Delhi High Court Upholds Arbitrator’s Interim Award Enforcing Non-Compete Clause in SHA

The Delhi High Court dismissed an appeal under Section 37 of the Arbitration Act challenging an interim award passed under Section 17, which restrained appellants from breaching a non-compete clause in a valid Shareholders’ Agreement (SHA).

The Court held that such enforcement doesn’t violate Section 27 of the Indian Contract Act, as the SHA wasn’t lawfully terminated.

The Court observed that managerial disengagement doesn't absolve contractual obligations and noted the appellants’ inconsistent positions.

The Court held that interim relief was essential to preserve the arbitration’s subject matter and prevent irreparable harm. The Court found the award reasonable and satisfying the triple test for interim relief.

[Paul Deepak Rajaratnam & Ors. V Surgeport Logistics Private Limited & Anr.]