These Civil Miscellaneous Appeals have been filed challenging the interim Orders passed by the learned arbitrator to seize the vehicles.

2. Since, the dispute is said to have been arisen in hire purchase agreements, in respect of around 28 trucks, entered between the parties on 30.09.2017 and the fact that in all the appeals, similar disputes have arisen out of the hire purchase agreements, though styled as a different contract, as the matter involves one and same and similar to each other, this Court is inclined to dispose of all the appeals in a Common 2/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 Judgment.

3. These Civil Miscellaneous Appeals have been filed challenging the Order of the learned arbitrator under section 17 of the Arbitration and Conciliation Act to seize the vehicle.

4. Brief facts leading to filing of these appeals are as follows :

5. It is to be noted that the arbitration hearing date has been fixed on 09.12.2019. In all the matters, a cyclostyle order has been passed by the learned arbitrator appointing an employee of the respondent as a receiver to seize the vehicles. Pursuant to the said Order, it appears that more than 26 trucks were said to have been seized and kept idle from 02.12.2019. Challenging the interim Orders passed by the learned arbitrator, the present appeals have been filed.

Heard the learned counsel appearing for the appellant and the respondents and Mr.Sharath Chandar, Amicus Curie.

6. It is appropriate to set out the framework of Sections 9 and 17 of the Act and to examine their scope, object and purpose, for consideration of the following interim measures 4/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 A. Interim Injunctions B. Appointment of Receiver C. Seizure of Vehicles D. Power to order sale E. Furnishing Security pending arbitral proceedings

7. Ideally, the handling of arbitral disputes should resemble a relay race. In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the court; for at that stage there is no other organisation which could take steps to prevent the arbitration agreement from being ineffectual. When the arbitrators take charge they take over the baton and retain it until they have made an award. At this point, having no longer a function to fulfil, the arbitrators hand back the baton so that the court can in case of need lend its coercive powers to the enforcement of the award.

8. SECTION 9 OF THE ARBITRATION AND CONCILIATION ACT, 1996 reads as follows :

9. The purpose of this provision has been felicitously set out by Lord MustillIn Conservatory and Provisional Measures in International Arbitration, 9th Joint Colloquium, in the following words :

http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 Mr Subramanium is, therefore, right in submitting that when an application under Section 9 is filed before the commencement of the arbitral proceedings, there has to be manifest intention on the part of the applicant to take recourse to the arbitral proceedings if, at the time when the application under Section 9 is filed, the proceedings have not commenced under Section 21 of the 1996 Act. In order to give full effect to the words “before or during arbitral proceedings” occurring in Section 9 , it would not be necessary that a notice invoking the arbitration clause must be issued to the opposite party before an application under Section 9 can be filed. The issuance of a notice may, in a given case, be sufficient to establish the manifest intention to have the dispute referred to an Arbitral Tribunal. But a situation may so demand that a party may choose to apply under Section 9 for an interim measure even before issuing a notice contemplated by Section 21 of the said Act. If an application is so made, the court will first have to be satisfied that there exists a valid arbitration agreement and the applicant intends to take the dispute to arbitration. Once it is so satisfied, the court will have the jurisdiction to pass orders under Section 9 giving such interim protection as the facts and circumstances warrant. While passing such an order and 7/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 in order to ensure that effective steps are taken to commence the arbitral proceedings, the court while exercising jurisdiction under Section 9 can pass a conditional order to put the applicant to such terms as it may deem fit with a view to see that effective steps are taken by the applicant for commencing the arbitral proceedings.

10. The requirement of “manifest intention” to arbitrate was expounded further in Firm Ashok Traders v. Gurumukh Das Saluja , (2004) 3 SCC 155, wherein it was observed thus:

11. In Firm Ashok Traders case, the Supreme Court held that a party moving the Court under Section 9 must ensure that arbitral proceedings are commenced within reasonable time. However, as the expression “reasonable time” was nebulous and was prone to the vagaries of judicial interpretation, the Law Commission of India in its 246th Report on the Arbitration and Conciliation Act, 1996 recommended the insertion of a clause fixing the outer limit for commencement of arbitration proceedings. Thus, Section 9(2) was introduced vide the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) specifically setting out that where the Court passes an order for any interim measure of protection the arbitratal proceedings 9/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 shall be commenced within 90 days from the date of such order or within such time as the Court may determine.

