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2026 Supreme(Ker) 654

IN THE HIGH COURT OF KERALA AT ERNAKULAM
S. Manu, J.
Malabar International Gold Designs Private Limited – Petitioner
Versus
Anil Kumar K V – Respondent
AR NO. 263 OF 2025, AR NO. 264 OF 2025, AR NO. 265 OF 2025
Decided On : 19-05-2026

Advocates Appeared:
For the Petitioner: Sri.P.Viswanathan (Sr.), Smt.D.Reetha, Shri.Akhil K.M., Smt.Anjali Nair, Sri.P.V.Vinod (Bengalam)
For the Respondent: Shri.C.K.Karunakaran, Smt.Lekshmi P. Nair, Smt.Shifna Muhammed Shukkur, Smt.Krishna Suresh, Smt.Mekha Manoj, Shri.Anirudh Indukaladharan

Under Section 11(6-A) of the Arbitration and Conciliation Act, 1996, the referral court's jurisdiction is strictly limited to prima facie examining the existence of an arbitration agreement. All substantive questions regarding arbitrability, jurisdiction, and the validity of clauses must be determined by the Arbitral Tribunal.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) and 11(6-A) - Appointment of arbitrator - Scope of jurisdiction of referral court - Referral court's authority is limited to prima facie determination of existence of an arbitration agreement - Courts must refrain from entering into contentious factual or legal issues related to maintainability or merits - Doctrine of competence-competence empowers Arbitral Tribunal to rule on its own jurisdiction and validity of arbitration agreement. (Paras 17, 19, 21)

(B) Companies Act, 1956 - Section 10 and 14 - Articles of Association - Binding nature of amended articles - Upon registration, articles bind the company and its members - Special resolution for alteration is valid and binds all members to the same extent as if original. (Para 17)

Facts of the case:
Petitioners, being companies, invoked arbitration clauses contained in their Articles of Association against shareholders (respondents) for alleged violations of non-solicitation and non-competition undertakings. Respondents challenged the arbitration requests, claiming the Articles were amended without their consent, no deeds of adherence were signed, and that the dispute was not arbitrable, suggesting exclusive jurisdiction lies with the Civil Court. The High Court had previously rejected similar requests as premature due to non-compliance with pre-arbitration discussion requirements.

Findings of Court:
Articles of Association, once amended via special resolution, are binding on all members under statute. The referral court's role under the Arbitration and Conciliation Act is restricted to a prima facie examination of the arbitration agreement's existence; issues of arbitrability, jurisdiction, and validity are to be decided by the Arbitral Tribunal under Section 16 of the Act. Disputes regarding the non-compete clauses effectively trigger the arbitration mechanism designated in the Articles.

Issues: Whether the court, in a Section 11 application, should adjudicate complex contentions regarding the validity of amended articles, arbitrability of disputes, and lack of signed adherence deeds, or limit itself to the prima facie existence of the arbitration agreement.

Ratio Decidendi: The referral court's jurisdiction is confined to the threshold scrutiny of the existence of an arbitration agreement. Contentious issues such as the binding nature of amended corporate articles or the validity of the arbitration clause are to be left for the Arbitral Tribunal to adjudicate, ensuring minimal judicial interference in line with statutory mandates.

Result: Arbitration requests allowed; a sole arbitrator directed to be appointed to resolve the disputes.

Table of Content
1. shareholders bound by restrictive covenants in articles of association. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12)
2. parties dispute existence/validity of arbitration and jurisdiction. (Para 13 , 14 , 15 , 16 , 17 , 18)
3. court role under s.11 limited to prima facie existence. (Para 19 , 20 , 21 , 22 , 23)
4. appointment of arbitrator to resolve all pending disputes. (Para 24)

ORDER :

S. Manu, J.

Since common issues are involved in these arbitration requests, they are being disposed of by this common order.

2. Petitioners are companies incorporated under the provisions of the Companies Act, 1956. Malabar International Gold Designs Private Limited is the petitioner in A.R.No.263/2025. The respondent in A.R.No.263/2025 is one of the shareholders of the petitioner company having 300 equity shares of Rs.1,000/- each and 6450 compulsorily convertible debentures of Rs.1,000/- each.

3. In A.R.No.264/2025 the petitioner is Luster Gold Palace (India) Pvt Ltd. The respondent is one of the shareholders of the petitioner company having 190 equity shares of Rs.1,000/- each and 4010 compulsorily convertible debentures of Rs.1,000/- each.

4. In A.R.No.265/2025, Malabar Gold Super Market (Kannur) Pvt. Ltd. is the petitioner and the respondent is same as in A.R.No.264/2025. The respondent is holding 380 shares of Rs.1,000/- each and 4420 compulsorily convertible debentures of Rs.1,000/- each in the petitioner company in A.R.No.265/2025.

5. The crux of the disputes between the parties is the involvement of the respondents in two other entities engaged in the manufacture of gold and diamond ornaments, as also the import, export, trading, distribution, wholesale and retail business in all kinds of gold, diamond, jewellery, ornaments, etc. According to the petitioners, the same is in violation of the specific terms and conditions of the Articles of Association of the petitioner companies.

6. For a detailed discussion, I shall refer to the facts and documents in A.R.No.263/2025. Contentions are identical in the other two cases and no separate reference to the details is therefore required.

7. The petitioner specifically refers to Article 79 of the Articles of Association of the company, which reads as under:-

“NON-SOLICITATION AND NON-COMPETITION UNDERTAKING (79) (1) The Shareholders acknowledge that they will have access to and will be exposed to Confidential Information of Malabar Group that will confer upon the Shareholders a unique competitive advantage, and further acknowledge that the Shareholders' working with or setting up an establishment carrying out similar activities as that of the Company will inevitably result in the use/disclosure of Confidential Information prejudicial to the interests of the Company/Malabar Group, therefore, in consideration of the benefits and rights available to the Shareholders, for as long as the Shareholder is connected or associated with the Company as a Shareholder, Director, officer, or employee of the Company, and for a period of 3 (three) years from the date he ceases to be a Shareholder, Director, officer, or employee of the Company, unless otherwise agreed to by the Board, the Shareholders and their Immediate Relatives shall not, whether directly or indirectly, or through their respective Affiliates or nominees:-

(a) carry on, own, manage, operate, join, assist, enable, have an interest in, invest in, control or otherwise engage or participate in a business similar to the Business or be connected or associated (as a shareholder, Director, officer, employee, partner, representative, lender, guarantor, distributor or advisor of, or consultant to or otherwise) in any business/business entity which directly or indirectly is engaged in the Business or competes with the Company or Franchisor Company, other than through the Company or entities under Malabar Group; or

(b) be involved or become involved or engage in any other activities that may conflict with the Shareholder's obligations to the C

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