Hari Kumar v. Shriram Transport Finance Company Ltd. & Sajeev

**C.R.** **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** **&** **THE HONOURABLE MRS. JUSTICE SHIRCY V.** **WEDNESDAY, THE 24TH DAY OF JANUARY 2018 / 4TH MAGHA, 1939** **Arb.A.No. 1 of 2018** **AGAINST THE ORDER IN IA 2351/2017 IN OP(ARB)NO. 398/2017 OF DISTRICT COURT, THIRUVANANTHAPURAM** **APPELLANT/(1ST COUNTER PETITIONER IN THE COURT BELOW)** **HARI KUMAR** **KRISHNA NILAYAM, MARADI, KARODE P.O., NEYYATTINKARA, THIRUVANANTHAPURAM - 695 506.** **BY ADVS.SRI.V.G.ARUN (K/795/2004) SMT.INDULEKHA JOSEPH SRI.NEERAJ NARAYAN** **RESPONDENT(S)/(1ST RESPONDENT HEREIN IS THE PETITIONER AND 2ND RESPONDENT HEREIN IS THE 2ND COUNTER PETITIONER IN THE COURT BELOW):** **1. M/S.SHRIRAM TRANSPORT FINANCE COMPANY LTD BRANCH OFFICE AT 1ST FLOOR, S.N.COMPLEX, N.H. ROAD, NEYYATTINKARA P.O., THIRUVANANTHAPURAM, REPRESENTED BY ITS AUTHORISED OFFICER, KARTHIKEYAN.K, AGED 35 YEARS, S/O. KUMARASWAMY CHETTIYAR.** ## **2. SAJEEV,** **K.V. SADANAM, CHERUKUZHIKKARA, KARODE, NEYYATTINKARA - 695 506.** **BY ADV. C. HARIKUMAR** **THIS ARBITRATION APPEALS HAVING COME UP FOR ADMISSION ON 24-01-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **C:R:** ## **C.K. ABDUL REHIM & SHIRCY V.,JJ.** ## **============================== Arbitration Appeal No. 1 of 2018** ## **================================= Dated this the 24[th] day of January, 2018 JUDGMENT** ## **C.K. Abdul Rehim, J.** An interim order passed by the District Court, Thiruvananthapuram in I.A.No.2351/2017 in O.P. (Arb)No.398/2017 is under challenge at the instance of the 1[st] respondent before the court below. The 1[st] respondent herein had filed an original petition under Section 9 of the Arbitration and Conciliation Act seeking for appointment of an Advocate Receiver for taking possession of the vehicle bearing Registration No. KL-58-D-2979, which is allegedly hypothecated to the 1[st] respondent herein and to entrust that vehicle to them or in the alternative to pass appropriate directions for securing the claim amount of Rs.4,21,349/-, which is allegedly due from the appellant herein. Along with the original petition, the 1[st] ARBA NO. 1/2018 2 respondent had filed I.A.No.2351/2017 seeking for appointment of an Advocate Receiver for taking possession of the vehicle and to entrust the same to them, in accordance with law or on the alternative to issue appropriate direction for securing the claim amount. By virtue of the impugned order passed on 31.8.2017, the District Court had appointed an Advocate Commissioner for taking possession of the vehicle. The appellant is challenging the said order on various grounds. 2. Heard; counsel for the appellant and counsel appearing for the 1[st] respondent. Since the order proposed to be passed in this appeal is not going to affect the 2[nd] respondent, we are inclined to dispose of the appeal at the stage of the admission itself, without issuing notice to the 2[nd] respondent. 3. Learned counsel for the appellant contended that, the court below is lacking power to issue an order in the nature of the impugned one. It is further pointed out that, based on the impugned order the District Judge had issued a direction to the Advocate Commissioner to repossess the vehicle from the appellant and to handover the same to the 1[st] respondent with ARBA NO. 1/2018 3 the assistance of the local police station, if necessary. A copy of the order issued by the District Judge to the Advocate Commissioner is produced for our perusal. It is specifically stated therein that the Commissioner is directed to repossess the vehicle and to handover the same to the petitioner in the application, with the assistance of local police station, if necessary. 4. The above appeal is resisted by the learned counsel appearing for the 1[st] respondent contending that, the appeal itself is not maintainable. It is further contended that the 1[st] respondent was entitled to repossess the vehicle and to sell it, in accordance with the terms of the hypothecation agreement executed between the parties and therefore the District Court was fully justified in issuing the order impugned herein. 5. At the first instance we may decide the question regarding maintainability of this appeal. Contention of the 1[st] respondent is that, an appeal under Section 37 of the Act is maintainable only against a final order issued under Section 9 of the Act. In support of such a contention learned counsel had ARBA NO. 1/2018 4 cited a decision of the High Court of Karnataka reported as **Symphony Services Corp.(India)Pvt.Ltd. v. Sudip Bhattacharjee [2008(1)KarLJ 24]** . It is held therein that an appeal under Section 37 of the Act is maintainable against an order granting or refusing any interim measure under Section 9 of the Act. The nomenclature or usage of the word 'granting' under Section 9 of the Act would necessarily mean only the final adjudication of an application under section 9 of the Act, is the finding. We are in respectful disagreement with the above proposition. It is true that Section 37 provides appeals from original decrees of the court passing any order granting or refusing to grant any measure under Section 9. The question is, whether an interim order passed in an original petition filed under Section 9 is outside the purview of “any measure under section 9” of the Act. It is trite law by this time that any order passed by the court under section 9 of the Act, whether it is final or interim, is only in the nature of an interim measure. When the court passes any order of interim measure under section 9, such order cannot be considered as one passed outside the purview of ARBA NO. 1/2018 5 Section 9, because even the final order under section 9 is only in the nature of an interim measure. Hence we hold that, the above appeal filed against an interim order is sustainable. 6. One of the contention raised by the counsel for the appellant is that, the order passed by the court below appointing the Advocate Commissioner to take possession of the vehicle, with the specific direction to handover the same to the 1[st] respondent, is outside the ambit and scope of section 9 of the Act. It is contended that the power conferred under section 9(i) (ii)(a) is only for preservation or interim custody or sale of any goods, which are the subject matter of the arbitration. The contention raised is that, by handing over possession of the vehicle to one of the party to the arbitration, it goes beyond the purview of, preservation or interim custody or sale of any goods contemplated under section 9 of the Act. 7. It is to be noted that, the 1[st] respondent could invoke section 9 of the Act only if there is a bonafide intention for initiating arbitral proceedings. The power under Section 9 is to provide an interim measure to preserve or to protect any ARBA NO. 1/2018 6 property, which is the subject matter of the arbitration. In the case at hand, the vehicle in question is definitely the subject matter of the hypothecation agreement, wherein the parties had agreed for an arbitration. Therefore, a question arises as to whether the 1[st] respondent is entitled to repossess the vehicle or to sell the same. Evidently it is a matter which need to be decided by the arbitral tribunal, either in exercise of power vested under section 17 of the Act or while passing the final award. That being the position, the direction now issued by the learned District Judge to the Advocate Commissioner, permitting him to hand over possession of the vehicle to the 1[st] respondent, cannot be justified and it cannot be turned as an equitable relief which could be granted as an interim measure in exercise of the power vested under section 9 of the Act. 8. We are of the considered opinion that, interest of justice could be achieved by protecting or preserving the vehicle in question. The District Court was fully justified in issuing an Advocate commissioner to take over possession of the vehicle. But the direction issued to the Advocate Commissioner to hand ARBA NO. 1/2018 7 over the possession of the vehicle to the 1[st] respondent cannot be sustained. 9. Under the above mentioned circumstances, we are inclined to interfere with the order impugned and to issue the following directions: (i) The District Court is directed to preserve the vehicle in question, if taken over possession by the Advocate Commissioner, either by keeping it in the custody of the court itself or by granting the same under kaichit or bond to the 1[st] respondent. (ii) The District Court shall also consider releasing of the vehicle to the appellant herein, on payment of the value thereof, which will be determined by the court through appropriate methods. Such payment if any made can be directed to be adjusted against the claim in the arbitral procedures, subject to decision of the arbitral tribunal. (iii) The District Court is directed to pass appropriate orders in accordance with the directions contained hereinabove, at the earliest. ARBA NO. 1/2018 8 The appeal is disposed of by modifying the impugned order as well as the direction issued by the District Judge to the Advocate Commissioner on 20.09.2017, to the above extent. **Sd/C.K. ABDUL REHIM JUDGE** ks **Sd/SHIRCY V. JUDGE** **True copy** **P.S. To Judge**