12. Like any other interim relief, the relief sought for and granted under Section 9 can only be in aid of and as ancillary to the main relief which may be available to the party on final determination of his rights before the Arbitral Tribunal. As was pointed out by the Supreme Court in Orissa Manganese and Minerals Limited v Synergy Ispat Private Limited that an interim order, the effect of which would be tantamount to granting the final relief, cannot be passed in an application under Section 9.

13. Yet another well settled principle pointed out by the Supreme Court in Adhunik Steels Ltd. v. Orissa Manganese and Minerals Pvt. Ltd. , (2007) 7 SCC 125, relying on the observations in the Siskina case [1979] AC 210, is that the right to obtain an interim measure/order cannot constitute a cause of action. An interim measure pleaded and sought for by the applicant must be parasitic on a pre-existing cause of action and explains this in the following passage from the judgment in 10/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 the Siskina case:

The Court must weigh one need against another and determine whether the balance of convenience lies. The concept of discretion implies good faith in discharging public duties. The exercise of discretion has to be based on relevant considerations. When it is exercised by taking into extraneous considerations, such action has to be quashed. The concept of absolute, untrampled or unfettered discretion is wholly inappropriate to a public authority. When given power to exercise discretion it has to be used for public good. When it is found that no right thinking or conscientious person would have exercised the discretion in the manner it was exercised, the action 14/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 will have to be quashed. The power is to use the discretion and not abuse it. The authority granted discretion has to exercise power in a fiduciary capacity. As said earlier, Section 9 of the Act deals with interim measures.”

16. In Arvind Constructions Co. (P) Ltd. v. Kalinga Mining Corpn. , (2007) 6 SCC 798, the Hounourable Supreme Court expressed a prima facie view that the exercise of power under Section 9 would be governed by the well-settled principles governing the grant of such orders under the Code of Civil Procedure and has observed as under :

But, how far these decisions are correct, requires to be considered in an appropriate case. Suffice it to say that on 16/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 the basis of the submissions made in this case, we are not inclined to answer that question finally. But, we may indicate that we are prima facie inclined to the view that exercise of power under Section 9 of the Act must be based on well-recognised principles governing the grant of interim injunctions and other orders of interim protection or the appointment of a Receiver.”

17. However, inAdhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd. , (2007) 7 SCC 125, which was decided two months after the decision in Arvind Constructions Co. (P) Ltd case, the Supreme Court fully endorsed the applicability of the underlying principles of the Code of the grant of interim measures under Section 9 and has held as follows :

Moreover, when a party is given a right to approach an ordinary court of the country without providing a special procedure or a special set of rules in that behalf, the ordinary rules followed by that court would govern the exercise of power conferred by the Act. On that basis also, it is not possible to keep out the concept of balance of convenience, prima facie case, irreparable injury and the concept of just and convenient while passing interim measures under Section 9 of the Act”

18. In view of the aforesaid authoritative pronouncements of the 18/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 Honourable Supreme Court, it is now beyond cavil that the Court exercising discretion to grant or withhold interim measures under Section 9 will have to be guided by the well-recognized principles governing the grant of such reliefs under the Code of Civil Procedure , 1908.

19. SECTION 17 OF THE ARBITRATION AND CONCILIATION ACT, 1996 Prior to the 2015 Amendment, Section 17 of the Arbitration and Conciliation Act read as under ;

“Interim measures ordered by arbitral tribunal – (1) Unless otherwise agreed by partied, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute.

(2) The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1).” Prior to the 2015 Amendment, the Tribunal was a toothless tiger as its power to pass interim orders were severely restricted in contradistinction 19/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 to the wide powers available to a Court under Section 9 . The scope of the unamended Section 17 was explained by the Supreme Court in Managing Director, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd. , (2004) 9 SCC 619, in the following words:

When this provision is read in conjunction with section 9(2) , parties will by default be forced to approach the Arbitral Tribunal for interim relief once the Tribunal has been constituted. The Arbitral Tribunal would continue to 21/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 have powers to grant interim relief post-award. This regime would decrease the burden on Courts. Further, this would also be in tune with the spirit of the UNCITRAL Model Law as amended in 2006

22. From the above, it is clear that the object of amending Section 17 of the Act was to vest with the Tribunal with the same powers as a civil court in relation to the grant of interim measures. In other words, the power to pass interim measures imposes a discretion vested in the Tribunal would have to be exercised in consonance with the well settled principles governing the grant of such reliefs by the civil court.

