Judgment : Dr. M. K. Chaudhuri, J. This appeal has been preferred against the judgment and order dated 26.02.2010 passed by learned Additional District Judge, Alipore, 24 Pgs(S) in Title Suit No. 3605 of 2009 in an application under Section 9 of Arbitration and Conciliation Act, 1996. The case of the respondent nos.1 & 2 in the petition under Section 9 of the Arbitration and Conciliation Act, 1996 in short is that Pramod Mittal and Vinod Kumar Mittal who are respondent nos. 1 & 2 in this appeal are promoters of GPI Textiles Limited, the appellant of this appeal. The company, is engaged in manufacturing cotton yarn, polyester and blended yarns. Its registered office is located at Solan, Himachal Pradesh and is still running its business in Kolkata at P.O. Pailan, Diamond Harbour Road, 24 Pgs(S), West Bengal. Since 1998, the company has its textile business. In 2007, the promoters namely respondent nos. 1 & 2 entered into one time settlement agreement with the respondent no.3 in order to augment fresh fund. Therefore, a tripartite share subscription and shareholders agreement was entered into between respondent nos.1 and 2 and the respondent no.3, GL Asia Mauritius-II Limited. It is the foreign company and the company agreed to infuse more fund. The said agreement took place on 22.03.2007 at Mittal House, 24, Alipore Road, Kolkata-700027, P.S. Alipore. At the time of agreement, the promoters i.e. respondent nos.1 & 2 were major shareholders of this company holding 48.9 per cent of share. From 2000-2007, the company was managed and controlled by the respondent nos.1 & 2 who invested a huge amount in the company. In order to infuse or augment fresh fund and to maintain stable source of income of the company, respondent nos.1 & 2 entered into agreement with the foreign company namely respondent no.3. According to the agreement, the promoters reduced their share from 48.9 per cent to 37.6 per cent and thereby allowed the respondent no.3 to hold majority of the share. According to the agreement, the promoters reduced their share from 48.9 per cent to 37.6 per cent and thereby allowed the respondent no.3 to hold majority of the share. According to the agreement, the respondent no.3 will procure Rs.130 crores as a loan from ICICI Bank and the respondent no.3 as a investor will provide security of the said loan in the form of irrecoverable standby letter of credit (S.B.L.C.) for the amount covering 100 per cent outstanding principal + interest and the said standby letter of credit (S.B.L.C.) would be valid throughout the period of the facility till the year 2014. Accordingly, the ICICI Bank issued a standby letter of credit to the respondent no.3, GL Asia Mauritius-II Limited. The said loan agreement dated 28th March, 2007 entered into between the company and ICICI Bank provides that the repayment to be made by equal installment for 5 years starting from 2009 and continued throughout 2014. Subsequently, ICICI Bank loan was swapped with HSBC loan on 8th April, 2009. Terms of said HSBC loan are similar to that of ICICI bank with security of a standby letter of credit provided by the respondent no.3, but the repayment of HSBC loan was to be made at one payment i.e. after 5 years i.e. 2014. In the loan period only interest of payment was to be made. Thus, the role of the respondent no.3 is to procure and maintain loan vide non-disposal undertaking given to HSBC dated 8th April, 2009 and the respondent no.3 was thus prevented from disposing of its share during the loan period. Therefore, respondent no.3 was to give interest till 2014. The purpose of swapping to HSBC from ICICI is to reduce the earlier burden of payment of principal amount by installment, so that the fund can be utilized towards working capital of the company. Respondent no.3, therefore, acquired majority of directors of the board of company and controlled the management and the running of the company. The respondent no.3, on the strength of majority number of directors passed a resolution on 20.10.2009 whereby it was held that company required Rs.470 million on urgent basis and the said money was to be funded by offering equity share on right basis. The right offer is to remain open till 5th December, 2009. The respondent no.3, on the strength of majority number of directors passed a resolution on 20.10.2009 whereby it was held that company required Rs.470 million on urgent basis and the said money was to be funded by offering equity share on right basis. The right offer is to remain open till 5th December, 2009. The respondent nos.1 & 2 Pramod Mittal and Vinod Kumar Mittal apprehended that the investor/GL Asia Mauritius-II Limited was intending to avoid its obligation as a guarantor by way of discharging the loan obligation of 130 