Judgment :- 1. By consent of the parties, heard finally. 2. The petitioner has invoked Section 9 of the Arbitration and Conciliation Act, 1996 (for short, the Act) as dispute arose between the parties arising out of the Memorandum of Understanding (MOU) having arbitration clause No.28 which reads as under: “28 Any dispute or difference between the parties hereto including in respect of any breach or alleged breach hereof, shall be referred to the sole arbitration of a person to be mutually agreed upon by the parties hereto. The sole arbitrator shall have summary powers and the Arbitrator shall not be required to give reasons for his award. The place for arbitration shall be at Bombay.” 3. The basic facts/events, as per the petitioner, are: The petitioner is a public limited company incorporated and registered under the Companies Act, 1956 inter alia carries on the business of manufacturing, marketing and distribution of various industrial chemicals, chemicals, etc. 4. The respondents are shareholders of Gharda Chemicals Limited (hereinafter referred to as “GCL”), a public limited company incorporated and registered under the Companies Act, 1956. The majority shares of GCL are owned by Dr.Keki Gharda and the respondents are minority shareholders of GCL. 5. In 1992, the respondents offered for sale 461 shares of GCL owned by them as the respondents were unable to repay the loan amount given to the respondents by the petitioner. The petitioner is the owner of 461 shares of GCL which are sold by the respondents to the petitioner after following the detail provisions of the Articles of Association of GCL. 6. The petitioner agreed to make available to the respondents loan to purchase the shares of GCL as and when offer for sale is made in accordance with the Articles of Association of GCL. On 03.06.1992, the terms and conditions of loan agreed to make available by the petitioner to the respondents are contained in the Memorandum of Understanding (“MOU”). 7. Between 1992 to 2000, as agreed and in terms of MOU, the petitioner made available to the respondents a sum of Rs.10.34 crores to purchase the shares of GCL offered for sale in accordance with the Articles of Association of GCL. The respondents have accepted the loan amount and have pledged the shares which are owned by them with the petitioner towards the security of the loan. The respondents have accepted the loan amount and have pledged the shares which are owned by them with the petitioner towards the security of the loan. The respondents have accepted the loan amount and have pledged the shares owned by them. The respondents have executed the irrevocable Power of Attorney and Loan cum Pledged Agreements in favour of the petitioner. 8. The petitioner has performed the terms and conditions of the MOU and has not acted contrary to the terms and conditions of the same. In terms of the MOU, the respondents also agreed that they shall not enter into a compromise or agreement or arrangement directly or indirectly or otherwise howsoever with any other shareholder of GCL or with GCL itself in respect of the shares of GCL or with regard to any other matter pertaining to the participation of the parties to the MOU in the business affairs, management, properties, technical know how arrangement, engineering or process development or engineering etc. of GCL. 9. Except as permitted, in terms of MOU, the respondents shall not be entitled to pledge, charge or offer as security in any manner or form the shares held by them in GCL for securing any of their borrowings. 10. The respondents had filed a Company Petition being Company Petition No.77 of 1990 before the Bombay High Court alleging oppression and mismanagement by the majority shareholders of GCL. The petitioner was subsequently made party to the said company Petition but no relief was sought against the petitioner. 11. In 2005, the petitioner lodged the shares which are pledged by the respondents with the petitioner for transferring the same in the name of the petitioner with GCL. The shares were lodged for transfer in the name of the petitioner and/or its nominees with GCL but the said GCL alleged refused to transfer the shares in the name of the petitioner. 12. GCL filed a Suit against the petitioner and the respondents herein before this Court being Suit No.1170 of 2005. The petitioner had filed Company Petitions before the Company Law Board challenging the refusal of GCL to transfer the shares in the name of the petitioner. On 27.09.2008 the Company Law Board dismissed the Company Petitions. The petitioner preferred an Appeal under Section 10(F) of the Companies Act, 1956 before this Court. The petitioner had filed Company Petitions before the Company Law Board challenging the refusal of GCL to transfer the shares in the name of the petitioner. On 27.09.2008 the Company Law Board dismissed the Company Petitions. The petitioner preferred an Appeal under Section 10(F) of the Companies Act, 1956 before this Court. This Court was pleased to allow the respondents 1, 2, 3, 6 and 7 to withdraw the said Company Petition. On 14.11.2008, the said Company Petition No.77 of 1990 was dismissed by this Court. 13. The petitioner apprehends that the respondents are trying to sell their shares of GCL in collusion with Dr.Keki Gharda so as to cause loss, damage and injury to the petitioner and in breach of the terms and conditions of MOU. Hence the petition. 