Bombay High Court
IIFL FINANCE LTDversusDEEVENA ENTERPRISES THROUGH ITS PROPRIETOR RAMKRISHNA CHELLURI
- Decided
- Disposal
- DISPOSED OFF
Holding
The Court held that the petitioner had made out a prima facie case for interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, and therefore granted the relief.
Summary
IIFL Finance Ltd., the petitioner, sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, against multiple respondents who had defaulted on term loan repayments. The loan agreements contained an arbitration clause, and the petitioner alleged that the respondents had stopped payments, ignored a demand notice, and were attempting to transfer assets, creating a risk of non‑recovery. The respondents did not appear or contest the claims. The Court examined the loan agreement, the demand notice, and the statement of account, finding a prima facie case for the petitioner and noting the balance of convenience favored granting relief. Consequently, the Court ordered the respondents to comply with the petitioner's prayer and directed the petitioner to constitute an Arbitral Tribunal within ninety days. No costs were awarded.
Issues considered
- Whether the petitioner has established a prima facie case for interim protection under Section 9 of the Arbitration and Conciliation Act, 1996.
- Whether the existence of an arbitration clause in the loan agreement permits the Court to entertain interim relief before the arbitral tribunal is constituted.
- Whether the balance of convenience favors granting the interim relief sought by the petitioner.
Legislation cited
Subjects
- Arbitration
- Interim relief
- Section 9
- Loan default
- Arbitration agreement
- Balance of convenience
- Enforcement
Judgment
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AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION NO. 918 OF 2025
ATUL
GANESH
IIFL Finance Limited … Petitioner
KULKARNI V/s.
Digitally signed by
ATUL GANESH
Maa Vaishno Mobile Centre & Ors. … Respondents
KULKARNI
Date: 2026.08.28
10:37:51 +0530
WITH
COMM ARBITRATION PETITION NO.718 OF 2025
IIFL Finance Limited … Petitioner
V/s.
M.M. Patel & Others … Respondents
WITH
COMM ARBITRATION PETITION NO.842 OF 2025
IIFL Finance Limited … Petitioner
V/s.
Tez Cargo Logistics & Ors. … Respondents
WITH
COMM ARBITRATION PETITION NO.358 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Jai Bhawani Steel Agency & Ors. … Respondents
WITH
COMM ARBITRATION PETITION NO.294 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Kutumbh HR Care Pvt. Ltd. & Ors. … Respondents
WITH
COMM ARBITRATION PETITION NO.846 OF 2025
IIFL Finance Limited … Petitioner
V/s.
Ankit Choudhary& Anr. … Respondents
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WITH
COMM ARBITRATION PETITION NO.408 OF 2026
IIFL Finance Limited … Petitioner
V/s.
India Metal Crop & Ors. … Respondents
WITH
COMM ARBITRATION PETITION NO.415 OF 2026
IIFL Finance Limited … Petitioner
V/s.
T.M. Enterprises & Ors. … Respondents
WITH
COMM ARBITRATION PETITION NO.164 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Jyotirling Kirana Stores … Respondent
WITH
COMM ARBITRATION PETITION NO.238 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Deevena Enterprises & Anr. … Respondents
WITH
COMM ARBITRATION PETITION NO.293 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Siddharth Trading & Another … Respondents
WITH
COMM ARBITRATION PETITION NO.263 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Surya Narayan Filling Station & Anr. … Respondents
WITH
COMM ARBITRATION PETITION NO.533 OF 2026
IIFL Finance Limited … Petitioner
2
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V/s.
Soham Engineering & Anr. … Respondents
WITH
COMM ARBITRATION PETITION NO.534 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Opel Industries & Another … Respondents
WITH
COMM ARBITRATION PETITION NO.363 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Jay Shree Shakti Ma Precast & Anr. … Respondents
WITH
COMM ARBITRATION PETITION NO.264 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Mukesh Kumar & Co. & Another … Respondents
WITH
COMM ARBITRATION PETITION NO.265 OF 2026
IIFL Finance Limited … Petitioner
V/s.
Singla CCTV & Security System & Anr. … Respondents
Mr. Vyapak Desai with Mr. Jitesh Mundhwa, Ms. Shital
Londhe and Ms. Varsha Singh for the Petitioner-IIFL.
CORAM : AMIT BORKAR, J.
DATED : AUGUST 27, 2026
P.C.:
1. The present petitions have been filed under Section 9 of the
Arbitration and Conciliation Act, 1996. By these petitions, the
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petitioner is seeking interim reliefs against the respondent (in each
petition) pending the commencement of arbitration proceedings.
2. The case of the petitioner, in brief, is that the respondent was
in need of financial assistance for expanding its business and for
obtaining a term loan. For that purpose, the respondent
approached the petitioner by submitting an online application
seeking financial help. After considering the request made by the
respondent and after discussions between the parties, the
petitioner agreed to grant a business term loan. Accordingly, a loan
facility was sanctioned in favour of the respondent on the terms
and conditions contained in the loan agreement executed between
the parties.
