Reading Nagaraj Mylandla: Transnational Issue Estoppel finds its footing in India

LAST MONTH, the Supreme Court published its judgment in Nagaraj V. Mylandla v. PI Opportunities Fund. The case arose from a special leave petition against Madras High Court’s judgement in PI Opportunities Fund – I v. FSSPL (2025) which had allowed the enforcement of an international arbitration award against the appellant award debtor. While the Supreme Court’s judgment upholding the Madras High Court’s judgment, and thereby allowing the enforcement of the award, was broadly anticipated. In doing so, the Court for the first time recognised the doctrine of transnational issue estoppel under Indian law. This is a notable development as it strengthens India’s stated pro-arbitration policy approach.

Background

The dispute in this case arose out of a share acquisition and shareholders’ agreement (‘SASHA’) between the promoters of Financial Software and Systems Pvt. Ltd. (‘FSSPL’), its promoters, the Mylandlas, and a group of private equity investors (PIOF, Millenna, and NYLIM entities). The agreement contained a detailed exit waterfall (‘Clause 19’), requiring the company and promoters to provide investors an exit through a Qualified Initial Public Offering, failing which through a secondary sale, buy-back, Initial Public Offering, or ultimately a strategic sale, that would force the promoters to part with their shares. When no exit materialised despite repeated notices – including secondary sale notices from 2016 onwards – the investors alleged material breach of the exit obligations and invoked their contractual rights, including the right to pursue a strategic sale.

In an arbitration seated in Singapore, the investors claimed (i) damages equivalent to the contractual ‘exit price’ for failure to procure a secondary sale, and (ii) enforcement of their right to a strategic sale. The tribunal held that Clause 19 imposed an absolute obligation to provide an exit and awarded damages for the promoters’ breach pegged to the exit price (valued as of September 2020). It further ruled that if the damages were not paid within 90 days, the investors could proceed with a strategic sale, with the promoters required to cooperate.  

The award was unsuccessfully challenged by the promoters before the Singapore High Court (the seat court), which rejected the natural justice and buy-back objections. The investors then sought enforcement in India. The Madras High Court enforced the award as a decree, while rejecting public policy objections (including arguments that the award amounted to an impermissible buy-back or violated the Specific Relief Act, 1963) and also invoking transnational issue estoppel. 

The Madras High Court’s judgment was appealed to the Supreme Court which not only upheld the judgment of the Madras High Court, but also expounded on the scope of transnational issue estoppel.