2013 (8) TMI 1063 - HC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of arbitral tribunal in mortgage enforcement.
2. Status of creditors as unsecured after relinquishing mortgage claim in arbitration.
3. Extent of attachment ordered in comparison to the arbitration claim.

Summary:

1. Jurisdiction of Arbitral Tribunal in Mortgage Enforcement:
The court addressed the submission that, per the Supreme Court's judgment in *Booz Allen and Hamilton Inc. Vs. SBI Home Finance Limited and Others*, an arbitral tribunal lacks jurisdiction to entertain a claim for mortgage enforcement as it constitutes an action in rem. The court clarified that in the present cases, the claims in arbitration were not for mortgage enforcement but for the recovery of monies due. Therefore, the principle laid down in *Booz Allen* was not breached, and the creditors were justified in asserting their money claims in arbitration.

2. Status of Creditors as Unsecured After Relinquishing Mortgage Claim in Arbitration:
The court refuted the argument that creditors become unsecured once they give up the mortgage claim in arbitration. It held that creditors do not relinquish their mortgaged security or abandon their right to bring the mortgaged property to sale by subsequently instituting a suit as envisaged in Order XXXIV Rule 14 of the Code of Civil Procedure, 1908. The court affirmed that a secured creditor could invoke Section 9 of the Arbitration and Conciliation Act, 1996 for interim measures to protect the fruits of the arbitral award, which was correctly accepted by the learned Single Judge.

3. Extent of Attachment Ordered in Comparison to the Arbitration Claim:
The court discussed the applicability of Order XXXVIII Rule 5 of the Code of Civil Procedure, 1908, to an application u/s 9 of the Arbitration and Conciliation Act, 1996. It emphasized that while the principles for granting interlocutory reliefs under the CPC guide the court, the rigors of every procedural provision cannot defeat the grant of relief that serves the paramount interests of justice. The court found that the learned Single Judge was justified in ordering the furnishing of security and attachment of properties and bank accounts, given the appellant's lack of candor and failure to disclose assets and properties.

Conclusion:
The appeals were dismissed, and the court upheld the learned Single Judge's order and directions, finding no merit in the submissions challenging the jurisdiction of the arbitral tribunal, the status of creditors, and the extent of the attachment ordered.