23. Section 17 was, accordingly, amended by Act 3 of 2016. Under Clause 17(1) the Tribunal was given identical powers of the Court under Section 9 . A fortiori, the Arbitral Tribunal can now pass orders akin to those passed under Section 9 . As a natural corollary, it follows that the ratio of the decision in Adhunik Steels would apply equally to Tribunals as well, with the result that Tribunals passing interim measures under Section 17 would be bound to observe the guiding principles 22/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 governing the grant of such reliefs under the Code. The discretion conferred on the Arbitral Tribunal under Section 17 to pass interim measures is undoubtedly judicial. As the Supreme Court pointed out in Dev Prakash v Indra [2018 14 SCC 292] “judicial discretion has to be disciplined by jurisprudential ethics and can by no means conduct itself as an unruly horse”.

24. Vide the 2015 Amendment, Clause (2) of the Section 17 was substituted with a new clause declaring that the interim order passed by the Tribunal would be deemed to be an order of the civil court and shall be enforceable under the CPC in the same manner as if it were an order of the Court. This provision was inserted to specifically get over the issue of enforceability of the interim orders of the Tribunal that had proved to be the bane of the unamended Section 17 .

25. It may also be noticed that the 2015 Amendment also introduced an anomaly as it gave the power to the Arbitral Tribunal to pass an interim order after it has made the award but before it is enforced 23/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 under Section 36 . Under Section 32 , upon making of an award the Tribunal would become functus officio, and cannot pass an interim order. Noticing this incongruity, in 2018 the High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India under the Chairmanship of Justice B.N Srikrishna recommended the deletion of the expression “or at any time after making of the arbitral award but before it is enforced in accordance with Section 36 ” from the text of Section 17(1) .

The Committee observed thus :

ii. In C.S.S. Corp Private Limited v. Space Matrix Design Consultants Private Limited , (2012) 1 CTC 225, a Division Bench of this Hon’ble Court reiterated this requirement in the following words :

iii. There is no gainsaying that the purpose of an temporary injunction is to maintain the status quo ( Shiv Kumar Chadha v. Municipal Corpn. of Delhi , (1993) 3 SCC 161).

iv. In the case of injunctions granted ex-parte the Court is bound to observe the principles set out by the Supreme Court inMorgan Stanley 28/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 Mutual Fund v. Kartick Das , (1994) 4 SCC 225 wherein it was observed thus :

http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020

(g) General principles like prima facie case, balance of convenience and irreparable loss would also be considered by the court.” v. Interim mandatory injunctions : The principles governing the grant of interim mandatory injunctions are no longer res integra. The leading case on the point is the decision of the Supreme Court in DorabCawasji Warden v. CoomiSorab Warden , (1990) 2 SCC 117, where the principles were set out thus :

“The grant of an interim prohibitory injunction or an interim mandatory injunction are governed by well- known rules and it is difficult to imagine that the legislature while enacting Section 9 of the Act intended to make a provision which was dehors the accepted principles that governed the grant of an interim injunction. Same is the position regarding the appointment of a receiver since the section itself brings in the concept of “just and convenient” while speaking of passing any interim measure of protection.” ii. Under the Code, Courts possess powers to appoint Receivers if it finds it just and convenient to do so. The expression “just and convenient” though of wide amplitude require the Court to exercise caution and circumspection as the appointment of the Receiver is a drastic remedy. Hence, the Courts have insisted that the applicant must establish a heightened threshold of “an excellent chance of success” as distinguished from a mere “prima facie case” under Order XXXIX. It is for the applicant to plead and establish this exacting requirement, and a 32/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 Receiver will not be appointed on the mere ipse dixits of the applicant or on the basis of bald and unsubstantiated averments.

iii. In Three Cheers Entertainment (P) Ltd. v. CESC Ltd., (2008) 16 SCC 592, the Supreme Court has also strongly deprecated the practice of passing ex-parte orders appointing Receivers and the Apex Court has observed thus :

(3) Not only must the plaintiff show a case of adverse and conflicting claims to property, but, he must show some emergency or danger or loss demanding immediate action and of his own right he must be reasonably clear and free from doubt. The element of danger is an important consideration. A Court will not act on possible danger only; the danger must be great and imminent demanding immediate relief. It has been truly said that a Court will never appoint a receiver merely on the ground that it will do no harm.

