1. Petition under Section 9, Arbitration and Conciliation Act, 1996 seeking interim direction to handover title deeds before arbitral proceedings. (Para 1 , 2 , 3 , 4 , 13 , 14 , 15 , 17 , 18 , 19 , 20 )
Back
Next 
2026 Supreme(Online)(Bom) 118
HIGH COURT OF BOMBAY
HON'BLE SHRI JUSTICE SANDEEP V. MARNE
Aditya Birla Housing Finance Limited – Appellant
Versus
Axis Bank Ltd – Respondent
CARBP/104/2025
Advocates:
For the Appellants/Petitioners: Megha Gupta, Lavanta Chityala, Pranjali Khemnar
For the Respondents: Cyrus Ardeshir, Rushil Mathur, Aadil Parsurampura, Yash Pitroda, Amrita Narrajan, Smit Solanki, Sarfaraz Shaikh, Rishi Kapoor, Ankur G.
For the Appellants/Petitioners: Megha Gupta, Lavanta Chityala, Pranjali Khemnar
For the Respondents: Cyrus Ardeshir, Rushil Mathur, Aadil Parsurampura, Yash Pitroda, Amrita Narrajan, Smit Solanki, Sarfaraz Shaikh, Rishi Kapoor, Ankur G.
Section 9 of the Arbitration and Conciliation Act, 1996 empowers courts to grant interim measures against non-signatories/third parties to preserve the subject matter of arbitration and prevent irreparable loss or frustration of the arbitral process.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 9 - Interim measures before commencement of arbitral proceedings - Power of Court to direct a third party to preserve the subject matter of arbitration - Power to issue interim orders against non-signatories to an arbitration agreement to aid the proceedings and prevent frustration of the subject matter (Paras 24-25).
(B) Arbitration and Conciliation Act, 1996 - Section 9 - Scope of relief against third parties - While relief directed against a third party should be exercised sparingly and under exceptional circumstances, it is permissible if the order is essential for the preservation of the subject matter of arbitration (Para 25).
(C) SARFAESI Act, 2002 - Section 11 - Resolution of disputes relating to priority of claims over security between financial institutions (Paras 7, 11, 23).
(D) Banking Law - Conduct of a Bank - Where a bank is aware of a loan takeover by another financial institution and a request for debit freeze is made, allowing the subsequent revival of the account and further disbursements to defaulting borrowers is not a bona fide act of a prudent banker and justifies interim protection of the security (Paras 20-22).
Facts of the case:
Borrowers had availed credit facilities from a bank, securing them by mortgaging a property. The borrowers subsequently approached a financial institution for a larger loan to take over the bank's facilities. The financial institution transferred the required amounts to the bank. However, a small balance remained in an overdraft account, which was subject to a debit freeze. Despite being informed that the loans were taken over and that the borrowers were defaulting, the bank lifted the debit freeze at the borrowers' request and permitted further withdrawals, while refusing to release the title deeds of the property to the financial institution.
Findings of Court:
The bank was fully aware of the loan takeover transaction. The bank's action of lifting the debit freeze and allowing further disbursements to the borrowers, knowing they were defaulting on the new loan, was not bona fide and appeared to be in collusion with the borrowers. To prevent the property from being sold by the bank or title deeds being returned to the borrowers to create third-party rights, it was necessary to keep the documents in the custody of the court.
Issues: Whether interim measures under Section 9 of the Arbitration Act can be directed against a third-party bank to preserve title deeds of a mortgaged property and whether such an order is warranted despite the bank not being a party to the arbitration agreement.
Ratio Decidendi: The power under Section 9 of the Arbitration Act allows courts to grant interim relief against third parties to preserve the subject matter of arbitration. If the court is convinced that a third party's actions might frustrate the potential outcome of the arbitration or result in irreparable loss—particularly where the third party's conduct is found to be mala fide—the court can direct interim measures, such as the deposit of title deeds with the registry, to protect the security.
Result: Petition allowed; title deeds pertaining to the subject property shall continue to remain deposited with the Registry of the Court during pendency and conclusion of arbitral proceedings.
Legal Category Hierarchy
-
practice and procedure
- interim measures
- arbitration
- evidence
- banking and finance
- statutory interpretation
Table of Contents
2. Petitioner claimed loan takeover; Respondent argued no privity of contract, no security created in petitioner's favour, and no arbitration agreement. (Para 6 , 7 , 8 , 9 , 10 , 11 )
3. Prima facie, Axis Bank had knowledge of loan transfer and colluded with borrowers, misusing title deeds to re-operationalize OD account. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 )
4. Interim measures under Section 9 can be directed against a third party to preserve subject matter of arbitration, exercised sparingly. (Para 25 )
5. Title deeds to remain deposited with court registry during arbitral proceedings; issue of arbitrability with bank left open. (Para 29 , 30 )
6. Can interim measures under Section 9 of the Arbitration and Conciliation Act be granted against a third party not a signatory to the arbitration agreement?
