Waterfield Advisors Private Limited Vs Sridhar Kurpad (Bombay High Court)
Bombay HC Upholds Award for Employee Share Allotment
The Bombay High Court dismissed a Section 34 Arbitration and Conciliation Act, 1996 petition filed by Waterfield Advisors Private Limited challenging an arbitral award directing allotment of 31,878 equity shares to its former employee, Sridhar Kurpad. The employee’s appointment letter offered equity of 0.5% in Y1, 0.2% in Y2 and 0.2% in Y3, with vesting in Y4, Y5 and Y6 subject to continued employment. A Grant Letter dated 1 March 2017 subsequently declared entitlement to 31,878 shares. The Arbitral Tribunal directed specific performance and awarded Rs.15,51,265 as costs.
Challenge Based on Companies Act and ESOP Scheme
The company argued that Sections 53 and 62 of the Companies Act, 2013 and Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014 required an ESOP scheme for allotment of shares. It also contended that the employee’s resignation triggered relinquishment provisions, that the Tribunal had rewritten the contract, and that damages rather than specific performance should have been awarded.
The employee supported the award, submitting that the appointment and grant letters established vesting and that the absence of an ESOP policy could not defeat his entitlement.