crores which is valid up to 2014 as per tripartite agreement dated 22.03.2007. They have, however, no objection in using the proceed of right offer in the matter of payment of interest and day-to-day working of the company. If the respondent no.3 is allowed to discharge its loan obligation from the proceeds of right issue the financial condition of the company will be in a precarious position and the company will be rendered into starvation endangering the future of 10,000 employees. The tripartite agreement allowed the company to offer right issue and use the fund from right issue to pay monthly interest of loan received from HSBC, but the respondent no.3 intends to discharge its loan obligation from the proceed of the right issue. Respondent no.3 having control over the company and its board has a mala fide intention to make repayment of principal amount of loan which is not to be repaid till 2014. Hence, the respondent nos.1 & 2 filed a petition under Section 9 of the Arbitration and Conciliation Act praying for an order in the form of interim injunction so that respondent no.3 and the appellant are prevented from redeeming the security given by the respondent no.3 by utilising the proceed of right issue. This application was contested by the appellant and the respondent no.3 i.e. company and the investor in the similar fashion. According to them, learned court below has no jurisdiction to entertain the application in view of the fact that the company has its registered office at Solan, Himachal Pradesh and investor has no business in West Bengal. According to them, arbitration clause cannot be invoked unless 30 days of mandatory period of consultation expires. Moreover, UNCITRAL rules will be applicable for any dispute redressal measure between the parties. According to them, arbitration clause cannot be invoked unless 30 days of mandatory period of consultation expires. Moreover, UNCITRAL rules will be applicable for any dispute redressal measure between the parties. Moreover, respondent no.3 under loan agreement with HSBC has obligation to make payment of monthly interest. It is further obligation to make repayment of the principal amount after 5 years by way of lumpsum payment. Since the company was unable to pay interest to HSBC loan, HSBC issued notice of default to the respondent no.3. Respondent no.3 paid interest to HSBC. They issued offer for right issue to collect fund in order to discharge loan obligation and for running of day-to-day business of the company including payment of salary to the employees. The decision to augment fund by issuing offer for right issue has no mala fide intention on the part of the respondent no.3. The decision was taken for the benefit of the company. On the other hand, the respondent nos.1 & 2 i.e. Mittal brothers are trying to cause hindrance on the basis of unreasonable apprehension. They have no intention to offer arbitration. They took no initiative for settlement of dispute through arbitration. On the other hand, they filed the application under Section 9 of Arbitration and Conciliation Act without any valid reason. The shareholders agreement was not executed in Kolkata but it was executed outside the jurisdiction of this Court. The application under Section 9 filed by the respondent nos.1 & 2 does not disclose any prima facie case. A balance convenience does not appear in favour of them. Their only intention is to enhance liverage in a promotional sale of their equity interest. The “objects of issue” in the matter of offer disclosed the need of fund by the company. In the circumstances, they prayed for the dismissal of the application under Section 9 of the Arbitration and Conciliation Act. Learned Trial Court after hearing both sides and perusing the materials on record allowed the petition by issuing interim temporary injunction against the appellant and respondent no.3 restraining them including the directors, employees, men and agents from using the proceeds of the rights issue directly or indirectly or any manner whatsoever to discharge and/or redeem the security of the principal amount of Rs.130 crores given/submitted by the respondent no.3 investor till the disposal/conclusion of the arbitrary proceeding. Being aggrieved by and dissatisfied with the judgment and order passed by learned Trial Court, this appeal have been preferred. Now, the only points for consideration are – 1) Whether learned court below has jurisdiction to entertain the application under Section 9 of Arbitration and Conciliation Act, 1996 ? 2) Whether the respondent nos.1 & 2 have any prima facie case to get any order of injunction as an interim measure of protection under Section 9 of the Arbitration and Conciliation Act, 1996 ? 