Arbitral orders must be enforced through civil courts, as per the Arbitration and Conciliation Act, 1996.

JUDGMENT :

N. NAGARESH, J.

The petitioner is a Company promoted by the Kerala State Industries Development Corporation (KSIDC). The petitioner is involved in the business of providing financial services and carrying out equipment leasing and hire purchase finance activities.

2. The petitioner filed an Arbitration Request AR No.227/2023 for appointment of an Arbitrator for the determination of disputes between the petitioner and customer. This Court appointed Advocate K.K. Raziya as Arbitrator as per Ext.P1 judgment. The petitioner filed an application under Section 17 of the Arbitration and Conciliation Act seeking attachment of Bank accounts of the customers with respondents 2 and 3 Banks in order to secure the amount in dispute. The Arbitrator passed Ext.P2 order and directed respondents 2 and 3 Banks to attach the respective Bank accounts. Respondents 2 and 3, however, did not comply with the direction of the Arbitrator. The Banks took a stand that they will not comply with Ext.P2 order passed by the Arbitrator as the Arbitrator is not a judicial authority.

3. The petitioner states that the Banks operating under a licence of the Reserve Bank of India cannot take such untenable stand. Such disobedience will defeat the very purpose of the Arbitration and Conciliation Act. As per Section 17(2) of the Arbitration and Conciliation Act, an interim order passed by an Arbitrator is enforceable in the same manner as an order of the Court.

4. The petitioner therefore prayed to direct respondents 2 and 3 to comply with Ext.P2 interim attachment order passed by the Arbitrator appointed by this Court. The petitioner also sought to direct the 1^st respondent-RBI to issue a common direction / Circular to all Banks operating under its licence to adhere to and comply with the orders issued by Arbitrators appointed by Courts of law.

5. Standing Counsel representing the 2^nd respondent- Bank resisted the writ petition. The orders passed by an Arbitrator can be enforced only through civil courts, urged the Standing Counsel. Orders of the Arbitrator will have to be executed invoking the provisions of the Code of Civil Procedure. The writ petition is therefore without any merit and is liable to be dismissed, contended the Standing Counsel.

6. I have heard the learned counsel for the petitioner and the learned Standing Counsel representing the 2^nd respondent.

7. The argument of the petitioner is that any order or direction given by an Arbitrator appointed under the Arbitration and Conciliation Act is liable to be adhered to by the Banks as such. The Arbitrator appointed by this Court at the instance of the petitioner has passed an interim order on 12.11.2024 attaching the accounts detailed in the attachment schedule of IA No.1/2024 in AC No.227/2023. Attachment was ordered for satisfying the claim of the petitioner. The Arbitrator ordered that on intimation of the interim order to the concerned Banks, no further transaction shall be effected pertaining to the account under attachment.

8. The Arbitrator has passed Ext.P2 order in exercise of the powers conferred under Section 17 of the Arbitration and Conciliation Act, 1996. Section 17 of the Act, 1996 reads as follows:

17. Interim measures ordered by arbitral tribunal (1) A party may, during the arbitral proceedings, apply to the arbitral tribunal—

(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters, namely:—

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitratio