Arbitration clause and Section 8 bar court proceedings in shareholders disputes; interim restraint needs a prima facie case.

Disputes arising from a shareholders agreement and share purchase arrangement were treated as falling within the parties' arbitration clause, which covered interpretation, performance, breach and implementation of the agreement; on a timely Section 8 application, the Tribunal held the matter referable to arbitration and directed the parties to arbitrate. Interim restraint against transfer of assets and shares was refused because no prima facie case, no balance of convenience and no equitable basis was shown to stop transfers already made or to prevent third-party rights from arising.

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Issues: (i) Whether the disputes arising out of the shareholders agreement were required to be referred to arbitration under the arbitration clause and Section 8 of the Arbitration and Conciliation Act. (ii) Whether interim restraint orders could be granted against transfer of assets and shares in the absence of a prima facie case.

Issue (i): Whether the disputes arising out of the shareholders agreement were required to be referred to arbitration under the arbitration clause and Section 8 of the Arbitration and Conciliation Act.

Analysis: The dispute was found to arise from the shareholders agreement and share purchase arrangement governing the parties' inter se rights and obligations. The arbitration clause covered disputes relating to the agreement, its performance, breach, interpretation, implementation, and rights of the parties. Section 8 was treated as mandatory in its operation where a covered dispute is brought before a judicial authority and a timely application is made.

Conclusion: The dispute was held referable to arbitration, and the parties were directed to arbitrate.

Issue (ii): Whether interim restraint orders could be granted against transfer of assets and shares in the absence of a prima facie case.

Analysis: The requested interim protection was declined because the challenged transfers and management decisions were held to be governed by the contractual framework already accepted by the parties. The Tribunal found no prima facie case, no balance of convenience in favour of the petitioners, and no basis to restrain transfers already made or to prevent creation of third-party rights.

Conclusion: Interim relief was refused.

Final Conclusion: The petitioners were not entitled to interim restraint, while the substantive disputes were sent to arbitration under the parties' agreement.

Ratio Decidendi: Where a dispute falls within an arbitration agreement and a timely Section 8 application is made, the judicial forum must refer the parties to arbitration, and interim relief will not issue absent a demonstrated prima facie case and equitable grounds.

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