3) Whether learned trial court was justified in allowing the application under Section 9 of the Arbitration and Conciliation Act by way of issuing interim temporary injunction restraining respondent no.3 from using the proceed of right issue to discharge the obligation of the security of principal amount of loan of Rs.130 crores till the disposal of the arbitrary proceeding ? Decision with Reasons We have carefully gone through the materials on record including note of argument submitted by appellant and respondent nos.1 & 2 and heard the learned counsel of both sides. It is an admitted position that respondent nos.1 & 2 Pramod Mittal and Vinod Kumar Mittal were the founder/promoter of the company, GPI Textiles Limited. It is also an admitted fact that the company needed augmentation of fund for the running of business for which Mittal brothers entered into agreement with respondent no.3 i.e. GL Asia Mauritius-II limited. By virtue of the agreement, the respondent nos. 1 & 2 reduced the shareholding from 48.9 per cent to 37.6 per cent and allowed the opportunity to the respondent no.3, investor to become majority of the shareholding in the company so that the investor will procure Rs.130 crores as a loan from ICICI Bank and subsequently the loan was swapped into HSBC loan. It is also an admitted fact that the respondent no.3 after obtaining 45 per cent of the shareholding of the company having five Directors stood as a guarantor of 130 crores of loan and the said security shall remain in force till 2014. Similarly, there is no dispute that, with the help of majority of Directors of the respondent no.3 the company took decision to augment fund by issuing offer to right issue. Similarly, there is no dispute that, with the help of majority of Directors of the respondent no.3 the company took decision to augment fund by issuing offer to right issue. The respondent nos.1 & 2 apprehend that respondent no.3 is trying to use the proceed of right issue towards discharging the security obligation of loan which need not be repaid immediately but may be continued till 2014. The appellant and respondent no.3 have raised the issue that District Court in Kolkata has no territorial jurisdiction to entertain the application under Section 9 of the Arbitration and Conciliation Act, 1996, in view of the fact that the registry office of company of respondent no.3 is at Solan, Himachal Pradesh having no business in Kolkata. Moreover, the shareholders agreement dated 22nd March, 2007 was not executed in Kolkata but somewherelse. According to them the observation of learned Additional District Judge holding that the agreement was executed at Kolkata is totally wrong. Further case is that since the residence of the company i.e. the registered office is at Solan, Himachal Pradesh, learned Additional District Judge acted beyond its jurisdiction. Moreover, there is no cause of action or any prima facie case to file application under Section 9 of Arbitration and Conciliation Act. Following decisions have been cited from the end of appellant :- 1) S.P. Chengalvaraya Naidu (dead) by Lrs. Vs. Jagannath (dead) by Lrs. and Ors. reported in (1994)1 SCC 1 . 2) Tata Finance Limited vs. Pragati Paribahan reported in 2000 (2) CHN 72 . 3) Morgan Stanley Mutual Fund vs. Kartick Das with Dr. Arvind Gupta vs. Securities and Exchange Board of India and Ors. reported in (1994) 4 SCC 225 . 4) J.P. Srivastava & Sons (P) Ltd. and Ors. vs. Gwalior Sugar Co. Ltd. and Ors. reported in (2005) 1 SCC 172 . 5) Firm Ashok Traders and Another vs. Gurumukh Das Saluja and Ors. reported in (2004) 3 SCC 155 . 6) Castron Mining Limited vs. Parameshwar Kumar Agarwalla & Ors. in FMAT No. 2642 of 2005 of this Court. 7) Sundaram Finance Limited vs. NEPC India Limited reported in 1999 (2) SCC 479 . 8) Needle Industries (India) Limited and Ors. vs. Needle Industries Newey (India) Holdings Limited and Ors. reported in (1981) 3 SCC 333 . 9) SBP & Co. vs. Patel Engineering Ltd. and Another reported in (2005) 8 SCC 618 . 7) Sundaram Finance Limited vs. NEPC India Limited reported in 1999 (2) SCC 479 . 8) Needle Industries (India) Limited and Ors. vs. Needle Industries Newey (India) Holdings Limited and Ors. reported in (1981) 3 SCC 333 . 9) SBP & Co. vs. Patel Engineering Ltd. and Another reported in (2005) 8 SCC 618 . On the other hand, the case of the respondent nos.1 & 2 is that the learned Additional District Judge, Alipore is quite justified in holding that the court has jurisdiction to entertain the application under Section 9 of Arbitration and Conciliation Act. Following decisions are relied upon by the respondent nos.1 & 2:- 1) R.S.D.V. Finance Co. Pvt. Ltd., appellant vs. Shree Vallabh Glass Works Ltd., respondent reported in AIR 1993 SC 2094 . 