Delhi HC Orders Arbitration in Medikabazaar Board Dispute, Tiwari Challenges Termination
New Delhi: In a significant development in the ongoing corporate controversy at Medikabazaar, the Delhi High Court has admitted a petition filed by Co-founder and CEO Vivek Tiwari under Section 9 of the Arbitration and Conciliation Act, 1996. The Court has directed that arbitration proceedings be initiated to resolve the dispute concerning his removal from the company's board and alleged infringement of his promoter rights.
Tiwari sought an urgent stay on the termination letter dated August 23, 2024, issued by Boston Ivy Healthcare (Respondent No. 1) and an injunction against any coercive actions that could impede his promoter rights and role in the day-to-day management of the company.
Justice Jyoti Singh, presiding over the matter, noted the close interplay between the Shareholders Agreement (dated March 17, 2022) and the Employment Agreement (dated September 1, 2021), both of which contain distinct arbitration clauses.
In a significant development, the Court recorded the mutual consent of both parties to resolve the dispute through arbitration. Tiwari suggested the name of Hon’ble Justice Rajiv Shakdher (Retd.), former Chief Justice of the Himachal Pradesh High Court, as his arbitrator, an appointment that was duly recorded and accepted by the Hon’ble Delhi High Court.
The respondents suggested the name of Hon’ble Justice G.S. Sistani (Retd.), former Judge of the Delhi High Court, whose appointment was also accepted. Both arbitrators will now proceed to appoint a Presiding Arbitrator, and the arbitration will be conducted under the Delhi International Arbitration Centre (DIAC) rules.
The case, which stems from a controversial boardroom fallout, centers around Tiwari’s termination and alleged infringement of his rights as a promoter.
The court has ruled that the matter shall be resolved through arbitration, in accordance with the distinct arbitration clauses contained in both the Shareholders Agreement (SHA) dated March 17, 2022, and the Employment Agreement (EA) dated September 1, 2021.
Court's Ruling: Arbitration to Commence
Justice Jyoti Singh, presiding over the matter, appointed two arbitrators to proceed with the dispute resolution.
“With the consent of the parties, Justice Rajiv Shakdher, former Chief Justice of High Court of Himachal Pradesh is appointed as the nominee Arbitrator of the Petitioner and Mr. Justice G.S. Sistani, former Judge of this Court is appointed as nominee Arbitrator of the Respondents. Both the Arbitrators will proceed to appoint the Presiding Arbitrator. The arbitral proceedings will be held under the aegis of DIAC and as per its Rules. Fee of the Arbitrators shall be fixed as per the DIAC (Administrative Cost and Arbitrators’ Fees) Rules, 2018."
Background: Dispute over Termination and Promoter Rights
Medical Dialogues team had earlier reported on allegations of inflated GMV, financial misreporting, a Rs 278 crore indemnity claim by investors, and Tiwari’s eventual ouster from the board of Medikabazaar.
The controversy had begun with a forensic audit conducted by PwC, which revealed that Medikabazaar had overstated its Gross Merchandise Value (GMV) by over 50% in FY23. The company had reportedly recorded gross order values as net sales, leading to inflated revenue figures. In FY23, Medikabazaar reported revenues of approximately $181 million, nearly double the previous year's figures, primarily due to this accounting practice.
As per various media accounts, further investigations by Uniqus India, Alvarez & Marsal, and law firm Rashmikant & Partners had concluded that Tiwari had allegedly breached his fiduciary duties, engaged in gross negligence, and was involved in financial mismanagement and fraud. These findings had led to his removal from the company's board.
Also Read: Rs 278 Cr Indemnity Claim, Inflated GMV, Board Ouster: Inside the Medikabazaar Controversy
The recent petition arose after Tiwari received a termination letter from Boston Ivy Healthcare (Respondent No. 1) dated August 23, 2024. Tiwari has claimed that the termination was unilateral and violated his rights under the SHA and EA.
"This petition is preferred on behalf of the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 (‘1996 Act’) seeking inter alia stay of the implementation and operation of termination letter dated 23.08.2024 issued by Respondent No. 1 as also for restraining the Respondents from taking coercive steps against the Petitioner, which directly or indirectly, affect the promoters’ rights and reserve matters including but not limited to participation in the day-to-day management and affairs of Respondent No. 1," the court order read.
Petitioner’s and Respondents’ Nominations
During the proceedings, both parties agreed upon their respective arbitrator nominees.
The Petitioner has nominated Mr. Justice Rajiv Shakdher, former Chief Justice of High Court of Himachal Pradesh as his nominee Arbitrator. Counsel for the Petitioner submitted that the Shareholders Agreement dated 17.03.2022 (SHA) contains arbitration clause 23.2 and Employment Agreement dated 01.09.2021 (EA) also contains arbitration clause 12 and while both have separate arbitration clauses, the agreements are intrinsically linked and that Petitioner has no objection if in the present petition Court appoints the Arbitrators, referring the disputes under both the Agreements.
Rajiv Nayar and Dayan Krishnan, learned Senior Counsels for the Respondents also submitted that Respondents have no objection for referring the matter to arbitration under both the Agreements and Respondents have nominated Mr. Justice G.S. Sistani, former Judge of this Court as their nominee Arbitrator and thereafter, the two Arbitrators can proceed to appoint the Presiding Arbitrator. Both parties agree that the arbitration be held under the aegis of Delhi International Arbitration Centre (DIAC) and as per its Rules
Liberty to Seek Consolidation
The court further clarified that Tiwari may pursue consolidation of both proceedings under the two agreements. The Court allowed Tiwari the liberty to request the Arbitral Tribunal to consolidate the two arbitration proceedings under the aforementioned agreements.
Vivek Tiwari’s Response
Commenting on the development, Vivek Tiwari said, “Initiating arbitration is a significant and necessary step toward upholding the contractual commitments made in good faith. Both the Shareholders and Employment Agreements clearly define my role and responsibilities, and I welcome the Court’s direction to proceed under the Delhi International Arbitration Centre. I have unwavering faith in the legal process and remain committed to resolving this matter with transparency and integrity. My focus has always been on contributing meaningfully to the company’s growth, and I am confident that a fair and impartial hearing will allow the facts to speak for themselves.”
On the allegations made against him, he added, “I also categorically refute the recent allegations made against me. I remain committed to addressing these claims through appropriate legal channels and I am confident that a fair examination of the facts will set the record straight in due course.”
While disposing of the petition, the Court clarified that it has not commented on the merits of the case and all rights and contentions of the parties remain open. It noted;
"It is made clear that this Court has not expressed any opinion on the merits of the case and all rights and contentions of the respective parties are left open. It will be open to the Petitioner to raise a plea before the Arbitral Tribunal for consolidation of the proceedings in respect of EA dated 01.09.2021 and SHA dated 17.03.2022."
To view the original order, click on the link below:
