At, High Court of Kerala
By, THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI
For the Petitioners: K.C. Eldho, M. Mallenathan, K. Sindhu Elias, Krishna Santhosh, Haritha Jayan, Advocates. For the Respondent: R1, C. Harikumar, Renjith Rajappan, Nova Sen Abraham, Advocates.
Judgment Text
1. The first petitioner availed a vehicle loan from the respondent, a finance company. The second and the third petitioners were the guarantors in the loan transaction.2. Alleging that the petitioners committed default in repayment of the loan, the respondent recalled the loan and initiated arbitral proceedings against them.3. The respondent filed application before the arbitral tribunal for taking possession of the vehicle IEMC 121819 involved in the loan transaction. The arbitral tribunal passed an order on 03.05.2019 for taking possession of the vehicle.4. The respondent filed C.M.A(Arb.) No.389/2019 in the District Court, Thrissur under Section 17(2) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') for enforcing the O.P.(C) No.312/2020 4 aforesaid interim order passed by the arbitral tribunal.5. As per the order in I.A No. 3511/2019, the District Court appointed an advocate commissioner to take possession of the vehicle and to hand over it to the respondent. The Commissioner took possession of the vehicle and handed over the same to the respondent.6. The petitioners filed an application as I.A.No.4032/2019 (Ext.P3) before the District Court for an order granting status quo ante with regard to the vehicle.7. As per Ext.P7 order, the learned Additional District Judge dismissed Ext.P3 application.8. This original petition under Article 227 of the Constitution of India is filed by the petitioners challenging the legality and propriety of Ext.P7 order.9. Heard the learned counsel for the petitioners and also the respondent.10. Section 17(1) of the Act empowers the arbitral tribunal to pass interim orders of the nature mentioned thereunder. Section 17(2) of the Act provides that, subject to any orders O.P.(C) No.312/2020 5 passed in an appeal under Section 37, any order issued by the arbitral tribunal under Section 17 shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 in the same manner as if it were an order of the Court.11. Admittedly, the arbitral tribunal had passed an order for taking possession of the vehicle which was involved in the loan transaction. There can be no doubt with regard to the fact that it was an order passed by the arbitral tribunal under Section 17(1) of the Act.12. As per the order in I.A.No.3511/2019, the District Court appointed an advocate commissioner to take possession of the vehicle and to hand over it to the respondent. Pursuant to that order, the advocate commissioner took possession of the vehicle and handed over the same to the respondent.13. Ext.P3 application for passing an order granting status quo ante in respect of the vehicle was filed by the petitioners on two grounds, (i) possession of the vehicle was taken by using force and (ii) possession of the vehicle was taken before O.P.(C) No.312/2020 6 considering Ext.P2 application filed by the petitioners for keeping in abeyance the order passed by the court in that regard.14. The District Court, in the light of the report of the advocate commissioner, has rightly found that possession of the vehicle was taken over pursuant to the order passed by the Court, by due process of law.15. Pendency of Ext.P2 application filed by the petitioners did not render the act of taking possession of the vehicle illegal. There was no order passed by the Court to keep in abeyance the execution of the warrant issued to the advocate commissioner for taking possession of the vehicle.16. Ext.P2 application was filed by the petitioners raising dispute with regard to the amount due from them to the respondent and also contending that the order passed by the Court for seizure of the vehicle was passed without notice to them.17. Before passing an order under Section 17(2) of the Act for enforcement of the interim order of the arbitral tribunal to take possession of a vehicle, it is not mandatory or necessary to O.P.(C) No.312/2020 7 issue notice to the affected party (See HDFC Bank Limited v. Manaf : 2018 (4) KHC 84). The vehicle may be the only security and asset available to the creditor for realisation of the debt. Issuance of notice prior to taking possession would enable the debtor to remove the vehicle out of the process of law.18. The dispute raised by the debtor with regard to the amount due to the creditor cannot be adjudicated by the Court before or while passing an order under Section 17(2) of the Act. The Court has also no power under Section 17(2) of the Act to determine the validity or otherwise of the interim order passed under Section 17(1) of the Act by the arbitral tribunal (See Sakthi Finance Limited v. Shanavas : 2018 (5) KHC 739).19. What is contemplated under Section 17(2) of the Act is only enforcement of the interim orders passed by the arbitral tribunal under Section 17(1) of the Act. While exercising the jurisdiction under Section 17(2) of the Act, the court is not sitting in appeal over the correctness or otherwise of the interim order passed by the arbitral tribunal under Section 17(1) of the Act. In exercise of the power under Section 17(2) of the Act, the court O.P.(C) No.312/2020 8 is not entitled to modify or vary the orders passed or directions given under Section 17(1) of the Act by the arbitral tribunal (See HDB Financial Services Limited v. Kings Baker Private Limited : 2019 (1) KHC 814 : 2019 (1) KLT 784).20. The prayer made by the petitioners in Ext.P3 application was to pass an order restoring status quo ante in respect of the vehicle, which would amount to restoration of the possession of the vehicle to the petitioners. Granting such an order would have the effect of not merely varying or altering the order passed by the arbitral tribunal under Section 17(1) of the Act but really nullifying it. Therefore, learned Additional District Judge has rightly dismissed Ext.P3 application.21. An order passed under Section 17(1) of the Act by the arbitral tribunal is appealable under Section 37(2)(b) of the Act. Enforcement of an order of the arbitarl tribunal by the Court under Section 17(2) of the Act is subject to any orders pass
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ed in an appeal under Section 37 of the Act.22. In the instant case, the petitioners did not file any appeal against the order passed by the arbitral tribunal and it O.P.(C) No.312/2020 9 remained unchallenged. The order was enforceable under Section 17(2) of the Act. The lower court rightly refused to restore possession of the vehicle to the petitioners. There is no jurisdictional error committed by the lower court. In such circumstances, there is no sufficient ground to invoke the supervisory jurisdiction of this Court under Article 227 of the Constitution and to interfere with Ext.P7 order order passed by the lower court.Consequently, the original petition is dismissed.