution forums demonstrate this trend’s magnitude. FINRA alone handles thousands of securities-related arbitrations annually, showcasing arbitration’s widespread adoption in business dispute resolution 4.

2️⃣ The complex interplay between shareholder and employment agreements in founder disputes

Tiwari’s case highlights a common tension in growth-stage startups where a founder’s dual roles as both shareholder and executive can create competing contractual frameworks.

Recent Medikabazaar developments