Kerala High Court
M/S. Sakthi Finance Limited vs Shanavas on 29 November, 2018
Author: Sathish Ninan
Bench: Sathish Ninan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SATHISH NINAN
THURSDAY ,THE 29TH DAY OF NOVEMBER 2018 / 8TH AGRAHAYANA, 1940
OP(C).No. 3044 of 2018
AGAINST I.A No.686/2018 IN OP(ARB) 36/2018 of ADDL. DISTRICT
COURT IV, PATHANAMTHITTA
PETITIONER/S:
M/S. SAKTHI FINANCE LIMITED,
NO-62, DR.NANJAPPA ROAD, COIMBATORE-641018, REPRESENTED
BY ITS PATHANAMTHITTA BRANCH MANAGER AND POA HOLDER
SHRI.PRADEEP CHANDRAN.
BY ADV. SRI.P.PAULOCHAN ANTONY
RESPONDENTS:
1 SHANAVAS,
AGED 36 YEARS
S/O.MUTHUPILLA RAWTHER, KAVULATHIL VEEDU, ELAMANNOOR
P.O, ENATHIMANGALAM, ADOOR, PATHANAMTHITTA-691524.
2 SOUDA BEEVI,
AGED 63 YEARS, S/O.MUTHUPILLA RAWTHER, KAVULATHIL
VEEDU, ELAMANNOOR P.O, ENATHIMANGALAM, ADOOR,
PATHANAMTHITTA-691524.
3 RAMESAN,
AGED 53 YEARS, S/O. NARAYANAN, RAJESH BHAVANAM, NEDUMON
P.O., ADOOR, PATHANAMTHITTA - 691524.
THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 29.11.2018, THE COURT
ON THE SAME DAY PASSED THE FOLLOWING:
OP(C).No. 3044 of 2018
2
JUDGMENT
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 3 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 4
"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."
4. The learned District Judge has proceeded to enter into a prima opinion regarding the merits of the OP(C).No. 3044 of 2018 5 claim and has dismissed the application. The learned District Judge proceeded as if he was exercising the appellate jurisdiction under Section 37 of the Act. Under Section 17(2), the Court is only enforcing the order passed by the Tribunal under Section 17(1). Therefore, the learned District Judge was not right in holding that the petitioner has prima facie failed to satisfy the court that taking over possession of the vehicle is necessary. Such an enquiry is beyond the scope of the proceedings under Section 17(2) of the Act.
In the result, the impugned orders are set aside. The court below shall pass fresh orders in the light of the observations made above.
Sathish Ninan, Judge vdv OP(C).No. 3044 of 2018 6 APPENDIX PETITIONER'S/S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE POWER OF ATTORNEY ISSUED BY SAKTHI FINANCE LTD. HEAD OFFICE DATED 02/06/2016.
EXHIBIT P2 TRUE COPY OF THE INTERIM ORDER DATED 04/09/2018 IN IA NO.29/2018 IN ARB. NO.124 E OFF 2018 PASSED BY THE HON'BLE ARBITRAL TRIBUNAL.
EXHIBIT P3 TRUE COPY OF THE ORDER DATE 09/10/2018 OF THE HON'BLE ADDL. DISTRICT COURT-IV, PATHANAMTHITTA IA NO.686/2017 IN OP(ARB) NO.36/2018.
EXHIBIT P4 TRUE COPY OF THE ORDER IN I.A NO.709/2018 IN OP (ARB) NO.36/2018 OF THE HON'BLE ADDL. DISTRICT AND SESSIONS COURT-IV, PATHANAMTHITTA DATED 22/10/2018.