14. The basic prayer of the petitioner is as under: (a) that the pending the hearing and final disposal of the proposed arbitration proceedings and the making and implementation of the Award herein, the Respondents, their agents, servants or any other person claiming through or under them be restrained by a temporary order and injunction of this Hon’ble Court from, in any manner, directly or indirectly, dealing, selling, offering for sale, causing it to be offered for sale, transferring, causing to be transferred, parting with possession of, delivering, creating or causing to be created any third party rights of whatsoever nature, or any right, title and interest in the shares owned by the Respondents of Gharda Chemicals Limited, other than to the petitioner AND be further restrained from committing any breach of the Memorandum of Understanding dated 3rd June 1992 or acting contrary to the terms and conditions of the same. 15. The whole submissions of the parties revolve around the MOU duly signed and executed by the parties and same is intact till this date. The parties in fact acted upon the same without any objection. The petitioner has made available to the respondents a sum of Rs.10,34,00,000/- since 1992 to 2000 to purchase the shares of the company. The loan amount was admittedly disbursed to the Advocates of the respondents M/s. Federal & Rashmikant as agreed. The parties have acted accordingly without any objection. 16. The petitioner has made available to the respondents a sum of Rs.10,34,00,000/- since 1992 to 2000 to purchase the shares of the company. The loan amount was admittedly disbursed to the Advocates of the respondents M/s. Federal & Rashmikant as agreed. The parties have acted accordingly without any objection. 16. The important clauses of the negative covenants are 15 to 18 of the MOU are: “15 The parties hereto covenant and agree that either of the parties shall not enter into a compromise or agreement or arrangement directly or indirectly or otherwise howsoever, with any other shareholders of the Company or the Company itself in respect of the shares of the Company or with regard to any other matter pertaining to the Participation of the parties hereto in the business affairs, management, properties, technical knowhow arrangement, engineering or process development or engineering etc. of the Company. 16. The parties hereto agree and undertake that till the Company goes public and or its shares are listed in any recognized stock exchange, the parties shall not sell, alienate, dispose of or transfer or create any interest or right in the third party rights in any shares registered in their respective names or in which they have a beneficial interest. It is clarified that nothing herein will restrict the transfer among the designated nominees/limited nominees defined hereinabove”. 17. The party of the First Part shall be bound to sell and/or transfer or dispose of any rights in respect of any shares, whether purchased with the finance made available by the party of the Other Part or not, only to the party of the Other Part. In respect of shares that are not purchased with the finance made available by the party of the Other Part, the sale and/or transfer etc. shall be made at the fair value as determined in accordance with the Articles of Association of the Company. In respect of shares purchased with the finance made available by the party of the other part, the value shall be determined in accordance with Clause 10 hereof. 18. Except as permitted herein the parties hereto shall not be entitled to pledge charge or offer as security in any manner or form the shares held by them in the Company for securing any of their borrowings.” 17. The petitioner moved the present petition after receiving the information/news that Dr. 18. Except as permitted herein the parties hereto shall not be entitled to pledge charge or offer as security in any manner or form the shares held by them in the Company for securing any of their borrowings.” 17. The petitioner moved the present petition after receiving the information/news that Dr. Keki Gharda, who is a 60% shareholder was proposing to sell 75% shares of the Company to private parties like Blackstone and Morgan Stanley. The respondents are not entitled to sell the shares as they are bound by the negative covenants as referred above, this Court, therefore, after considering the averments so raised granted interim reliefs on 12th May, 2009 in the following terms: “3 Admittedly, there is a Memorandum of Understanding (MOU) dated 03.06.1992 which provides an arbitration clause. Pursuance to this MOU, as the petitioners have paid about Rs.10 crores and approximately 3000 shares have been pledged. Therefore, considering the averments made in paragraph 28 and as case is made out and further to secure the amount/claim as contemplated under Section 9 of the Act, I am inclined to grant ad-interim relief to the extent that the respondents shall not sell, transfer, part with possession or create any third party right or interest of whatsoever nature in the shares owned by the respondents of GHARDA CHEMICALS LIMITED, if not already transferred or created any right party right or interest thereon.” 18. Respondent no.2, in response to their letter dated 25.05.2009 stated that they were not selling and/or intend to sell the shares of the company. However, there is no appearance on behalf of respondent no.2 though served. Respondents 4 and 5 appeared and resisted the petition by reply dated 20.07.2009. 19. It is clear that there exists a valid MOU between the parties with the arbitration clause. The said MOU is, therefore, binding to all the parties, unless it is set aside. There is no denial by respondents 4 and 5 to the apprehension raised by the petitioner that they are likely to sell and dispose of or create third party rights in the shares. On the contrary, the submission is that they are free and entitled to sell their shares. Respondent no.2 though not appeared, expressed otherwise by letter. Therefore, there is clear a conflict and dispute between the petitioner and respondents 4 and 5 and also between respondent no.2 and respondents 4 and 5. 