Companies Act, 2013.
S. 2(62) : One person company–The separate legal personality and limited liability shield of an One Person Company (OPC) under Indian corporate law-The separate legal personality and limited liability shield of an OPC under Indian corporate law- Set aside the direction of the Arbitration Tribunal against Mr. Savan Prasad. [S. 3(1), Arbitration and Conciliation Act, 1996, S. 17, 37(2)(b)]
A Production Agreement was entered into on March 10, 2021, under which Endemol was to produce regional versions of the “Masterchef” television show. Endemol raised four invoices amounting to ₹15.93 crores. Innovative paid ₹4.45 crores and adjusted ₹1.08 crores under a different contract, leaving ₹10.40 crores in dispute. Arbitral Tribunal passed an interim order under Section 17 directing, deposit of ₹10.40 crores in a fixed deposit and Extensive personal and corporate financial disclosures by Mr. Prasad and Innovative. The petitioner challenged the order of the Arbitral Tribunal before the Honourable High Court. The issue before the Court was ;
1. Whether the Arbitral Tribunal could impose interim directions on Mr. Saravana Prasad, a non-party to the contract, in the absence of any independent personal liability?
2. Whether the limited liability protection under the Companies Act, 2013 for a One Person Company (OPC) bars interim relief against its sole member?

3. Whether a balance confirmation letter issued by the OPC constitutes sufficient prima facie basis for interim relief under Section 17 of the Arbitration and Conciliation Act, 1996?
Petitioner contended that, the OPC is a separate legal entity with limited liability, prasad is not a party to the Production Agreement, the Tribunal’s direction breaches fundamental company law principles by treating the company and its sole shareholder as one. Respondent contended that , Prasad, being the sole director and operator, effectively controlled all decisions of Innovative. A “Confirmation Letter” issued by Innovative acknowledging the outstanding ₹10.40 crores formed the basis of the claim. The deposit was necessary to safeguard dues during the arbitration. The court held that the Tribunal’s directions against Mr. Prasad personally (for deposit and disclosures) violated the limited liability principle of OPCs under the Companies Act, 2013, No prima facie case or contractual liability against Mr. Prasad was established. Therefore, directions against Mr. Prasad were set aside. As to Directions Against Innovative, The court upheld the order requiring Innovative to deposit the sum in a fixed deposit without loss of control and to disclose its own assets and financial records. The tribunal’s reliance on the Confirmation Letter was valid for prima facie purposes. The court observed that interim measures under Section 17 do not need strict CPC standards like Order 38 Rule 5. The latitude available to arbitral tribunals to pass interim measures even if they don’t conform strictly to CPC standards. (CAP (L) no 22714 of 2024 / 22746 of 2024 dt. 3-7-2025 )
Saravana Prasad v. Endemol India Pvt. Ltd. & Anr. (Bom)(HC) www.itatonlline.org
[Coram : Hon’ble Shri Justice Somasekhar Sundaresan]