JUDGMENT

The petitioners are aggrieved by Exhibit P5 order by which the court below injuncted the 8th respondent Bank from transferring or disbursing any amounts lying in the accounts of petitioners 1 and 2 and directed to maintain status quo with respect to the accounts until further orders. The essential facts are as under;

The 1st petitioner and respondents 1 and 2 were partners of a firm by name ‘MCEES Trading’. The firm was doing the business of trading and servicing of generators and other allied products. There arose some dispute among the partners and the 1st respondent issued notice dissolving the partnership and thereafter filed CMA. (Arb).No.766 of 2020 before the Principal Sub Court, Ernakulam seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act’). The CMA (Arb) was dismissed by the Sub Court and the 1st respondent preferred Arbitration Appeal No.54 of 2021 before the High Court. In the appeal this Court passed an interim order directing parties to maintain status quo with respect to the accounts maintained by the firm. The interim order was later modified permitting the respective Banks to receive the inward remittances and credits from M/s.MCEES Trading by maintaining the status quo order issued. Later, by judgment dated 5.3.2021, the Arbitration Appeal was allowed and an ad interim order of injunction passed under Section 9(1) of the Act restraining M/s.MCEES Trading, its partners and agents or persons acting under them from alienating, encumbering and dealing with the assets of the firm in any manner prejudicial to the interest of the appellant till arbitration proceedings are initiated before an Arbitrator appointed by the court. Being aggrieved by the appellate court's refusal to freeze the accounts of the partnership firm, the 1st respondent preferred Special Leave Petition before the Honourable Supreme Court and obtained an interim order directing that none of the parties should operate the bank account of the firm until the appointment of an Arbitrator. Thereafter, as per the order dated 24.6.2011 in AR.No.111 of 2020, this Court appointed Justice (Rtd.) Thomas P.Joseph as the sole Arbitrator.

2. The Arbitral Tribunal held its first sitting on 9.7.2021 and adjourned the matter to 14.7.2021 directing the claimant to file statement of claim and interlocutory application if any by 13.7.2021. Accordingly, the statement of claim and I.A.No.1 of 2021, seeking to extend the operation of the orders issued by the High Court and the Honourable Supreme Court, freezing the bank accounts of MCEES Trading till final adjudication and disposal of the arbitration claim, were filed on 13.7.2021. The interlocutory application was heard by the Arbitral Tribunal on 14.7.2021 and order pronounced on 15.7.2021, directing the parties not to operate the bank accounts of MCEES Trading until final adjudication of the dispute.

3. In the meanwhile, on 11.7.2021, the 1st respondent approached the Principal Sub Court under Section 9 of the Act by filing CMA.(Arb).No.321 of 2021. It was alleged that the petitioners had constituted a benami firm (2nd petitioner herein) and had syphoned off the funds of MCEES Trading, which fact had come to the notice of the 1st respondent only after 9.7.2021. The 1st respondent apprehended that if he waits till 14.7.2021 for moving the Arbitral Tribunal for interim relief, the petitioners may alienate the remaining dealership and distribution rights of MCEES Trading to the 2nd petitioner firm and will withdraw the syphoned off amounts from their Bank accounts. The 1st respondent therefore sought intervention of the court under Section 9(1). Along with the appeal, the petitioner moved I.A.No.2 of 2021 praying for an interim injunction against operating the bank accounts of petitioners 1 and 2 and to freeze the accounts. By Exhibit P5, the prayer for injunction and freezing of accounts was granted and the CMA (Arb) posted for hearing to 12.8.2021.

4. Sri.C.