(4) An order appointing a receiver will not be made where it has the effect of depriving a defendant of a ‘de facto’ possession since that might cause irreparable wrong. If the dispute is as to title only, the Court very reluctantly disturbs possession by receiver, but if the property is exposed to danger and loss and the person in possession has obtained it through fraud or force the Court will interpose by receiver for the security of the property. It would be different where the property is shown to be ‘in medio’, that is to say, in the enjoyment of no one, as the Court can hardly do wrong in taking possession: it will then be the common interest of all the parties that the Court should prevent a scramble as no one seems to be in 35/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 actual lawful enjoyment of the property and no harm can be done to anyone by taking it and preserving it for the benefit of the legitimate who may prove successful. Therefore, even if there is no allegation of waste and mismanagement the fact that the property is more or less ‘in medio’ is sufficient to vest a Court with jurisdiction to appoint a receiver. Otherwise a receiver should not be appointed in supersession of a bone fide possessor of property in controversy and bona fides have to be presumed until the contrary is established or can be indubitably inferred.

(5) The Court, on the application of a receiver, looks to the conduct of the party who makes the application and will usually refuse to interfere unless his conduct has been free from blame. He must come to Court with clean hands and should not have disentitled himself to the equitable relief by laches, delay, acquiescence etc.” v. In Parmanand Patel v. Sudha A. Chowgule , (2009) 11 SCC 127, the Supreme Court broadly restated these principles in the following passage :

Element of danger is an important consideration. Ordinarily, a Receiver would not be appointed unless a case has been made out which may deprive the defendant of a de facto possession. For the said purpose, conduct of the parties would also be relevant.” vi. Very recently, the Supreme Court in Dev Prakash v Indra (2018) 14 SCC 292, held, in the context of appointment of a Receiver for immovable property, that the very purpose of a temporary injunction and receivership is to protect the property from acts of waste, damage and 37/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 alienation during the pendency of the suit. The Supreme Court set aside the order directing sale of the property through public auction and observed thus :

The power to re-possess the vehicle for defaults in payment of instalments by the borrowers is a creature of the contract. Though it is well settled that finance companies/banks can exercise this contractual power to re-possess the asset [ Harita Finance Limited v ATV Projects 39/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 India Limited, 2003 2 LW 179], the exercise of this power can be only in a manner known to law.

ii. The Supreme Court has, in no uncertain terms, condemned the use of hirelings to recover possession of the vehicle without recourse to the remedies available in law. Thus, in ICICI Bank Ltd. v. Prakash Kaur , (2007) 2 SCC 711, it has been observed as under :

v. While the finance company or Bank may have a contractual right to repossess the asset upon Commission of default by the borrower, it cannot be again said that in many cases mechanical seizure of vehicles, en masse, may lead to substantial injustice. It is common knowledge that in a number of cases the borrowers generate income by putting these vehicles to use. Therefore, it may be worthwhile for the Tribunal to balance equities, in appropriate cases, by allowing the vehicles to operate while at the same time direct that some portion of the income got from plying these vehicles be deposited to the credit of the finance company. The Tribunals are under no obligation to pass orders seizing vehicles mechanically. In a vast majority of these cases, a common sense approach would not only ensure that the finance company is able to realise some portion of the outstanding dues periodically while at the same time enabling the borrower to retain the vehicle to generate income. 42/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 vi. The emphasis is that seizure and sale is not a one size fits all approach. In an appropriate case, the Tribunal can resort to the aforesaid procedure instead of sale. While a finance company may have the right to repossess the asset under the terms of the contract, the Court or Tribunal when petitioned for an order of seizure is certainly bound to apply its mind to balance the equities and cannot pass orders seizing vehicles for the asking.

