HON’BLE SRI JUSTICE NAGESH BHEEMAPAKA

WRIT PETITION No. 37518 OF 2022

O R D E R:

Petitioner No.1 is a partnership firm involved in the

business of real estate and construction; petitioners 2 and 3 are partners of the said firm. Petitioners are the owners of vehicle bearing Registration No. TS 07 UE 3600 (subject vehicle) having purchased the same in 2016. Petitioner No.1 purchased through a loan facility given by Respondent No. 3 – Axis Bank Limited. They had repaid the said mount and the loan account was declared ‘closed’. Further, in the course of business, on assessing the repayment history of petitioner No.1, Respondent No.3 offered / granted additional loan facility. Petitioners 2 and 3 are co-borrowers in respect of the operational expenses incurred by Petitioner No.1. Pursuant to the additional loan facility, the subject vehicle was hypothecated with Respondent

No.3.

1.1. Petitioner No.1 due to outbreak of COVID-19 pandemic, was forced to shut their business operations and could only resume the business in September 2021. They had paid EMI up to February 2020 only pursuant to the additional loan facility availed vide Agreement dated 25.06.2019. Due to

non-payment of the loan amount, disputes arose between Respondent No.3 and Petitioner No.1. Therefore, Respondent No.3 - bank initiated arbitration proceedings and in respect of the same, Sri K.C. Ramesh, Advocate was appointed as the sole arbitrator for adjudication of the claims between petitioners and Respondent No.3.

1.2. On 18.09.2021, the sole Arbitrator passed an ex parte interim order, upon an Interlocutory Application filedl by Respondent No.3, permitting Respondent No.3 bank to take possession of the subject vehicle and keep the same in their custody until further orders. The relevant portion of the interim order is extracted hereunder:

“ 6. The Tribunal has also carefully gone through the provisions under Section 17 of the Arbitration and Conciliation (Amendment) Act, 2015, which reads as follows:

“ 17(1) : A party may during the arbitral proceedings or at any time after the making of the arbitral award but before it is enclosed in accordance with Section 36, 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 arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence.

(d) Interim injunction or the appointment of a receiver;

(e) Such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient.

And the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of and in relation to any proceedings before it.

7. Under Section 17 of the Arbitration and Conciliation (Amendment) Act, 2015, the Arbitral Tribunal shall have the same power as the Court has for the purpose of and in relation to any proceeding before it for granting interim measure of preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement and such other interim measure of protection as may appear to the Arbitral Tribunal to be just and convenient.

8. In the case on hand, the subject mater of the dispute is that the claimant has extended financial facility to the respondents for the purchase of the vehic