Arbitrators lack authority to enforce attachment orders without civil court validation.

JUDGMENT

(Dated this the 17^th day of December, 2025)

The petitioners had availed a vehicle loan by hypothecation-cum-

loan agreement from the 3^rd respondent. When the repayment became irregular, the 3^rd respondent instituted Arbitration Proceedings against the petitioners. Along with the arbitration claim petition, the 3^rd respondent filed a petition for the attachment of property belonging to the 1^st petitioner. The Arbitrator allowed the interim relief for the attachment of the petition schedule property of the 1^st petitioner as per Ext.P1 order and reported the same to the revenue authorities. Consequently, the attachment was effected in the encumbrance as F67/2012 on 12.11.2012.

2. During the course of the arbitration proceedings, the parties reached an agreement and the matter was settled and the amount was paid. The 3^rd respondent filed a petition to that effect before the arbitrator and the arbitration case was accordingly settled. As per Ext.P5 order in I.A.No 1 of 2025 in A.C.No 36 of 2025 passed by the Sole Arbitrator dated 18.07.2025, the attachment was lifted. When Ext.P5 was communicated by the arbitrator to the respondents 1 and 2, they took the stand that, unless an order from a court is produced lifting the attachment, an entry to that effect cannot be made in the books of the Registry.

3. Aggrieved by the same, present writ petition is filed by the petitioner seeking a writ of mandamus or any other appropriate writ, order, or direction to the respondents 1 and 2 to remove the entry of attachment made pursuant to Ext. P1 order in I.A.No 38 of 2012 in A.C.No 54 of 2012 passed by the Sole Arbitrator dated 02.11.2012 in the registration and revenue records of the petitioners.

4. The learned counsel for the petitioner relies on a judgment of a Division Bench of this Court in M/s.Shriram Transport Finance Co. Ltd. v. Saneesha M.S and Ors. [2024 SCC online Ker 5233] wherein, it was held as follows:

“10. The question is what is the remedy then available for a third party who is aggrieved by an order of attachment. So long as the order is not enforced, the same is not self workable. If it is enforced through a civil court, necessarily, the third party, who is aggrieved can raise his objection against the enforcement or even after the enforcement, the third party can very well raise an objection as against the enforcement by claiming that the property belongs to him. The Code of Civil Procedure provides necessary mechanism for the third party to raise a claim or title over the property. We are of the view that the writ petitioner -Saneesha M S, is not deprived of any remedy as the Code of Civil Procedure safeguard such interest of the third parties. The law is very clear that the tribunal cannot exercise sovereign function of enforcement and such power is vested with civil court. Therefore, writ petitioner - Saneesha M S can very well resist the enforcement or can raise a claim before the civil court when an order is sought to be enforced. So long as it is not enforced, no right of the writ petitioner - Saneesha M S is deprived of to enjoy the property in accordance with law, if the writ petitioner - Saneesha M S is the real owner of the property. As we noted earlier, we have not decided the maintainability of such challenge in appeal before civil court under Section 37 of the Arbitration and Conciliation Act. That will have to be worked out independently as it is not for us to observe whether such appeal is maintainable or not in this proceedings.

11. On conclusion, we are of the view that the arbitral tribunal usurped the power of civil court by directly intimating the order of attachment to the Sub Registrar and the Village Officer. That direction will have to be nullified. Accordingly, we nullify the direction. The Sub Registrar or any revenue officials is not bound by any orders pas