NEERAJ KISHAN KAUL,J. - (1.) THIS appeal has been filed against the order of the learned Single Judge dated 25th May, 2009. Briefly the facts of the case are as follows :-
(2.) THE respondents were the shareholders in the appellant No. 5 having 30% shares in the company. The other shareholders of the company were the appellants No. 1 to 4. The respondents started their own company while they were working as Directors of the appellant company which resulted into disputes between the appellants and the respondents and ultimately a Memorandum of Understanding (for short 'MOU') was signed between the parties whereby the respondents agreed to sell their shares to the appellants. The payment of the value of equity shares was to be done in a phased manner. A detailed list of recoverable dues was attached with the MOU. There were certain projects of the appellant company under which the likely dates of completion of these projects were mentioned in the MOU and it was provided that the respondents shall continue to assist appellant No.5 in the business and completion of these projects and ensure smooth takeover and smooth implementation of the MOU. The respondents being Directors of the company had given collateral security to Canara Bank, bankers of the appellant No.5 company, for securing CC Limit. It was agreed between the parties that after signing the MOU, the appellant shall not exceed the sanctioned CC Limit till release of the collateral securities given by the respondent of their personal properties and the bank would be advised not to take recourse to the collateral securities before taking recourse to other securities provided by the company to the bank and the respondent will be indemnified by the appellants against the use of collateral securities/personal guarantees by the bank. The appellant was to initiate proceedings of getting collateral securities released from the bank within 45 days of signing of the MOU. In case of delay in releasing of the security beyond 90 days of the MOU, it would be the responsibility of the appellants to give equivalent FDRs to the bank and get the collateral FAO(OS) 243/2009 Page 4 of 12 securities of the respondents released immediately.
(3.) AFTER signing of the MOU, disputes arose between the parties in respect of its implementation and on other aspects and the parties exchanged correspondence through e-mails. The appellants invoked the arbitration clause vide letter dated 3rd October 2008. We are informed that an Arbitrator has been appointed by the Court to adjudicate the disputes between the parties. A petition under Section 9 of the Arbitration and Conciliation Act, 1996 (for short the Act?) was filed by the respondents in which the impugned order was passed. The respondents inter alia in the said petition prayed that the appellants be directed to release the collateral security of the respondents lying with the bank by substituting it with a fixed deposit as per the terms of the MOU. Various other prayers were also made in the said petition.;