2) Ramesh Chand Ardawatiya, appellant vs. Anil Panjwani, respondent reported in AIR 2003 SC 2508. 3) Sushil Kumar, appellant vs. Rakesh Kumar, respondent reported in AIR 2004 SC 230 . 4) Ramchandra Jamnadas Katariya, applicant vs. Nuruddinbhai and Ors., respondents reported in AIR 2005 BOMBAY 107. 5) Abdulla Bin Ali and Ors., appellants vs. Galappa and Ors., respondents reported in AIR 1985 SC 577 . On scrutiny it appears that the shareholders agreement was executed on 22nd March, 2007 at Kolkata within the territorial jurisdiction of the District Court at Alipore. Moreover, personal guarantees of the promoters i.e. the respondent nos.1 & 2 were executed at Kolkata within the territorial jurisdiction of learned Alipore Court. The stamp papers on which the agreement was executed were also purchased in Kolkata giving rise to a presumption that the agreement was executed in Kolkata. It is pertinent to note that the appellant and respondent no.3 only denied the execution of the shareholders agreement at Kolkata but they have not categorically mentioned as to where the same was executed. Mere evasive denial will not suffice. Denial must be categorical and specific. It is, therefore, crystal clear that the denial in the instant case, is not specific but evasive. Ratio of the decision of Hon’ble Apex Court reported in AIR 2004 SC 230 (Sushil Kumar vs. Rakesh Kumar) may be relied upon. Apex Court held that the denial being evasive and not categorical amounts to admission. Similarly, ratio of decision reported in AIR 2005 Bombay 107 (Ramchandra Jamnadas Katariya, vs. Nuruddinbhai and Ors.) in the matter of vague or evasive denial may also be relied upon. Apex Court held that the denial being evasive and not categorical amounts to admission. Similarly, ratio of decision reported in AIR 2005 Bombay 107 (Ramchandra Jamnadas Katariya, vs. Nuruddinbhai and Ors.) in the matter of vague or evasive denial may also be relied upon. Since no specific or categorical denial in respect of place of the execution of deed is made, such evasive denial amounts to admission to the effect that the shareholders agreement was executed at Kolkata giving rise to the cause of action and territorial jurisdiction. Moreover, it is not at all denied that the stamp papers on which the agreement was executed were purchased in Kolkata giving rise to strong presumption of fact that the agreement was executed in Kolkata. Furthermore, the invocation of arbitration proceeding was initiated at Kolkata within the territorial jurisdiction of the learned Alipore Court. The letters issued by them on 15th May, 2010 were received by the respondent no.3 who replied to the address of respondent nos.1 & 2 at Kolkata. The correspondence between the parties as well as the purchase of stamp paper on which the agreement was executed clearly denote that those were done at Kolkata. Therefore, a presumption has to be drawn that a document on a stamp paper has been executed in the said place from where stamp papers have been purchased. Reliance be placed on the decision reported in 2005 (1) Arb. LR 431 (Delhi) (Ansal Buildwell Limited vs. North Eastern Indira Gandhi Institute of Health and Medical Science and Ors.), This decision relates to the point of territorial jurisdiction of application under Section 9 of Arbitration and Conciliation Act, 1996. We have carefully scrutinised the share subscription and shareholders agreement. It is quite apparent that the said agreement was executed on 22nd March, 2007 at Kolkata as it appears in page 202 of Paper Book Volume II Part I. Mere address of the witnesses in the deed as ‘Panchkula’ does not denote that the agreement was executed at Panchkula. In the instant case, the respondent no.3 has only denied the execution at Kolkata. They have not at all made any whisper as to where it was executed other than Kolkata. Hon’ble Apex Court held in (Morgan Stanley Mutual Fund vs. Kartick Das with Dr. In the instant case, the respondent no.3 has only denied the execution at Kolkata. They have not at all made any whisper as to where it was executed other than Kolkata. Hon’ble Apex Court held in (Morgan Stanley Mutual Fund vs. Kartick Das with Dr. Arvind Gupta vs. Securities and Exchange Board of India and Others) reported in (1994)4 Supreme Court Cases 225 that normally cases should be filed only where the registered office of the company situated, but when the court outside the place where registered office is situated is approached, then such courts must ensure that the plaintiff comes to court well in time so that notice may be served on the defendant and he may have his say before any interim order is passed. In the judgment, Hon’ble Apex Court does not prevent the filing of the suit or application for injunction at any other place where the