The main legal point established in the judgment is the importance of adhering to natural justice principles and laying down guidelines for handling applications under Section 9 of the Arbitration and Conciliation Act related to vehicle seizure.

This appeal has been filed against the order of the learned single Judge directing the appellant to hand over to the respondent the vehicle, viz., Chevrolet Tavera BS III bearing Registration No.KL-43-2829 with Engine No.31F42786 and Chassis No.MA6AB6G766HJ42343.

2.The appellant-company and the respondent-borrower entered into a loan agreement in respect of the above vehicle. The agreement provided for the resolution of dispute by arbitration. Article 11 of the agreement provides for re-possession by the company of the Asset of the company, as the vehicle is called, on occurrence of any of the events of default set out in Article 10 of the agreement and if the borrower failed to deliver the Asset, it was open to the company to enter any place where the Asset may be and to remove or take possession of the same.

3.The appellant filed Application No.1282 of 2009 for appointment of an advocate commissioner to seize and deliver the aforesaid vehicle. According to them, the respondent was due and payable a total sum of Rs.5,87,796/-under the agreement. The said amount should be paid in 36 monthly instalments. It is also alleged that there was chronic and wilful default and as on 13. 2009, a sum of Rs.2,74,689/- was due towards arrears of instalments. It is stated that they were in the process of initiating arbitration proceedings. But, since they had the right of re-possession and since they feared that the vehicle would be subject to constant depreciation in value, wear and tear, the Court should appoint an advocate commissioner to seize and deliver the vehicle. An ex parte order was passed and the vehicle was seized by the learned Advocate Commissioner on 30.06.2009 at Ernakulam.

4.On 17. 2009, the learned counsel for the appellant submitted to the Court that the vehicle had been seized and the application may be closed. Only the learned Advocate Commissioner was present in Court apart from the learned counsel for the appellant. The learned counsel for the respondent was neither present nor heard. The application was closed.

5.Thereafter, the respondent filed the present application, viz., A.No.3162 of 2009, wherein he has stated that he had been paying the instalments for the two vehicles, which he had purchased on loan, but due to recession, he could not make payments. He has also stated that the appellant had filed Arbitration O.P.No. 729 of 2009 under Section 9 of the Arbitration and Conciliation Act (for brevity the Act) before the District Court, Ernakulam, against the respondent and the guarantor and prayed for an order of attachment to attach the immovable property with a direction to furnish security and I.A.No.2857 of 2009 was also filed for interim attachment, which the District Court, Ernakulam had granted.

6.According to the learned counsel for the respondent, thereafter the respondent approached the regional office of the appellant at Cochin and by negotiation, arrived at a sum of Rs.3,20,000/- as one time settlement. But, even before the cheque could be furnished, the vehicle, viz., Chevrolet Tavera, which is the subject matter of this appeal, had been seized and only thereafter, he came to know of the order passed in the above application. The respondent contended that this Court had no territorial jurisdiction and that the appellant had suppressed the filing of the application under section 9 of the Act and also the order of attachment obtained from the District Court, Ernakulam. In these circumstances, he prayed for release of the vehicle.

7.In the application, a counter was filed by the appellant stating that the cause of action had not entirely arisen at Kerala and that it was open to them to file the application under Section 9 before this Court. The respondent was not appearing even before the Arbitrator, who had by then been appointed and who had entered upon the reference. The respondents intention was only to drag on the matter. The learned counsel, therefore, prayed that some condition may be i