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Section 9 petition maintainable despite pending NCLT proceedings on overlapping facts where rights claimed arise from shareholders' agreement: Bombay high court
Case Name: Shiv Keshrimal Agrawal v. Farma Hub Overseas Pvt. Ltd. and Ors.
Citation: (2026) ibclaw.in 4177 HC
Coram: Justice Amit Borkar
The Bombay High Court has partly allowed a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, granting limited interim protection to a Director and 33% shareholder of a company, pending commencement of arbitral proceedings under two Shareholders' Agreements.
The Petitioner, a Director holding 33% shareholding in Farma Hub Overseas Pvt. Ltd., alleged that the remaining Directors, holding 67% shareholding, had excluded him from management, denied him access to the company's digital platforms and records, entered into related party transactions in breach of the Shareholders' Agreements, manipulated board meeting minutes, and proposed to remove him as Director at a meeting scheduled for 21st April, 2026.
The Respondents raised three principal objections. First, that the Petitioner had already filed a Company Petition before the National Company Law Tribunal, Allahabad, under Sections 241 and 242 of the Companies Act, 2013, seeking substantially similar reliefs, and that Section 430 of the Companies Act barred the jurisdiction of civil courts over such matters. Second, that Uttarakhand, and not Maharashtra, was the seat of arbitration, since the Shareholders' Agreements were executed at Haridwar, the company was incorporated and operated there, and the Respondents resided there. Third, that the Petitioner had no absolute right to continue as Director, relying on Clause 18 of the Shareholders' Agreement and a Notice of Default dated 11th June, 2026.
On maintainability, the Court held that overlapping facts between the NCLT petition and the Section 9 petition did not bar the latter, since the source of rights in each proceeding was different. Disputes of oppression and mismanagement under Sections 241 and 242 are statutory and in rem, whereas obligations such as joint management, digital access, and restrictions on related party transactions arose purely from the Shareholders' Agreements and remained arbitrable. Section 430 of the Companies Act was held to bar civil court jurisdiction only over matters exclusively reserved for the NCLT, and not over a Section 9 petition seeking protection of contractual arbitration rights.
On jurisdiction, the Court examined Clause 21 of the Shareholders' Agreement, which provided that the venue of arbitration shall be “Maharashtra and Uttarakhand unless otherwise agreed in writing,” and held that this language did not designate an exclusive juridical seat. Relying on the Supreme Court's decision in BGS SGS Soma JV v. NHPC Ltd., the Court held that where no seat has been agreed and a Section 9 petition is filed before an arbitral tribunal is constituted, the court where the application is first made, and where part of the cause of action arises, may assume jurisdiction under Section 42 of the Act. Since the Petitioner resided in Mumbai, his investment originated from Mumbai, and financial prejudice was alleged to have been suffered there, the Court held it possessed jurisdiction under Section 2(1)(e) of the Act, without recording any final finding on the juridical seat, leaving that question to the Arbitral Tribunal under Section 20.
On merits, the Court held that whether any breach was committed by the Petitioner, and whether the requirements of Clause 18 for termination were satisfied, were disputed questions of fact requiring evidence and could not be conclusively decided at the interim stage. Similarly, the allegations of exclusion from management, denial of digital access and unauthorised related party transactions raised triable issues.
Finding a prima facie case, balance of convenience, and possibility of irreparable injury in favour of preserving the status quo, the Court restrained the Respondents from giving effect to any resolution removing the Petitioner as Director for ninety days or until an application under Section 17 is decided by the Arbitral Tribunal, whichever is earlier. The Respondents were permitted to continue holding board and shareholder meetings and conducting ordinary business, but were restrained from dealing with the company's land, directed to preserve financial and digital records, and directed to provide the Petitioner read-only access to company records and digital platforms. Broader reliefs, including restraint on day-to-day management and bank account operations, were refused as falling outside the scope of interim relief under Section 9
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