Madras HC Appoints Arbitrator In Chemical Firm Acquisition Dispute, Continues Asset And Share Injunction Pending Arbitration

The applicant and respondents had entered into an acquisition agreement dated 21 August 2025 concerning the third respondent company. The first respondent later terminated the agreement, and the applicant sought to enforce it, invoked arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, and obtained interim orders restraining dealings with the company’s assets and shares.

The respondents argued that the applicant had failed to take steps to constitute the arbitral tribunal and that the applications should therefore be dismissed under Section 9(2). The Court suggested appointing an independent arbitrator; both sides agreed to the appointment and to continuation of interim protection pending arbitration.

The applications invoked Section 9(1)(ii)(d) of the Arbitration and Conciliation Act, 1996, under which a court may grant interim injunctive relief in aid of arbitration.

The respondents relied on Section 9(2), which requires arbitral proceedings to be commenced within the statutory period where interim relief is granted before commencement, subject to such further time as the court may allow.

The applicant had invoked arbitration under Section 21.

No judicial precedents were cited; the Court resolved the applications on the parties’ agreement to the appointment and continuation of interim protection.

The respondents contended that the applicant’s failure to take steps to constitute the tribunal after obtaining interim orders warranted dismissal under Section 9(2).

Rather than determine that objection on its merits, the Court proposed an independent arbitrator, and both parties consented to the appointment and agreed to cooperate in expediting the arbitration.

In light of that agreement, the Court appointed a sole arbitrator and continued interim protection over the company’s assets and business undertaking, as well as the respondents’ shares.

Until disposal of the arbitration, the respondents were restrained from dealing with, disposing of, alienating, charging or encumbering the specified assets and business undertaking of the third respondent, and from alienating, transferring or otherwise disposing of their shares in that company.