20. On the contrary, the submission is that they are free and entitled to sell their shares. Respondent no.2 though not appeared, expressed otherwise by letter. Therefore, there is clear a conflict and dispute between the petitioner and respondents 4 and 5 and also between respondent no.2 and respondents 4 and 5. 20. Admittedly, Company Petition No.77/1990 has not been dealt with and/or decided the validity and/or legality of the MOU as sought to be contended by respondents 4 and 5, including of the Power of Attorney-cum-Pledge Agreement executed by the respective respondents. The judgment and the relevant paragraphs so referred from the Company Petition No. 7/1990 is of no assistance and/or sufficient to overlook the averments made by the petitioner and now substantiated by the Affidavit filed by respondents 4 and 5 itself. 21. The respective interpretation of the clauses as sought to be contended by the parties is again, in my view, in the present facts and circumstances, is a matter of detail trial and inquiry. The MOU is a composite contract and the clauses thereof cannot be read in isolation. The subsequent documents executed, based upon the same and as the parties have already acted since long and never challenged the same at the earliest point of time and now when the petitioner has invoked present proceeding in view of the apprehension so raised denying and/or challenging the clauses of the MOU with regard to their obligations and liabilities, in my view, is unsustainable. 22. The allegations of collusion by the petitioner with respondents 1, 2, 3, 6 and 7; and/or misrepresentation and/or that respondents 4 and 5 never used and utilised; and/or received any such amount or consideration; and/or it was never intended for their respective shares; and/or got benefited out of this MOU at any point of time, need detail inquiry, based upon substantive material and pleadings and above all, detail inquiry and trial. These challenges itself unless it is accepted and/or granted in favour of respondents 4 and 5, shows that there is a prima facie, material substantiated by the above facts. 23. The plain reading of the MOU itself provides that all respondents are collectively bound by the terms. The interse dispute between the respondents in no way sufficient to overlook the express and clear terms of the MOU specially at this stage of the arbitration proceedings. 23. The plain reading of the MOU itself provides that all respondents are collectively bound by the terms. The interse dispute between the respondents in no way sufficient to overlook the express and clear terms of the MOU specially at this stage of the arbitration proceedings. The submissions with regard to the benami transaction and/or suppression and and/or of Section 9 of the Companies Act, even if any, at this stage, unless decided finally in favour of respondents 4 and 5 and as the respondents being “Party of the First Part” in the MOU they are bound by the same, specially in view of the negative covenants as referred above. The commercial minded parties having full knowledge of trade, practice of business, signed the MOU and, accordingly, acted also now cannot be permitted to agitate the issue at this prima facie stage revolving around the Doctrine of Restraint of Trade. 24. The submission with regard to the status of the company that the company is a Public Limited Company referring to clause 16 of the MOU which provides that “The company goes public and/or its shares are listed in any recognised Stock Exchange”, in my view, also interpreted to mean till the Company goes public and its shares are listed on the Stock Exchange. Clause 17 of the MOU also binds the respondents 4 and 5 to sell the shares held by them only to the petitioner. This itself means that clause 16 shall operate as long as company does not go “public” and the shares are not listed on the recognised Stock Exchange. The words “goes public”, in my view, also cannot be construed to mean become public by operation of law. The Company, as noted, had already become a public company in the year 1988 even before the signing of the MOU dated 3rd June, 1992 by the parties including respondents 4 and 5. Therefore, the contesting respondents were fully aware that the company has been a public limited company since 1988. 25. The Company, as noted, had already become a public company in the year 1988 even before the signing of the MOU dated 3rd June, 1992 by the parties including respondents 4 and 5. Therefore, the contesting respondents were fully aware that the company has been a public limited company since 1988. 25. The submission that the MOU is not enforceable and/or its broad understanding between the parties so that they could seek finance and enter into binding agreement known as “Loan-cum-Pledge Agreement” and restrictive covenants have ceased to exists and have no force in law and any interpretation of clause 16 will run contrary to the Companies Act and the Company being a Public Company, there can be no restriction on the transferability of its shares, in view of above facts itself, is not acceptable, without considering due and supportive material and evidence by the Arbitral Tribunal, but not at this preliminary stage of the proceedings under Section 9 of the Act to decide the issues finally. It is not a question of blanket restriction on the transfer of all shares, but it is the question of terms and conditions of duly signed MOU of the year 1992, specially when respondents 4 and 5 are only agitating and making this submission, but not by other respondents. Therefore, the said MOU, if not under challenge by other respondents and definitely by the petitioner, at the instance of respondents 4 and 5, at this interlocutory stage, even if the interpretation so sought to be made is accepted, that itself cannot be the reason to declare the said MOU null and void and/or enforceable, because the other respondents are supporting the case of the