Yes, but sparingly. Interim orders against a third party are permissible to preserve the subject matter of arbitration. (Para 24 , 25 )
7. What is the distinction for granting interim relief against a third party under Section 9?
Relief against a party to arbitration that incidentally affects a third party is ordinarily acceptable; relief directly against a third party is exercised sparingly. (Para 25 )
8. Does a bank's knowledge of a loan transfer affect its obligation to return title deeds?
Yes. Prudent banking conduct requires returning deeds when fully aware of loan takeover; silence and continued lending may be prima facie mala fide. (Para 20 , 21 , 22 , 26 )
Digitally signed by NISHA SHALESH SAWANT Date: 2026.01.20 10:35:53 +0530
JUDGMENT :
1) This is a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking interim measures before commencement of arbitral proceedings. Petitioner seeks a direction against Respondent No.1-Axis Bank to handover title deeds of the subject property to it during pendency of hearing and final disposal of arbitral proceedings between the parties.
2) Petitioner is a private limited company engaged in the business of housing finance. Respondent No.1 is a banking company doing business under the Banking Regulation Act, 1949. Respondent Nos. 2 to 5 are the borrowers, who had availed credit facilities in the form of cash credit (CC) and overdraft (OD) facility from Respondent No.1. The borrowers approached the Petitioner on 17 July 2023 for sanction of credit facilities of 4,70,05,000/- against security. The loan was applied for the purpose of taking over the CC and OD facilities sanctioned by Respondent No.1 to the borrowers. In furtherance of their application, the borrowers submitted copies of foreclosure letters and statement of accounts issued by Respondent No.1 relating to CC and OD facilities. Petitioner sanctioned loan of Rs.4,70,00,000/- in favour of the borrowers on 31 August 2023. According to the Petitioner, the loan was sanctioned against mortgage of the property bearing Plot No. 25, Survey No.20, Dwarka Service Centre Marble Market, South West Delhi, Delhi owned by Mr. Surendra Kumar Agarwal (subject property). It appears that the subject property was also mortgaged with Respondent No.1 for CC and OD facilities and accordingly, title deeds of the property were in possession of Respondent No.1-Bank.
3) On 4 September 2023, Petitioner and borrowers entered into loan agreement, which contained arbitration clause. On 12 September 2023, the borrowers also executed irrevocable Power of Attorney in favour of Petitioner which, inter alia authorized the Petitioner to collect the title documents of subject property from Respondent No.1. At the request of the borrowers, Petitioner transferred amount of Rs.17,05,144/- in CC account of Axis Bank of Respondent No.1 and Rs.96,25,003/- in OD account of Respondent No.5. On 13 September 2023, Respondent No.5 issued request for debit freeze in respect of the OD facilities. According to the Petitioner, despite disbursal of the aforesaid amounts, Respondent No.1 failed to release the title deeds. Petitioner therefore requested Respondent No.1 by letter dated 10 January 2024 to hand over the title deeds of the subject property. On 8 February 2024, the borrowers' accounts were classified into Non-Performing Assets (NPA) as per the RBI guidelines. On 19 June 2024, Petitioner issued notice to Respondent No.1 for handing over title deeds of the subject property. On 15 July 2024, Respondent No.1 replied to the Petitioner inter alia contending that sum of Rs.88,90,136/- was pending in relation to OD facility in the accounts of the borrowers. Petitioner sent letter dated 27 August 2024 to Respondent No.1 contending that all the outstanding dues in CC and OD facility were duly paid by the Petitioner.
4) In the above background, disputes and differences have arisen between the parties. Petitioner intends to invoke arbitration clause against the borrowers. However, for preservation of subject matter of arbitration, the Petitioner has filed the present petition seeking relief essentially against Respondent No.1 in the following terms:
a. That pending the hearing and final disposal of arbitration proceedings and execution of any award that may be passed therein, this Hon'ble Court may be pleased to direct Respondent No. 1 to handover the Title Deeds of the Subject Property to the Petitioner;
b. For costs of this Petition; and
c. For such other further reliefs and orders as the facts and circumstances of the case may require, and this Hon'ble Court may deem appropriate.
5) On 28 Marc