vii. In Cholamandalam DBS Finance Limited v Sudheesh Kumar [2010 1 LW 951], a Division Bench of this Court formulated guidelines that must be followed while entertaining applications for appointment of Advocate Commissioners to seize hypothecated vehicles and report to Court and has observed thus :

b) After the advocate commissioner reports to the Court that the vehicle has been seized, it shall be in the custody of the applicant. This custody is on behalf of the Court, i.e., the applicant will be holding it in custodia legis.

c) Of course, if even after notice, the borrower does not appear or if it appears to the Court that the borrower is deliberately evading notice, then it is open to the applicant to pray for such reliefs as are necessary, which may even include the sale of vehicle and the matter may be heard ex parte and orders passed in exercise of discretion of Court.

d) The application shall not be closed without hearing the other side after notice is served. Before closing the 44/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 application, the Court shall also ascertain whether the applicant has taken steps to initiate the arbitral proceedings. If the applicant has not done so, then orders shall be passed putting the applicant on terms as laid down in Sundaram Finance 's case (cited supra), because section 9 depends on a close nexus with the initiation of arbitral proceedings;

e) As regards the expenditure incurred for keeping the vehicle in custody, the applicant shall bear it until the respondent is served and appears. After that, the Court shall hear the parties and pass orders.

f) The remuneration for advocate commissioners appointed by this Court shall be commensurate with the work done, since the financiers will shift this burden only on the already beleaguered borrower.

One other advantage in hearing the respondent before the closing of application is the clue that we get from Firm Ashok Traders ' case[(2004) 3 SCC 155], cited supra, where the Supreme Court encouraged the parties to suggest a solution. If that is really possible, then even at the initial stage, the entire matter will come to a happy resolution. Therefore, it is not only in the interest of natural justice and fairness, but also as a pragmatic measure that we have laid down these guidelines.” 45/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 Post the 2015 Amendment to Section 17 , these guidelines will equally apply to applications before Arbitral Tribunal for appointment of Advocate Commissioner’s to seize hypothecated vehicles.

32. POWER TO ORDER SALE i. Section 9(1)(ii)(a) empowers the Court to order the sale of the goods which are the subject matter of the agreement. An identical power is available to the Arbitral Tribunal under Section 17(1)(ii)(a) . In L & T Finance Ltd. v. G.G. Granites , (2013) 5 LW 714 this Hon’ble Court held that these powers are akin to those granted under Order XXXIX Rule 6 of the Code, and that the principles laid down therein must guide the exercise of power under Section 9 . A fortiori, post the 2015 Amendment these observations would apply equally to Arbitral Tribunals under Section 17 .

ii. Order XXXIX Rule 6 the Court may order interim sale of a movable property forming the subject matter of the proceeding or which is attached before judgment. Sale may be ordered where the property is subject to speedy or natural decay [as in the case of perishable goods] or 46/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 for any other “just and sufficient cause” which may make it desirable to have it sold at once. Before ordering sale, Order XXXIX Rule 8 mandates that the Tribunal must order notice to the other side. This is the norm. Notice cannot be dispensed with save in exceptional cases where the object of the sale would be defeated by the delay involved in ordering notice. But these cases would be few and far between.

iii. The requirement of notice also ensures that the borrower is put on notice about the sale price. The expression “in such manner and on such terms as it thinks fit” occurring in Order XXXIX Rule 6 would show that the power to fix the price and the terms of the sale is with the Court. When an application is made to the Arbitral Tribunal the fixation of the price and the settlement of terms of sale must be done by the Tribunal itself. This function cannot be delegated to the applicant, as a duty is cast on the Tribunal to see that the asset is not being frittered away and is sold for a fair and reasonable value. 47/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 iv. It would also be necessary that the disposal of these vehicles be done through public auction. Though most of the companies, nowadays, resort to this method there appears to be no uniform procedure adopted for this purpose. Invitation for participation in public auction ensures transparency and it would ensure that the entire sale process is free from bias or discrimination andbeyond reproach. A public auction ensures fair price and maximum return and would ensure that the vehicles are not collusively disposed off for paltry sums thus causing legal injury to the debtor.

