IIFL Finance LimitedversusNew Pal Motors

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                        Vivekanand
                                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
           Digitally
           signed by
                                     ORDINARY ORIGINAL CIVIL JURISDICTION
           VIVEKANAND
VIVEKANAND RAJENDRA
RAJENDRA   BONDE
                                          IN ITS COMMERCIAL DIVISION
BONDE      Date:
           2026.10.08
           18:08:56
           +0530
                                     COMM ARBITRATION PETITION NO. 829 OF 2026

                        IIFL Finance Ltd                              … Petitioner
                                   V/s.
                        New Pal Motors and Another                    … Respondents

                        Mr. Jitesh Mundhawa with Ms. Shital Londhe with Ms.
                        Varsha Singh, for Petitioner.

                                                    CORAM      : AMIT BORKAR, J.

                                                    DATED      : OCTOBER 08 2026
                        P.C.:

                        1.      The Petitioner has filed this Petition under Section 9 of the
                        Arbitration and Conciliation Act, 1996. According to the Petitioner,
                        the Business Loan Agreement signed between the parties contains
                        Clause 26, which provides for arbitration. On that basis, the
                        Petitioner has approached this Court and has asked for ad interim
                        and interim protection pending the arbitration proceedings.

                        2.      The case of the Petitioner is that on January 2024 the
                        Respondents approached the Petitioner and applied for financial
                        help by submitting a loan application for a business loan. After
                        considering the request, the Petitioner sanctioned a business loan of
                        Rs.30,00,000/-.Thereafter, on 30 January 2024 both sides executed
                        the Loan Agreement and the loan amount was made available to
                        the Respondents. It is the Petitioner's case that after taking the loan,
                        the Respondents did not pay the instalments as agreed. According



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to the Petitioner, the Respondents failed to maintain financial
discipline and acted in breach of the terms and conditions of the
Loan Agreement. The Petitioner has further stated that because of
continuous default, a Loan Recall Notice dated 17 September 2025
was issued in respect of Loan Account. By the said notice, the
Respondents were called upon to repay the entire outstanding
amount within seven days. The Petitioner claimed an amount of
Rs.29,45,926.17/- together with interest at the rate of 21% per
annum from 05 September 2025 till payment or realisation, as
provided under the Loan Agreement. According to the Petitioner,
even after the recall notice was issued, the Respondents neither
replied nor cleared the outstanding dues. The Petitioner has
therefore contended that the Respondents have failed to repay the
recalled loan amount and continue to remain indebted. According
to the Petitioner, it is entitled to recover the outstanding amount in
terms of the Loan Agreement. The Petitioner has further alleged
that it has learnt that the Respondents have started taking steps to
dispose of or transfer their assets with the intention of defeating the
Petitioner's claim and preventing recovery of the outstanding dues.
On these allegations, the present Petition has been filed seeking
interim protection from this Court.

3.    Learned Advocate for the Petitioner submitted that the
Respondents were granted a business loan facility but committed
default in repayment of the loan. It is submitted that even after
receipt of the Loan Recall Notice, the Respondents failed to repay
the outstanding amount. Learned counsel further submitted that
the Respondents have neither filed any reply to oppose the present



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Petition nor remained present before this Court despite due service.
It is also submitted that this Court had earlier directed the
Respondents to disclose their assets and other financial particulars,
but the said order has not been complied with. On these grounds, it
is contended that the Petitioner has made out a prima facie case
and is entitled to the interim reliefs as prayed for in the Petition.

      REASONS AND ANALYSIS:

4.    I have carefully seen the record and also considered the
submissions made by learned Advocate for the Petitioner. Though
Respondents are properly served, nobody has come before this
Court. They have also not filed any reply for denying the case in the
Petition. Earlier, this Court also passed order asking the
Respondents to give details of their movable and immovable
properties and other financial matters. Even that order is not
followed till today. Therefore, this Court has to consider the present
Petition from the documents produced by the Petitioner and the law
relating to grant of interim protection under Section 9 of the
Arbitration and Conciliation Act, 1996.

5.    The first submission of the Petitioner is that both sides
entered into one Business Loan Agreement containing an
arbitration clause. Under that agreement, the Petitioner gave
business loan of Rs.30,00,000/-. to the Respondents. It is further
submitted that after taking the loan amount, the Respondents did
not pay the instalments as agreed and committed default. Because
of this default, the Petitioner issued one Loan Recall Notice asking
the Respondents to pay the entire outstanding amount. According



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to the Petitioner, even after receiving the said notice, the
Respondents did not clear the dues.

6.    From the documents filed along with the Petition, it appears
that the Loan Agreement and Loan Recall Notice are on record. At
this stage, nothing is brought before this Court to show that these
documents are false or they are not connected with the transaction
between the parties. Since the Respondents have remained absent,
there is also no dispute raised regarding execution of the Loan
Agreement, giving of the loan amount, default in repayment or
issuing of the Loan Recall Notice. Therefore, only for deciding this
request for interim protection, the documents produced by the
Petitioner are sufficient to show a prima facie case that some
amount has become due and payable under the Loan Agreement.
This finding is only for the present purpose and it shall not decide
the rights of the parties before the Arbitral Tribunal.

7.    The next submission of the Petitioner is that even after
issuance of the Loan Recall Notice, the Respondents have not paid
the outstanding amount. According to the Petitioner, this conduct
shows that the Respondents are trying to avoid payment of the
amount payable under the agreement.

8.    It is true that only because a loan amount is not repaid, it
does not mean that every interim relief under Section 9 must be
granted. A money claim and a case requiring immediate protection
are not always of the same nature. Therefore, this submission may
not be enough for granting every relief asked in the Petition. Still,
this circumstance supports the Petitioner's case that there is a



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money dispute between the parties and, if facts require, such claim
may need protection.

