The main legal point established in the judgment is the need to preserve the property pending arbitral proceedings to avoid multiplicity of proceedings and further litigation.

M. Chockalingam, J.

Challenge is made to an order of the learned Single Judge of this Court in O.A. No.1104 of 2005 under Sec.9 of the Arbitration and Conciliation Act, 1996, whereby the appellant herein sought for an order of interim injunction restraining the respondents from transferring/alienating the shares/assets of the 2nd respondent, particularly assets in the form of The Aruna Hotel and Aruna Central Buildings at No.144/145, Sterling Road, Nungambakkam, Chennai 600 034, pending finality and disposal of the intended arbitration proceedings between the parties in accordance with clause 17 of the Memorandum of Understanding dated 24. 2004, entered into between the parties.

2. The case of the appellant before the learned Single Judge where he sought the interim relief under Sec.9 of the said Act and also before this Court is that the appellant company decided to purchase the hotel which belonged to the respondents; that a Memorandum of Understanding (MOU) was actually entered into between the parties on 24. 2004, whereby the consideration was fixed at Rs.35,40,00,000/-, out of which Rs.1 crore was actually paid by way of advance; that thereafter, Rs.25 lakhs has also been paid; that it was also understood that as and when Rs.5 crores was tendered by the appellant, the respondents should hand over possession of the hotel; that even though it was tendered, the respondents were not ready and willing to do the same; that under the circumstances, a letter was addressed on 2. 2005; that despite receipt of the same, there was no reply; that at that juncture, there arose a necessity to invoke the arbitral clause namely clause 17 as found in the MOU; that an arbitrator was actually appointed by the Court; that now the proceedings are pending before the arbitrator; that under the circumstances, there arose a necessity for filing an application under Sec.9 of the said Act seeking interim injunction pending the arbitral proceedings since the appellant had got reliable information that the respondents are likely to transfer the interest and shares in the company; that if it is allowed to be done and even if the arbitral proceedings end in favour of the appellant, he could not enjoy the fruit of the same, and hence interim injunction has got to be granted and accordingly the appellant has made the application.

3. The respondents side was given an opportunity to file counter.

4. The learned Single Judge after hearing the submissions made and also looking into the materials available was of the opinion that no prima facie case was made out by the appellant under Sec.9 of the Act to make an order of injunction and accordingly dismissed the application. Aggrieved, the appellant has brought forth this appeal before this Court.

5. Advancing arguments on behalf of the appellant apart from reiterating the very same contentions put forth before the learned Single Judge, the learned Counsel would further add that the entire arbitral proceedings almost reached final stage; that when the appeal was heard, the First Bench of this Court was pleased to pass an order to maintain status-quo, after considering the circumstances; that if any disturbance is made to that order, or if interim injunction is refused, then it will cause prejudice and hardship; that even the proceeding before the Arbitrator was actually for the relief of specific performance in respect of the very same property; that under the circumstances, the respondents should be restrained from dealing with the property; that it is a fit case where Sec.9 of the said Act has got to be invoked by granting interim order; but, the learned Single Judge has not considered that aspect of the matter and has refused to do so, and under the circumstances, interim order has got to be granted.

6. Contrary to the above contentions, it is contended by the learned Counsel for the respondents that even as per the MOU, the total sale consideration was found to be Rs.35.40 crores; that Rs.1 cror