M/S. SAKTHI FINANCE LIMITED Vs. SHANAVAS

JUDGEMENT

(1.) Section 17 of the Arbitration and Conciliation Act, 1996 (herein after referred to as "the Act"), enables the Arbitrator to pass interim orders. Section 17(2) In terms of sub Section (2) of Section 17 such orders are deemed to be orders of the court and are enforceable under the Code of Civil Procedure, 1908, as if it was passed by the court. Sub Section (2) of Section 17 was introduced by Act 3 of 2016 with effect from 23.10.2015. The sub section added on the recommendation of the Law Commission, to provide teeth to the interim orders of the Arbitral Tribunal. Most often, interim orders are passed by the Arbitral Tribunal under Section 17 to secure the amount in dispute in the arbitration. When the only security available is a movable property, issuance of notice prior to enforcement of the order under Section 17 would enable removal of the security by the opposite OP(C).No. 3044 of 2018 party(see HDFC Bank Ltd.(M/s.) v. Manaf Arakkaveettil (2018(4) KHC 84)).

(2.) In the instant case an interim order was passed by the Arbitral Tribunal permitting the petitioner to repossess the vehicle, the purchase for which the loan was availed by the respondent. The Tribunal further directed the petitioner to keep the vehicle in safe custody until further orders.

(3.) Seeking enforcement of the order in terms of Section 17(2) of the Act, the petitioner approached the District Court. The court directed issuance of notice to the respondents, on the application. Pointing out that the issuance of notice will aid the respondent to remove the vehicle and would thus defeat the very purpose of the order under Section 17, the petitioner filed an application seeking review of the order directing issuance of notice. The learned District Judge dismissed the application holding thus: OP(C).No. 3044 of 2018 "Nothing is mentioned in the award about the amount of loan, defaulted instalments, and the present due as well. Having gone through the original petition also, I do not find anything about the amount of loan borrowed, nature of vehicle to which the loan was granted and defaulted instalment, as well as present due from the respondents......True, the petitioner is entitled to get necessary orders to protect the security involved in the Arbitral dispute, but at the same time, it is upon the petitioner to satisfy the Court that the respondents are willful defaulters and the seizure of the vehicle from their possession is highly necessary."