33. ORDERS DIRECTING FURNISHING OF SECURITY i. The power under Section 9(1)(ii)(b) and Section 17(1)(ii)(b) is analogous to the provisions of Order XXXVIII Rule 5 of the Code. The applicability of the provisions of the Code to an application to furnish security under Section 9(1)(ii)(b) is no longer res-integra. In Nimbus Communications Ltd. v. Board of Control for Cricket in India , (2013) 1 Mah LJ 39, the Division Bench of the Bombay High Court, has held as under :

ii. In Raman Tech. & Process Engg. Co. v. Solanki Traders , (2008) 2 SCC 302, the Supreme Court pointed out the drastic and 50/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 extraordinary nature of the power under Order 38 Rule 5 and opined thus :

It is a common knowledge, whenever, machineries or a motor vehicles are kept in idle, without any use, its value will automatically diminish and there will be wear and tear of all the parts. Therefore, the ultimate sufferer is the person who is already in adversity.

38. In some of the cases, Order obtained under section 17 of the Arbitration and Conciliation Act, vehicles have been sold without even notice to the hirer. The sale is also not transparent and no public auction is conducted and fate of the sale is also not known. Such proceedings is also totally against law. Whenever a vehicle is sold, such sale should be only by way of public auction, after giving wide publicity in a widely circulated newspaper.

39. In such view of the matter, this Court is of the view that while appointing a receiver as an interim measure under section 17 of the Arbitration and Conciliation Act, the tribunal has to follow the procedure well established as indicated above in various judgments. 55/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020

40. Similarly, while passing an Order for attachment before judgment, the Order is also mechanically passed to attach the property in order to make unsecured debt to secured debt. It is well settled law that an Order of attachment before the judgment is a drastic remedy. Such an Order cannot be passed mechanically without following the procedures as laid down under Order 38 Rule 5 of Code of Civil Procedure . It is held to be drastic by the Apex Court and such Orders cannot be passed under section 17 of the Arbitration and Conciliation Act to make an unsecured debt as a secured debt without following settled position of law. No doubt Section 17 of the Arbitration and Conciliation Act provides power to pass interim measure to preserve the property or secure any amount etc. But, at the same time, while passing such an Order, which is like that of an Order of a Civil Court, the procedure contemplated under law has to be strictly followed. This Court has come across many cases, where even without making sufficient allegations in the applications, to satisfy the Court to pass such an Order, such Orders are casually passed. Such Order also, in my view cannot be sustained in 56/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 the eye of law. While passing any such Order, atleast the fundamental principles established under law and declared by the Apex Court has to be followed by the arbitrator. In the impugned Orders, none of the procedures are followed by the learned arbitrator while passing Orders under section 17 of the Arbitration and Conciliation Act.

41. It is further to be noted that a number of arbitrations have been conducted by the same arbitrator. Though the arbitrator in the declaration has mentioned that he has no interest or personal interest with the respondent, it was found otherwise by this Court in an earlier occasion and passed Orders in the above Original Petitions. Therefore, his appointment is terminated by this Court and a new arbitrator has been appointed in those matters to commence the proceedings afresh. When the appointment itself has been terminated, this Court is of the view that as the Order has been passed without following any substantial procedure established under law, such an Order is certainly in violation of the fundamental policy of India and it cannot stand in the eye of law. Being an arbitral tribunal and having a trooping of Civil Court, while making decisions, the arbitral tribunal has to follow the procedure as 57/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 contemplated under law. If any interim Order of injunction is to be passed exparte, certainly, the tribunal has to keep in mind the well settled principles of law. While granting interim injunctions, only on being satisfied that there is a prima facie case in favour of the applicant and that balance of convenience is in his favour and irreparable loss or injury is likely to occur in the event of injunction not granted and only on being satisfied with the above grounds, interim Order of injunction can be granted by the tribunal. Whereas, in many Orders, this Court has come across, particularly in the arbitration cases, arising out of higher purchase and finance agreement, the arbitrator nominated by the financiers are passing Orders mechanically, without following any rule of law. Any such Order, in my view, cannot be sustained in the eye of law. Therefore, while passing any Order in the nature of interim injunction, the basic well established principles have to be followed by the arbitrator.

