A promoter’s termination may be stayed where it allegedly breaches shareholder agreements and threatens share rights.

The petitioner, a founding promoter and holder of 4,564 shares (approximately 30.39% of the respondent company’s issued equity), contended that his shares had vested as “Released Shares” and that he had been excluded from business decisions.

After he proposed an amicable exit, he received notice of a Board meeting only 28 minutes before it began.

The Board resolved to terminate his employment for “Cause,” and the petitioner alleged that the termination breached the Shareholders Agreement and Articles of Association, including by failing to obtain the required investor consent and provide notice and an opportunity to cure.

He sought interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, claiming that termination could adversely affect his shareholding and related rights.

1. Whether, pending determination of the Section 9 application, the Court should stay the Board resolution terminating the petitioner’s employment and the consequential termination letter

2. Whether the circumstances—including the short notice of the Board meeting and the alleged consequences for the petitioner’s shares—supported ad interim protection despite the respondents’ argument that a contract of personal service cannot be specifically enforced

Section 9 of the Arbitration and Conciliation Act, 1996 empowers the Court to grant interim measures of protection in aid of arbitration.

The petitioner relied on alleged requirements under the Shareholders Agreement and Articles of Association, and on Section 173(3) of the Companies Act, 2013 concerning notice of Board meetings.

The Court relied at the interim stage on Dr. Sharad Sahai v. Dio Digital Implant India Pvt. Ltd. & Ors., OMP (I) (COMM) 87/2021, where an interlocutory injunction was granted in circumstances involving an alleged flagrant breach of a promoter employment agreement.

The respondents’ authorities concerning the non-enforceability of personal-service contracts were noted, but their application was expressly left for consideration after receipt of the detailed reply.

The Court considered the notice—served at 7:02 p.m. for a meeting at 7:30 p.m.—and the immediate termination at that meeting to be stark circumstances warranting interim protection.

It also distinguished the matter from an ordinary employee termination: the petitioner was a founding promoter, alleged breaches of the Shareholders Agreement and Articles of Association, and claimed that termination could materially affect his shares.

Applying the approach in Dr. Sharad Sahai, the Court found no present hindrance to an interlocutory order.

It did not finally resolve the respondents’ personal-service-contract argument, reserving consideration of their cited authorities until the Section 9 application was heard on a fuller record.

The Court clarified that the order was purely interim and did not preclude a different view when the application was finally decided.

It directed the respondents to file replies within four weeks, allowed the petitioner two weeks thereafter for any rejoinder, and listed the application for arguments on 8 December 2026.