The main legal point established in the judgment is that when the debt is sufficiently secured by way of mortgage, the invocation of garnishee proceedings under Section 9 of the Arbitration and Conciliation Act is not justified.

R.BANUMATHI,J

1. Being aggrieved by dismissal of application [A.No.5363 of 2010] filed under Section 9 of Arbitration and Conciliation Act and declining to grant pro-order prohibiting the Garnishee/2nd Respondent from making payment to the 1st Respondent-Mir Ali, Appellant-M/s.Sundaram BNP Paribas Home Finance Limited has filed this appeal.

2. Brief facts are that Appellant sanctioned housing loan to the 1st Respondent for a sum of Rs.44 lakhs which is repayable with variable interest at 12.75% per annum. 1st Respondent had entered into loan agreement on 30.01.2010. To secure the loan, 1st Respondent had also executed promissory note dated 30.01.2010 for a sum of Rs.44 lakhs. One Tasleem Fatima joined as co-borrower of the loan. A mortgage deed was also executed mortgaging the house property purchased. Case of Appellant is that 1st Respondent had committed default in payment of instalments for more than 90 days. Therefore, the said loan account of the 1st Respondent was declared as Non-Performing loan on 30.06.2010. Further case of Appellant is that as on 20.09.2010, a sum of Rs.46,83,533/-was due and liable to be paid by the 1st Respondent and the co-borrower under the loan agreement.

3. Under Article 11 of the said Loan Agreement [30.01.2010], if any dispute, difference or claim arise against the 1st Respondent under the said agreement, whether during its subsistence or thereafter, the same shall be settled by Arbitration in accordance with the Arbitration and Conciliation Act. Arbitration proceedings was also commenced and one Mr.Inbavijayan, Advocate has been appointed as an Arbitrator.

4. Appellant had also initiated proceedings under Securitization Act by issuing possession notice under Section 13(4) of SARFAESI Act. Stating that Appellants claim needs to be secured till the recovery of the amount, Appellant has filed application under Section 9(ii)(b)(d)&(e) of Arbitration and Conciliation Act for issuing prohibitory order prohibiting the 2nd Respondent-Garnishee/employer of 1st Respondent from making any payment to the extent of the claim amount of Rs.46,83,533/-.

5. Resisting the application, 1st Respondent has filed counter stating that Appellant had issued possession notice under Section 13(4) of SARFAESI Act read with Rule 8 (1&2) of Security Interest (Enforcement) Rules, 2002 and had also taken symbolic possession of the said property and while so, Appellants action in filing application and securing the stay of payment of the entire salary of the 1st Respondent is illegal, fraudulent, and uncalled for. 1st Respondent has also averred that Appellant has suppressed the material fact of having taken symbolic possession of the property which is security for the loan as early as on 27.09.2010 and therefore, prayed for dismissal of the application.

6. Upon consideration of rival contentions, the learned Judge dismissed the application filed under Section 9 of Arbitration and Conciliation Act holding that the property was already mortgaged to the Appellant and steps had been taken under SARFAESI Act and when the loan amount is secured by way of immovable property, Appellant must take efforts only to sell the mortgaged property, instead of rushing to the Court by filing Section 9 application. The learned Judge further held that the 2nd Respondent-employer of 1st Respondent cannot be directed to withhold the huge amount of Rs.46,83,533/-from the monthly salary of 1st Respondent.

7. Challenging the impugned order, Ms.B.Rekha, learned counsel for Appellant has contended that even though the Appellant had initiated proceedings under Securitization Act, Appellant has every right to proceed against the 1st Respondent under Section 9 of Arbitration and Conciliation Act. It was further submitted that Appellants claim need to be secured till the recovery of the total amount due under the said loan from the 1st Respondent and under Section 9(ii)(b)(d)&(e) of Arbitration and Conciliation Act, the High Court is empowe