42. While passing any order for preservation or interim custody or a sale of any goods, which is subject matter of arbitral agreement or to 58/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 secure any amount, also preservation, the well established principles have to be followed by the arbitrators. Similarly, whenever the arbitral tribunal finds that such interim measures have to be passed, the arbitrator has to satisfy himself prima facie case of the applicant. The tribunal also has to find out the actual dispute and bonafide contest existing between the parties. Prima facie in the sense, the tribunal has to satisfy that the plaintiff has made positive averments that he has a strong case and legal right over the property, which has to be preserved or protected. To find out balance of convenience, the tribunal has to find out whether there is any bonafide contest between the parties and on which side the balance of convenience lies. Similarly, the tribunal also has to weigh whether in the event of not granting any injunction, the applicant will be really put to irreparable loss and injury. Only on being satisfied with these facts, interim Orders, particularly in the nature of injunction, can be granted.

43. This Court has also come across mechanical Orders passed for appointment of receiver to seize the vehicle. Though the contract for hire purchase provides for repossession of vehicles by appointing a 59/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 receiver, the tribunal has to follow the procedures as contemplated under law. When the properties are movables, running machineries, receiver cannot be mechanically appointed to seize the movables out of which the respondent is earning his livelihood. Merely because the contract provides for repossession of machineries, Order directing repossess the vehicle cannot be passed mechanically without the tribunal satisfying well settled position of law. If really, the appointment of receiver is required, to secure the amount to secure the amount, receiver can be appointed to oversee the business and collect the income and not to seize machineries to keep them in idle condition. When such Orders are passed and machineries are kept in idle, it will in fact diminish not only the value of the machineries but also lead to loss of livelihood of the other side. Such circumstances has to be foreseen by the tribunal while passing the Orders.

44. As per Order 40 of Civil Procedure Code, the purpose of appointing a receiver as contemplated under Order 40 has to oversee the property in respect of which the receiver is to be appointed. The 60/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 receiver, in fact, would be given a power to manage, protect and preserve and improve the property, besides collection of rents thereon. Even the Court has no power to remove from possession or custody of the property, any person whom any party to suit has not a present right so to remove. Whenever the receiver is appointed in respect of the property, he has to furnish security as the court thinks fit, duly to account for what he shall receive in respect of the property and submit his accounts at such periods and in such form as the Court directs and pay the amount due from him as the Court directs and be responsible for any loss occasioned to the property by his wilful default or gross negligence. As far as management of the property is concerned, he has responsibility over the property and he cannot commit gross negligence. Sub Clause 4 of Order 40 CPC deals with enforcement of receiver duties. High Court Amendment (Madras) Act that in the event, the receiver failed to submit the accounts, the Court can even attach his property.

45. A reading of the above provision makes it clear that mechanically receiver cannot be appointed to deal with the property. His 61/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 appointment is coupled with the responsibilities and duties. Whereas, in the pretext of power granted in the contract, the receivers have been mechanically appointed under section 17 of the Arbitration and Conciliation Act, particularly in the dispute arising out of the hire purchase agreement. Therefore, the Order of the tribunal is capable of execution as a decree of a civil Court, the arbitral tribunal has to follow the procedures as contemplated under law.

45. This Court also place on record of appreciation to Mr.Sharath Chander, Amicus Curiae placing various judgments of the Apex Court referred above.

46. Accordingly, these Civil Miscellaneous Appeals are allowed and the Orders passed by the learned Arbitrator Application No.1 of 2019 in Arbitration Case Nos.ACP No.HLF-FLY Nos.3/2019, 4/2019, 5/2019, 1/2019, 2/2019, 20/2019, 19/2019, 21/2019, 26/2019, 10/2019, 6/2019, 13/2019, 18/2019, 27/2019, 9/2019, 7/2019, 16/2019, 23/2019, 14/2019, 28/2019, 11/2019, 25/2019, 17/2019, 8/2019, 12/2019, 62/64 http://www.judis.nic.in C.M.A.Nos.25 to 28, 30 and 66 to 88 of 2020 and C.M.P.Nos.271, 273, 275, 277, 289, 617 to 621, 623 to 640 of 2020 15/2019, 22/2019 and 24/2019 is set aside. Consequently, connected Petitions are closed. No costs.