IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 4TH FEBRUARY 2010 / 15TH MAGHA 1931 Arb.A.No. 54 of 2009(D) --------------------------- OPARB.475/2007 of II ADDL.DISTRICT COURT,ERNAKULAM .................... APPELLANT/PETITIONER ---------------------------- HDFC BANK LTD., MATHER SQUARE, OPP: NORTH RAILWAY STATION, ERNAKULAM, COCHIN-18, REP. BY AUTHORIZED SIGNATORY, MR.SUMITH P.PRASAD, S/O. PARTHASARATHY PRASAD. BY ADV. SRI.SOORAJ T.ELENJICKAL RESPONDENT(S): RESPONDENT ----------------------------------- M/S. KAIRALI FOODS, VATHAKKAD, THURAVOOR, ANGAMALY, COCHIN, REP. BY ITS MANAGING PARTNER, MR.SIJU VARGHESE. ADV. SRI.PRAMOD JAIJI SRI.MANSOOR ALI THIS ARBITRATION APPEAL HAVING COME UP FOR ADMISSION ON 04/02/2010, A/W ARB.APPL.55/09, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PIUS C. KURIAKOSE & C. K. ABDUL REHIM, JJ. ------------------------------------------------ Arb. Appeal Nos.54 & 55 of 2009 ------------------------------------------------ Dated this the 4th day of February, 2010 JUDGMENT Pius C. Kuriakose, J Since it is an identical issue that is coming up for decision in both these appeals, we are deciding these appeals by a common judgment. The appellants filed Arbitration O.P.s before the District Court invoking section 9 of the Arbitration and Conciliation Act, 1996 for interim relief pending finalisation of the arbitration proceedings including proceedings for the prospective award which may be passed in their favour by the Arbitral Tribunal. It was attachment of immovable property that was sought for. The learned District Arb. Appeal Nos.54 & 55 of 2009 -2- Judge passed an interim order of attachment of the properties as sought for by the appellants. On noticing the order of attachment, the respondents entered appearance before the District Court and filed application seeking release of attachment offering to furnish security by way of fixed deposit receipts. Accepting the above security offered by the respondents, the learned District Judge would vacate the order of attachment and communicate the order vacating the attachment to the Sub Registrar concerned. By the impugned judgments, the learned District Judge has now dismissed the original petition filed by the appellants on the reason that it is only interim relief that can be granted under section 9 of the Act and that the said relief having been granted and the order of Arb. Appeal Nos.54 & 55 of 2009 -3- attachment granted having been lifted, the court ceased to have jurisdiction to pass any more orders. Thus, taking the view that the O.P. has become infructuous, the learned Judge dismissed the O.P. The learned Judge has referred to the judgment of this Court in Sudha Beevi v. State of Kerala (2004(2) KLT 746) and held that inasmuch as the vehicle which is subject matter of the hire purchase agreement has been repossessed, the hire purchase agreement has become terminated. Accordingly, the O.P was dismissed. Under the order which is impugned in Arb. Appeal No.55/09, the learned District Judge has specifically directed return of Fixed Deposit receipt produced by the respondent. In the order which is impugned in Arb. Appeal No.54/09, no such specific direction is Arb. Appeal Nos.54 & 55 of 2009 -4- issued. In these appeals several grounds have been raised assailing the impugned judgments and we have heard submissions of Smt.P.A.Sulekha, the learned counsel for the appellants and those of Sri.Mansoor Ali, the learned counsel for the respondents. 2. Smt.Sulekha submitted that the judgment in Sudha Beevi's case (cited supra) cannot have any application in this case. Here, the issue is whether the interim relief which has been granted by the court under Section-9 is to continue till such time as the prospective award to be passed by the Arbitrator if in favour of the appellant is implemented or not. According to the learned counsel, the learned District Judge after having granted the interim relief has virtually taken away Arb. Appeal Nos.54 & 55 of 2009 -5- that relief without any justifiable reason. What the learned Judge should have done was to keep the Fixed Deposit receipt as security till such time as the award passed by the Arbitral Tribunal in favour of the applicant is finally enforced. In the instant case, it cannot be said that the award has become final since application under Section 34 for setting aside the award has been filed by the respondents. Sri.Mansoor Ali, the learned counsel for the respondents would place reliance on the judgment in Sudha Beevi's case (cited supra). According to him, the vehicle which was subject matter of the hypothication agreement in which only the arbitration clause was contained is repossessed. Now that vehicle has been re- possessed and sold and the proceeds realised by Arb. Appeal Nos.54 & 55 of 2009 -6- the appellant, it is idle for the appellant to contend that the hypothecation agreement survives. The judgment in Sudha's case (cited supra) squarely applies and there is no infirmity about the judgment of the learned District Judge. We have very anxiously considered the submissions addressed before us. Section 9 of the Arbitration and Conciliation Act reads as follows:- “Interim measures, etc. by Court. - A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court -” S.36 is also relevant and we quote section 36 as follows:- Enforcement. - Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under Arb. Appeal Nos.54 & 55 of 2009 -7- the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court. 3. Admittedly an application for setting aside the award has been filed by the respondents. We are of the firm view that in order that the interim relief which was granted by the learned District Judge to the appellants becomes meaningful and effective, it was absolutely necessary that the learned District Judge retained the security furnished by the respondents as security for the enforcement of the award presently passed by the Arbitrator. We are therefore, of the view that the impugned judgment should be modified to the extent of providing that the fixed deposit receipts furnished by the respondents as security in the context of the attachment sought for by the Arb. Appeal Nos.54 & 55 of 2009 -8- appellants should be retained by the court till such time as the award passed by the Arbitrator in favour of the appellant is enforced or at least till such time as the application submitted by the respondents under Section 34 are finally disposed of. It is accordingly ordered that the Fixed Deposit receipts produced by the respondents as security be retained by the court till the application submitted by the respondents u/s 34 is finally disposed of. PIUS C. KURIAKOSE JUDGE C. K. ABDUL REHIM JUDGE kns/-