3. After execution of the loan agreement, the petitioner
disbursed the loan amount to the respondent in accordance with
the agreed terms. Under the loan agreement, the respondent was
required to repay the loan in monthly installments. Each
installment was to include interest calculated on the reducing
balance of the loan together with a part payment towards the
principal amount.
4. According to the petitioner, the respondent initially made
repayments for a few months. However, thereafter the respondent
stopped making the payments as required under the loan
agreement. Because of this failure, the respondent committed
default in repayment of the loan. The petitioner states that several
requests and reminders were given to the respondent to clear the
outstanding dues. In spite of those requests, the respondent failed
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to make the necessary payments.
5. As a final attempt before taking legal action, the petitioner,
through its Advocates, issued a demand notice calling upon the
respondent to pay the balance amount, which was stated to be
outstanding, within seven days from the date of receipt of the
notice. Even after receiving the notice, the respondent did not
make the payment or comply with the demand made therein. The
petitioner has also placed on record the foreclosure statement and
the statement of account showing the amount alleged to be due
and payable by the respondent.
6. The petitioner submits that, in view of Clauses 12 and 13 of
the loan agreement, an Event of Default has occurred. According
to the petitioner, it has therefore become entitled to enforce the
terms of the agreement and to take appropriate steps for recovery
of the outstanding amount. It is the petitioner's case that the
respondent are liable to pay the sum (as particularly set out in
prayer clause (e)) under the loan facility.
7. The petitioner further contends that the respondent has
failed to perform its obligations under the loan agreement as well
as the other transaction documents. It is also stated that the
petitioner has reason to believe that the respondent does not
intend to honor those obligations and is attempting to dispose of
or transfer its assets. According to the petitioner, if such transfers
are permitted, recovery of the outstanding dues may become
difficult and the petitioner may suffer serious loss. On this
apprehension, the present petitions have been filed seeking urgent
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interim protection under Section 9 of the Arbitration and
Conciliation Act, 1996.
8. Though the respondents were duly served with notice of the
present proceedings, none appeared on their behalf.
9. I have considered the pleadings, the documents placed on
record and the submissions made on behalf of the petitioner. Since
none has appeared for the respondent despite service, this Court
has examined the material available on record with due care. At
this stage, the Court is not expected to decide the disputes
between the parties. However, it is required to see whether the
petitioner has shown a prima facie case for grant of interim
protection on the basis of the available material.
10. Clause 26 of the loan agreement contains an arbitration
clause agreed between the parties. From the documents placed on
record, it appears that both sides had accepted that any dispute
arising out of the loan transaction would be referred to arbitration.
Therefore, at this stage, it cannot be said that there is no
arbitration agreement between the parties. Since the agreement
itself provides for resolution of disputes through arbitration, the
petitioner is entitled to invoke the jurisdiction of this Court under
Section 9 of the Arbitration and Conciliation Act for seeking
interim protection before the Arbitral Tribunal is constituted.
11. It is also not in dispute that the petitioner has already issued
a recall notice calling upon the respondent to repay the entire
outstanding loan amount. The petitioner has placed a copy of the
said notice on record. Despite such notice, there is nothing on
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record to show that the respondent have cleared the dues or
replied disputing the demand. Though the mere issuance of a
recall notice may not by itself establish the entire claim of the
petitioner, it does indicate that the petitioner has called upon the
respondent to make payment before approaching this Court.
12. The statement of account produced along with the petition
also shows the amount which, according to the petitioner, remains
due and payable from the respondent. At this stage, the Court is
not required to examine the correctness of every entry in the
statement of account or determine the liability. Those issues can be
examined in the arbitral proceedings after both sides place their
evidence. However, for the limited purpose of considering interim
relief, the statement of account provides prima facie support to the
petitioner's claim that some amount is stated to be outstanding
against the respondent.
13. The petitioner has further made a statement on oath that the
respondents are attempting to transfer or alienate its assets. Such
statement has been made in the petition after verification by the
petitioner. Though this allegation will have to be examined in
before the learned Arbitral Tribunal if disputed, at this stage there
is no material placed by the respondent to contradict the said
assertion, as the respondent has chosen not to appear. If the assets
are transferred during the pendency of the dispute and the
petitioner succeeds in arbitration, recovery of the awarded amount
may become difficult. Therefore, such apprehension expressed by
the petitioner cannot be ignored while considering the prayer for
interim protection.
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14. Having considered the pleadings and the documents placed
on record, I am of the opinion that the petitioner has made out a
prima facie case for grant of interim protection in terms of prayer
clause (e). The balance of convenience also appears to be in favour
of granting such relief. Accordingly, the petition can be disposed of
by passing the following order:
(a) The respondent (in each petition) shall comply with
prayer clause (e) of the petition;
(b) The petitioner shall take necessary steps for
constitution of the Arbitral Tribunal within a period of ninety
days from today;
15. All the arbitration petitions are accordingly disposed of in
the above terms. There shall be no order as to costs.
(AMIT BORKAR, J.)
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