cause of action arose. This decision of law as cited from the end of appellant does not help the appellant in anyway. Moreover, it has been held in AIR 1993 SC 2094 that unless there is a failure of justice the question of jurisdiction will not be readily entertained by the appellate or revisional court. Considering the fact the share subscription and shareholders agreement dated 22nd March, 2007 was executed at Kolkata, the correspondences between the parties and the purchase of stamp paper were made at Kolkata and having regard to the aforesaid proposition of law, we are of the considered view that learned Additional District Judge, Alipore was justified in holding that the court concerned has territorial jurisdiction to entertain the application under Section 9 of the Arbitration and Conciliation Act. Moreover, petition under Section 9 of the Arbitration and Conciliation Act reveals that appellant company GPI Textiles Limited has still been running its business in Kolkata at P.O. Pailan, Diamond Harbour Road, 24 Pgs(S), West Bengal within the jurisdiction of the learned court. It has been running textile business since 1998. Furthermore, invocation of arbitration proceeding through letter issued by respondent nos.1 & 2 accompanied the address at Kolkata as it appears from the written note of argument filed on behalf of respondent nos.1 & 2. It has been running textile business since 1998. Furthermore, invocation of arbitration proceeding through letter issued by respondent nos.1 & 2 accompanied the address at Kolkata as it appears from the written note of argument filed on behalf of respondent nos.1 & 2. Considering all the facts and circumstances and having regard to the decision of law cited above we are of considered view that the learned court has territorial jurisdiction to entertain the petition under Section 9 of Arbitration and Conciliation Act, 1996. Next point raised from the end of appellant is that application under Section 9 contemplates arbitral proceeding. Clause 23 of the shareholders agreement contains arbitration clause providing 30 days period of consultation before holding of arbitration. Therefore, in terms of shareholders agreement, consultation period is essential for identifying dispute between the parties. The respondent nos.1 & 2 issued notice inviting arbitration clause to settle the dispute by letter date 11th January, 2010. This appears from page 886 of Paper Book Volume II Part II. It is true that they should have issued such letter long before filing of the application. The contents of the said letter ‘Annexure A’ dated 11th January, 2010 reveals that the appellant and the respondent no.3 has mala fide intention to use the proceed of right issue to discharge the security provided by respondent no.3, which was to be maintained till 2014. From this point of view it cannot be stated that no notice in terms of shareholders agreement was ever issued. Now, the point to be considered is whether the respondent nos.1 & 2 have made out any prima facie case to get any interim order in the form of temporary injunction restraining the appellant and the respondent no.3 from using the proceeds of the offer of right issue for discharging their obligation of security to the loan of Rs.130 crores. In this connection, it is pertinent to note that the object of shareholders agreement dated 22nd March, 2007 (at Page 23 of the Paper Book Volume II Part I) is to augment fund for the benefit of the company by the respondent no.3 and, therefore, respondent nos.1 & 2 reduce the share from 48 per cent to 37 per cent. In this connection, it is pertinent to note that the object of shareholders agreement dated 22nd March, 2007 (at Page 23 of the Paper Book Volume II Part I) is to augment fund for the benefit of the company by the respondent no.3 and, therefore, respondent nos.1 & 2 reduce the share from 48 per cent to 37 per cent. The main purpose of tripartite agreement by which major portion of the share of the company was given to the respondent no.3 is to collect or augment fund for the survival of the appellant company and for that reason respondent no.3 stood as guarantor in respect of 130 crores of rupees loan incurred from HSBC by issuing Standby Letter of Credit. According to the facility rights agreement with HSBC, the payment of the loan may be made at the end of 4 years from the date of disbursement and the said option shall be available to be exercised for 50 per cent of the principal amount, but the interest payment is to be made regularly to HSBC. Therefore, the obligation of security on the part of the respondent no.3 would be valid up to 2014. The object of offer of right issue is debt obligation and accumulation of fund for day-to-day running of the business. So, debt