Anti-arbitration injunctions are exceptional; parallel company proceedings do not justify restraining arbitration absent strong grounds.

An anti-arbitration injunction restraining commencement and continuation of arbitral proceedings was held unsustainable because pending company-petition proceedings did not, by themselves, justify stalling arbitration. The tribunal's objections on overlap with oppression and mismanagement claims, waiver, and maintainability were matters to be tested within the arbitral framework, and a subordinate forum could not restrain proceedings before a non-subordinate arbitral forum except in rare and exceptional cases. The company tribunal also exceeded its limits by extending status quo relief and deferring the arbitration objection on a technical basis. The restraint on arbitration was vacated, and the parties were left to pursue their disputes under the arbitration agreement and governing law.

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Issues: (i) Whether the anti-arbitration injunction restraining commencement and continuation of arbitral proceedings was legally sustainable; (ii) Whether the impugned orders could be justified within the scope of the company-law proceedings and the law governing reference to arbitration.

Issue (i): Whether the anti-arbitration injunction restraining commencement and continuation of arbitral proceedings was legally sustainable.

Analysis: The Court held that an injunction restraining arbitration cannot be granted merely because parallel company-petition proceedings are pending. The dispute whether the arbitration claims overlap with oppression and mismanagement allegations did not justify stalling arbitration at the threshold. The Court emphasised that arbitral jurisdictional objections, including waiver and maintainability concerns, are matters to be tested in accordance with the arbitral framework, and that courts or tribunals should be slow to interfere with the chosen dispute-resolution mechanism. It further held that a subordinate forum cannot restrain proceedings before a forum not subordinate to it, and that an anti-arbitration order should be granted only in rare and exceptional cases, which were not made out.

Conclusion: The anti-arbitration injunction was not sustainable and was set aside.

Issue (ii): Whether the impugned orders could be justified within the scope of the company-law proceedings and the law governing reference to arbitration.

Analysis: The Court held that the National Company Law Tribunal had exceeded its proper limits by extending the status quo order and deferring the interim application on the premise that the dispute was sub judice elsewhere. It found that the powers under the company-law provisions do not authorise a blanket restraint on arbitral proceedings where the contractual dispute is separately cognisable under the arbitration agreement. The Court also held that the absence of a standalone application under the arbitration statute was not decisive where the substance of the objection to non-arbitration had already been raised, and that the tribunal could not refuse to consider the arbitration objection on that technical ground.

Conclusion: The impugned orders were beyond jurisdiction and contrary to the settled principles governing reference to arbitration.

Final Conclusion: The appeal succeeded, and the restraint on arbitration was vacated, leaving the parties free to pursue their disputes in accordance with the arbitration agreement and the governing law.

Ratio Decidendi: A forum that is not superior to the arbitral forum cannot restrain arbitral proceedings by an anti-arbitration injunction, and technical objections cannot be used to defeat the mandate to respect a valid arbitration agreement absent exceptional circumstances.

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