Full disclosure of material facts is essential for obtaining interim relief; unilateral appointment of arbitrators is unauthorized under arbitration agreements.

JUDGMENT :

VIBHU BAKHRU, CJ.

1. The appellant has filed the present appeal under Section 37 (1)(b) of the Arbitration and Conciliation Act, 1996 [A&C Act impugning an order dated 24.10.2025 passed by the learned LXXXIV Additional City Civil and Sessions Judge, at Bengaluru [Commercial Court] in IA No.3 in Com. A.A No.368/2025, captioned M/s Volvo Financial Services (India) Private Limited v. M/s. S S Constructions and another.

2. The respondents had filed the said application seeking vacation of the ex parte order dated 06.09.2025, whereby the learned Commercial Court had appointed a receiver to take possession of the schedule assets and hand over the same to the appellant company. It is material to note that the said order was passed ex parte.

3. The appellant had filed an application ‒ I.A No.2 before the Commercial Court claiming that it had sanctioned a loan of Rs.9,95,96,000/- to the respondents under various loan accounts. The respondents were liable to pay a sum of Rs.56,48,924/- towards the same, however, had failed to do so. It was alleged that the respondents were now selling their assets, which were hypothecated to the appellant. In view of the aforesaid contentions, on 06.09.2025, the learned Commercial Court had passed the following order:

"I.A.No.1 is allowed. Production of original documents dispensed with at this stage.

Further I.A.No.2 is also allowed. One Mr. Varadaraj, of the petitioner company is appointed as the Receiver to take interim possession of schedule assets from the respondents or from whomsoever's possession same are found with the assistance of the jurisdictional police and to handover it to petitioner company, who shall retain said equipments till disposal of this case.

The applicant shall comply procedure U/Or.39 Rule 3A of CPC. Office to issue aforesaid order of appointment Receiver only after compliance of aforesaid provisions.

Issue notice on main petition to Respondent, if PF and copies are furnished, R/by 26.09.2025."

4. The respondents filed an application seeking vacation of the aforesaid stay order in return of the assets, being IA No.3 in Com.A.A No.368/2025, which was allowed. The learned Commercial Court found that the petitioner had suppressed material facts. It had not disclosed that an arbitral award dated 01.08.2024 – which was rendered pursuant to the appellant recalling the loan advanced – was the subject matter of challenge before the Commercial Court in Gurgaon in ARB-169-2024 and the said arbitral award had been stayed. The appellant had joined the said proceedings. However, the interim stay had been extended. Thus, although the appellant was fully aware regarding the challenge to the arbitral award, it did not disclose the same. The learned Commercial Court also faulted the appellants in not mentioning that all the three Master Loan cum Hypothecation cum Guarantee Agreements [loan agreements] had expressly provided that the courts mentioned in Schedule 1 to the agreements would have exclusive jurisdiction over any dispute arising in connection with the loan agreements or in any other transaction documents. Schedule 1 to the agreements had mentioned the jurisdiction of the court as Gurgaon.

5. It is relevant to refer to some of the averments made in the petition filed by the appellant company under Section 9 of the A&C Act. We consider it apposite to set out the following extracts from the said petition:

"13. It is submitted that, the Respondents herein had undertaken to repay the Loan, along with the interest accruing thereon, in terms of the Agreement. The Loan was required to be repaid on stipulated da