9.    The Petitioner has then submitted that it has received
information that the Respondents have started selling, transferring
or otherwise dealing with their properties so that recovery of the
outstanding amount may become difficult. Such allegation is made
in the Petition. Normally, if the other side denies such allegation,
the Court has to examine the surrounding facts more carefully. But
in the present matter, no reply is filed. The Respondents have not
given any explanation denying these allegations. Mere absence of
denial cannot make every allegation proved. Still, because there is
no opposite case placed before this Court, the Petitioner's case is
required to be examined on the available material.

10.   Learned Advocate for the Petitioner has also relied upon the
conduct of the Respondents after filing of the present Petition. It is
submitted that though the Respondents were served, they have not
remained present before this Court. More importantly, this Court
had directed the Respondents to disclose details of their movable
and immovable properties and other financial particulars. That
direction was issued so that this Court could see whether any
interim protection was necessary. Even that order has not been
complied with.

11.     When this Court passes an order, parties are expected to
follow the same unless there is some legal reason. If one party
remains absent and also does not disclose its assets despite
direction of the Court, such conduct can be taken into consideration



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while deciding an application under Section 9. This conduct alone
may not prove dishonest intention. Even then, it creates a
reasonable apprehension that if no interim protection is granted
now, then even if the Petitioner succeeds in arbitration,
enforcement of the award may become difficult later.

12.   The judgment of the Supreme Court in Essar House (P) Ltd.
v. Arcellor Mittal Nippon Steel (India) Ltd., (2022) 20 SCC 178
holds that while deciding a petition under Section 9, the Court has
to keep in mind the basic principles of the Code of Civil Procedure.
At the same time, every technical provision of the Code need not be
applied strictly. The object of Section 9 is to protect the subject
matter of arbitration and to ensure that justice is not defeated. The
Supreme Court has further held that Section 9 gives wide powers to
the Court for securing the amount in dispute. While considering
such application, the Court has to see whether the applicant has
made out a good prima facie case, whether the balance of
convenience is in favour of interim protection and whether the
applicant has approached the Court without unnecessary delay. The
Supreme Court has also clarified that interim relief cannot be
refused only because the pleadings do not satisfy every technical
requirement relating to attachment before judgment under the
Code of Civil Procedure. The Supreme Court has also observed that
in every case the applicant is not required to prove actual transfer
or disposal of assets. If the material before the Court shows a strong
possibility that the assets may become unavailable or that the
arbitral award may become difficult to enforce, appropriate interim
protection can still be granted. Therefore, the Court has to see the



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overall circumstances of the matter and need not insist upon direct
proof of every intended transfer.

13.   Keeping these principles in mind, this Court finds that the
Petitioner has produced the Loan Agreement, the Loan Recall
Notice and the statement showing the outstanding dues. No reply
has been filed disputing these documents. The Respondents have
not denied the transaction or their liability before this Court. More
importantly, after service of the Petition, they remained absent and
also failed to comply with the order directing disclosure of their
assets. This conduct makes the present matter different from an
ordinary money recovery case where the defendant appears and
contests the claim.

14.   It is true that the Petitioner has not produced direct evidence
showing that the Respondents have transferred their properties. If
this circumstance is considered, the material may appear
insufficient. However, the law declared by the Supreme Court holds
that proof of completed alienation is not necessary in every matter.
This Court has to see all surrounding circumstances together.
Continuous default in repayment, absence before this Court, failure
to file reply and non-compliance with the order directing disclosure
of assets together create a reasonable apprehension that if interim
protection is not granted, the Petitioner's claim may finally remain
unsecured.

15.   Therefore, the submission of the Petitioner that interim
protection is necessary deserves acceptance. At the same time, only
because the Petition is not contested, every prayer made in the



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Petition cannot be granted. The relief granted should be only to the
extent necessary for protecting the arbitral proceedings and
securing the amount in dispute. The order of this Court should
protect the Petitioner's claim without going beyond what is
necessary at this stage.

16.   After considering the pleadings, documents placed on record,
conduct of the Respondents and the principles laid down by the
Supreme Court in Essar House (P) Ltd., this Court is satisfied that
the Petitioner has made out a good prima facie case. The balance of
convenience is also in favour of the Petitioner. If interim protection
is not granted, there is reasonable possibility that the arbitration
proceedings may become ineffective and the award, if ultimately
passed in favour of the Petitioner, may become difficult to enforce.
On the other hand, if suitable interim protection is granted at this
stage, it will only preserve the subject matter and secure the
Petitioner's claim till the disputes are finally decided in arbitration.
Therefore, this Court holds that the Petitioner has made out a case
for grant of appropriate interim protection under Section 9 of the
Arbitration and Conciliation Act, 1996.

17.      In view of the foregoing discussion and for the reasons
recorded hereinabove, the following order is passed:

           (i)     The Arbitration Petition is partly allowed in
           terms of prayer clause ‘(G) which reads thus;

                 ‘(G) This Hon’ble Court be pleased to pass an
                 order directing the marking of debit freeze of
                 all the bank accounts of the Respondents,



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        including but not limited to the bank accounts
        linked with PAN No.FOQPP8626L (PAN No. of
        Respondent No.2).’

(ii)      The observations made in this order are prima
facie in nature and confined only to the consideration
of the present application under Section 9 of the
Arbitration and Conciliation Act, 1996. The Arbitral
Tribunal shall decide the disputes independently and
on their own merits without being influenced by any
observations contained in this order;

(iii)     The Petitioner shall initiate steps to constitute
arbitral tribunal within a period of 90 days from today.

(iv)      The Petition is accordingly disposed of. There
shall be no order as to costs.


                                     (AMIT BORKAR, J.)




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