petitioner and in fact a statement is also made and recorded by letter that they are not intending to sell and/or transfer the shares. On the contrary, it is respondents 4 and 5 insisting and claiming right inspite of above to sell the shares. Therefore also, to avoid further complication by allowing such transfer of shares, I am of the view that let the Arbitral Tribunal finally decide these issues so that the parties can proceed accordingly. On the contrary, it is respondents 4 and 5 insisting and claiming right inspite of above to sell the shares. Therefore also, to avoid further complication by allowing such transfer of shares, I am of the view that let the Arbitral Tribunal finally decide these issues so that the parties can proceed accordingly. The submission so raised by respondents 4 and 5 with regard to the validity and/or enforceability of the MOU and/or right to transfer the shares after such long period and as it is question of interpretation of the clauses read with the conduct of the parties, I am of the view that the submission of respondents 4 and 5, based upon Affidavit filed on record, just cannot be accepted in defence to the positive case led by the petitioner with material on record to support the same apart from supporting respondent’s statement. 26. Importantly, there is no power or jurisdiction under Section 9 of the Arbitration Act to declare such action or inaction, void or illegal on merits. It is a matter of detail trial and inquiry before the Arbitral Tribunal as parties have themselves decided to settle the matter through the sole Arbitrator. Therefore, if no finality can be given to the decision under Section 9 of the Act, there is no point in deciding those issues while considering the interpretation of the rival parties at this prima facie stage of the proceedings. The basic requirement of existence of Agreement and the live subject matter of disputes between the parties are sufficient to grant the interim order as sought by the petitioner. In my view, there is no point to permit to introject such submissions at this stage of the proceedings, only because respondents 4 and 5 have agitated that the MOU is void under Sections 23 to 32 of the Indian Contract Act. 27. The petitioner, therefore, in my view, has made out a sufficient case under Section 9 of the Act read with Order 40, Rules 1 and 2 and/or Order 39, Rules 1 and 2 of the Code of Civil Procedure (CPC) for appropriate order and/or interim measure as sought, unless and until the case of respondents 4 and 5 is accepted and/or decided finally in their favour through the Arbitral Tribunal which the parties are free to appoint/constitute as per the MOU. 28. 28. There is no power under Section 9 of the Act to decide and declare such MOU null and void finally. The Arbitral Tribunal may do so. Therefore, unless it is declared so, in view of the agreed and signed MOU and the respective clauses referred above, that itself, in my view, sufficient to maintain the interim order already granted and/or pass such interim measure/protection as prayed. 29. All relevant elements of balance of convenience, equity, irreparable injury lies in their favour. The delay and latches on the part of respondents 4 and 5 including their conduct to challenge the MOU now also goes against respondents 4 and 5. I have also observed referring to the above elements in Arbitration Petition No.423/2009-Unity Realty and Developers Ltd. vs. BW Highway Star Pvt.Ltd. decided on 24.09.2009 as under: 71. The Supreme Court in Adhunik Steels Ltd. vs. Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC 125 has observed as under: “Moreover, when a party is given a right to approach an ordinary court of the country without providing a special procedure or a special set of rules in that behalf, the ordinary rules followed by that court would govern the exercise of power conferred by the Act. On that basis also, it is not possible to keep out the concept of balance of convenience, prima facie case, irreparable injury and the concept of just and convenient while passing interim measures under Section 9 of the Act.” Similarly so expressed in Arvind Constructions Co.;(P) Ltd. v. Kalinga Mining Corporation & ors., (2007) 6 SCC 798 . 72. The Apex Court in Kishorsinh Ratansinh Jadeja v. Maruti Corp. & ors., JT 2009 (5) SC 180, before passing or refusing any interim injunction/reliefs, has observed in the following words: “12 In addition to the above, Mr.Ranjit Kumar also referred to the decision of this Court in Mandali Ranganna & others v. T. Ramchandra [ 2008 (11) SCC 1 ] wherein an additional principle was sought to be enunciated relating to grant of injunction by way of an equitable relief. This Court held that in addition to the three basic principles, a Court while granting injunction must also take into consideration the conduct of the parties. This Court held that in addition to the three basic principles, a Court while granting injunction must also take into consideration the conduct of the parties. It was observed that a person who had kept quiet for a long time and allowed others to deal with the property exclusively would not be entitled to an order of injunction. The Court should not interfere only because the property is a very valuable one. Grant or refusal of injunction has serious consequences depending upon the nature thereof and in dealing with such matters the Court must make all endeavours to protect the interest of the parties.” 30. Resultantly, the interim order already granted on 12th May, 2009 which has been in force since then shall continue until the constitution of the Arbitral Tribunal and six weeks thereafter. 31. I do not deny the rights of the parties to raise their appropriate pleas or defences before the Arbitral Tribunal, if so constituted. 32. Rule is made absolute accordingly. No order as to costs.