obligation was given top priority. From Page 651 of Paper Book Volume II Part I, it appears that object of right issue is debt obligation including payment of interest. This is revealed from the circulation resolution passed by board of directors on October 20, 2009. The resolution of the board further reveals that HSBC is currently intending to treat any nonpayment of interest as an event of default under the facility agreement, as a result of which entire outstanding amount under the facility agreement could become payable. But facility agreement only reveals the payment of interest. The payment of the principal amount of loan may be made at the end of 4th year up to the extent of 50 per cent. From the resolution of the board emphasizing debt obligation the motive of the respondent no.3 in discharging the security of the loan amount which is valid up to 2014 is apparent. The payment of the principal amount of loan may be made at the end of 4th year up to the extent of 50 per cent. From the resolution of the board emphasizing debt obligation the motive of the respondent no.3 in discharging the security of the loan amount which is valid up to 2014 is apparent. Therefore, the apprehension of the respondent nos.1 & 2 in the matter of using proceeds of right issue by respondent no.3 towards the discharge of the security of the loan cannot be ruled out. The respondent nos.1 & 2 apprehend the use of the proceed of the right issue towards discharge of the security obligation of the principal amount by respondent no.3. This is why they approached the learned court for interim measure for the protection of property under Section 9 of the Arbitration and Conciliation Act. Respondent nos.1 & 2 have no objection in the matter of payment of interest on the principal amount of loan and the use of the fund of the right issue for other day-to-day business. The intention of the circular resolution dated 20th October, 2009 reveals that the purpose of the letter of offer of right issue is debt obligation inter alia day-to-day running of the business including payment of interest. Therefore, the respondent nos.1 & 2 has a strong prima facie case and sufficient cause of action to file the petition under Section 9 as an interim measure for the protection of the property. Learned Additional District Judge, Alipore, 11th Court is quite justified in allowing the petition in the form of interim temporary injunction restraining the respondent no.3 including the directors, employees, men and agents from using the proceeds of right issue directly or indirectly or any manner whatsoever to discharge or redeem the security of the principal amount of Rs.130 crores given by the respondent no.3 till the conclusion of the arbitral proceeding. Decision of law cited from the end of appellant does not help the appellant in any way so as to set aside the judgment and order passed by learned Additional District Judge, Alipore. Section 9 of the Arbitration and Conciliation Act, 1996 makes it clear that Section can be invoked before arbitral proceeding. The court can also pass an order as an interim measure before arbitral proceeding as well as during the arbitral proceeding. Section 9 of the Arbitration and Conciliation Act, 1996 makes it clear that Section can be invoked before arbitral proceeding. The court can also pass an order as an interim measure before arbitral proceeding as well as during the arbitral proceeding. In that view of the matter, the issuance of notice dated 11th January, 2010 for resolution of dispute by consultation as well as arbitration clause, although belated, does not defeat the respondent nos.1 & 2 to get a restraint order as an interim measure. Moreover, the balance of convenience and inconvenience stands in favour of respondent nos.1 &2. In case the application under Section 9 of Arbitration and Conciliation Act is refused, the respondent no.3 will get ample scope to use of the proceed of right issue in discharging their obligation in the security of loan and, therefore, the financial condition of company will be at a stake. If the application is allowed, the company will survive. It is, therefore, quite justified to allow the application under Section 9 of Arbitration and Conciliation Act and impose restraint order as a temporary measure for the protection of property. Therefore, the judgment and order passed by learned Additional District Judge, Alipore calls for no interference and are affirmed. The appeal, therefore, is dismissed but without any cost. I agree, Pratap Kumar Ray, J. 24.06.2011 Later In view of dismissal of appeal, there is no need to pass any order in stay application being CAN 2857 of 2010. It accordingly stands dismissed. Stay of the judgment, as prayed for, stands refused.