Biome founders withdraw Delhi high court plea against Fabindia, opt for arbitration

Appearing before justice Jasmeet Singh, the legal team for founders Shantanu Jain and Sania Arora Jain said they were withdrawing the plea since a three-member arbitral tribunal has now been constituted to hear the matter involving the enforcement of an exit clause that values their shares at ₹196.16 crore.

The high court permitted the withdrawal while granting them liberty to return if the tribunal does not grant adequate relief.

“Since the court has not adjudicated on the merits of the matter, the arbitral tribunal will decide the same, uninfluenced by any observations made by this court in case the petitioner approaches them," the court said verbally.

Biome Life Sciences houses Fabindia’s personal care line, FabEssentials, offering face washes, moisturisers, shampoos, and fragrances.

Confirming the withdrawal, Rajat Joneja, partner at KNM & Partners and counsel for Biome founders, said the step was in line with the law.

“It is correct that the petition has been withdrawn today before the Delhi High Court. Section 9(3) of the Arbitration and Conciliation Act, 1996 provides that once the arbitral tribunal has been constituted, the court shall not entertain an application under Section 9(1), unless in exceptional circumstances," he told Mint.

Joneja confirmed that a three-member tribunal, comprising former Supreme Court judges Justice L. Nageswara Rao as presiding arbitrator, and Justices Deepak Gupta and Sanjay Kishan Kaul as co-arbitrators, is now in place.

The tribunal held its first sitting on 18 October 2025, directing both sides to complete their pleadings. The matter is next listed for 6 April 2026.

"Fabindia Ltd will be taking appropriate and necessary legal recourse as the matter progresses before the hon'ble arbritation panel," a company spokesperson told Mint in an email. "Since the matter is sub judice, we won't be able to give specifics with regard to the questions put forth at this stage."

The tussle

Mint reported in September that the founders had sued Fabindia, alleging breach of their shareholder agreement (SHA) after the retailer allegedly failed to honour a put option that entitled them to sell their shares under a pre-agreed valuation formula.

Documents cited in the Jains' Delhi high court petition show that the exit clause assigned the following formula to value their stake in the subsidiary upon exit: either 10x the sales of the previous financial year or 40x the Ebitda of the previous financial year, whichever is higher.

According to the petition, Fabindia was required to complete the payment within 15 days—by 11 September—but allegedly responded late, raising objections not contemplated in the contract.

The founders argued that the conduct was “arbitrary and mala fide," aimed at stalling compliance and frustrating their exit to “arm-twist the petitioners."

On 20 September 2025, the founders invoked the SHA’s arbitration clause, issuing a notice and nominating their arbitrator. Fabindia appointed its own nominee arbitrator the next day, agreeing to the reference of the dispute to arbitration.

On 24 September, the high court issued notice and directed Fabindia to respond within two weeks.

Biome Life Sciences India Pvt. Ltd, incorporated in May 2020, is majority-owned by Fabindia. As of FY25, the founders held 49.99% stake in the company, while Fabindia held the remaining.

Despite a downturn in FY24, Biome recorded a 28% year-on-year growth in revenue to ₹21.6 crore in FY25. It reported more than 1.5x growth in net profit to ₹7.1 crore.

Additional reliefs

In their petition, the Jains also sought interim protection, including orders restraining Fabindia from alienating assets, diluting Biome’s shareholding, or misusing its fixed deposits except for routine operations.

They also sought asset disclosure and monthly financial statements, arguing that these steps were necessary to prevent the dissipation of assets that could undermine theenforcement of an arbitral award.

Fabindia had rejected the Jains' claim. The company said the founders were recruited for their expertise and were given substantial autonomy as Biome’s managing director and COO.

It maintained that multiple operational lapses and instances of negligence emerged over time, and when these concerns were raised, the founders shifted focus to the put option rather than addressing the issues.

Founded in 1960 by American entrepreneur John Bissell, Fabindia today runs one of India’s largest retail platforms linking over 55,000 rural artisans to urban consumers across apparel, home furnishings, organic foods, and personal care categories. The company withdrew its planned IPO in 2023, citing volatile market conditions.