Vedanta moves HC over 2011 arbitral award declaring Balco shares transfer as void

Vedanta Ltd on Thursday moved the division bench of the Delhi High Court challenging a 2011 arbitral award that declared its shareholders' agreement with the government on the transfer of shares of Bharat Aluminium Company (Balco) as void.

The high court will hear the case on February 13.

The government, however, opposed the Vedanta's petition, saying around Rs 10,000 to Rs 15,000 crore were at stake and also the company had filed the appeal beyond the 60-day limitation period against the single judge's October 8, 2025 order.


Vedanta in its appeal stated that pursuant to the GoI’s policy of strategic disinvestment in public sector undertakings, it acquired 51% of the equity shareholding in BALCO under a Share Purchase Agreement in 2001. The agreement had granted Vedanta an exclusive right to purchase the remaining 49% government stake after a three-year lock-in period.

A separate SHA was executed that included a call option, allowing Vedanta to ask the government to sell its remaining shares after three years. However, the government later in 2006 refused to sell, contending that Clause 5 of the SHA violated Section 111A(2) of the Companies Act 1956, which guarantees free transferability of shares in public companies, and hence is null, void and unenforceable.

"It was only after the valuation exercise was completed and presumably after the determined price was found to be commercially disadvantageous to the government that, for the first time, the government took the position that Clause 5.8 was void and unenforceable as being violative of Section 111A(2) of the Companies Act, 1956 , and declined to complete the transfer," the company stated in its appeal.

Vedanta then invoked an arbitration seeking enforcement of the Call Option and specific performance. On January 25, 2011, the arbitral tribunal by majority accepted the government’s stand holding Clause 5.8 (along with certain allied provisions) to be void and unenforceable under Section 111A(2), while a reasoned dissent held such contractual arrangements to be legally enforceable, the appeal stated.

The arbitral award said that various clauses of the shareholders' agreement imposed multiple layers of restrictions, rendering the sale of the government's shares to a third party impracticable. There was a clear bias in favour of Vedanta for becoming the full owner of Balco, ultimately, and there was no way around selling the shares to any other party, the award said, adding that the government was being forced to sell the shares only to Vedanta, which was clearly in contravention of Section 111A(2) of the Companies Act, 1956.

Vedanta then challenged the award before a single-judge bench of the high court, which refused to interfere with the award.