Interim injunction in corporate disputes may be refused when shareholder approval and arbitration can resolve the appointment issue.

Interim restraint under section 9 of the Arbitration and Conciliation Act, 1996 was found unwarranted where the impugned corporate action could be tested through the ordinary corporate process and the underlying dispute was referable to arbitration. The court applied the settled interlocutory relief tests of prima facie case, balance of convenience, and irreparable injury, and declined to stay the annual general meeting or suspend consideration of the managing director's appointment. The Board's appointment was treated as provisional, with its final efficacy dependent on shareholder approval and the outcome of the arbitral process under the parties' joint venture arrangement.

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Issues: (i) Whether interim restraint could be granted under section 9 of the Arbitration and Conciliation Act, 1996 to stop the annual general meeting and put the appointment of the managing director on hold. (ii) Whether the appointment of the managing director made by the Board could stand, subject to the outcome of the pending arbitration and shareholder approval.

Issue (i): Whether interim restraint could be granted under section 9 of the Arbitration and Conciliation Act, 1996 to stop the annual general meeting and put the appointment of the managing director on hold.

Analysis: The appointment had already been acted upon and the proposed annual general meeting was the forum where the appointment could be considered by shareholders. The settled principles for grant of interlocutory relief required a prima facie case, balance of convenience, and irreparable injury. On the facts, no sufficient ground was made out to restrain the meeting or to suspend the appointment, especially when the dispute could be adjudicated in arbitration and the petitioner could raise its objections at the meeting.

Conclusion: Interim restraint was declined and the annual general meeting was not stayed.

Issue (ii): Whether the appointment of the managing director made by the Board could stand, subject to the outcome of the pending arbitration and shareholder approval.

Analysis: The existing managing director's term had expired after five years, and section 317 of the Companies Act, 1956 permitted appointment for a term not exceeding five years at a time. The Board resolution was passed subject to shareholder approval, while the dispute regarding consultation and concurrence under the joint venture arrangement was one for arbitration under the parties' arbitration clause. The Court therefore preserved the appointment only to the extent that its final efficacy would depend on the shareholders' approval and the arbitral award.

Conclusion: The appointment was allowed to remain in force provisionally, subject to shareholder approval and the arbitrator's decision.

Final Conclusion: The petition failed to justify injunctive relief against the company meeting, but the controversy over the appointment was left to be resolved in arbitration and by the shareholders in the ordinary corporate process.

Ratio Decidendi: Interim injunction under section 9 will not be granted where the impugned corporate action is capable of being regularised through the ordinary corporate process and the underlying contractual dispute is referable to arbitration.

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