Kerala High Court
Cheraman Financial Services Limited vs Reserve Bank Of India on 18 July, 2025
Author: N.Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
FRIDAY, THE 18TH DAY OF JULY 2025 / 27TH ASHADHA, 1947
WP(C) NO. 20337 OF 2025
PETITIONER:
CHERAMAN FINANCIAL SERVICES LIMITED
33/2337- E, 2ND FLOOR, CHAKIAPADATH BUILDING,
BYPASS ROAD, PONNURUNNI, VYTTILA, COCHIN.
REPRESENTED BY ITS CHIEF FINANCIAL OFFICER
MR. RAMESH SHENOI, AGED 43YEARS,
S/O SURENDRA SHENOI,
RESIDING AT ADAMUKKATH HOUSE, CMC 29,
T D ROAD, CHERTHALA, ALAPPUZHA,
PIN - 682019
BY ADVS.
SHRI.JOY THATTIL ITTOOP
SRI.BIJISH B.TOM
SMT.UTHARA A.S
SHRI.KRISHNA KUMAR T.K.
SMT.BABY SONIA
SHRI.KARUN MAHESH
SMT.MEGHA JOSEPH
SMT.NEVIS CASSANDRA L CAXTON LORETTA
SMT.ROSHNI MANUEL
SRI.GOVIND VIJAYAKUMARAN NAIR
RESPONDENTS:
1 RESERVE BANK OF INDIA
19TH FLOOR, CENTRAL OFFICE BUILDING,
SHAHID BHAGAT SINGH ROAD, MUMBAI,
REP BY ITS CHAIRMAN, PIN - 400001
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2 ICICI BANK LTD
UDAYA TOWERS, WEST FORT ROAD,
PALAKKAD KERALA,REP BY ITS MANAGER,
PIN - 678001
3 KARUR VYSYA BANK LTD
KRISHNA TOWERS, 10/259(9),
VELLAN STEET, SULTHANPET, PALAKKAD,
KERALA . REP BY ITS MANAGER,
PIN - 678001
BY ADVS.
SHRI.LAL K.JOSEPH
SRI.P.MURALEEDHARAN (THURAVOOR)
SMT.T.A.LUXY
SHRI.SURESH SUKUMAR
SRI.ANZIL SALIM
SHRI.SANJAY SELLEN
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 24.06.2025, THE COURT ON 18.07.2025 DELIVERED
THE FOLLOWING:
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CR
N. NAGARESH, J.
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W.P.(C) No.20337 of 2025
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Dated this the 18th day of June, 2025
JUDGMENT
~~~~~~~~~ The petitioner is a Company promoted by the Kerala State Industries Development Corporation (KSIDC). The petitioner is involved in the business of providing financial services and carrying out equipment leasing and hire purchase finance activities.
2. The petitioner filed an Arbitration Request AR No.227/2023 for appointment of an Arbitrator for the determination of disputes between the petitioner and customer. This Court appointed Advocate K.K. Raziya as Arbitrator as per Ext.P1 judgment. The petitioner filed an application under 2025:KER:53231 W.P.(C) No.20337/2025 :4: Section 17 of the Arbitration and Conciliation Act seeking attachment of Bank accounts of the customers with respondents 2 and 3 Banks in order to secure the amount in dispute. The Arbitrator passed Ext.P2 order and directed respondents 2 and 3 Banks to attach the respective Bank accounts. Respondents 2 and 3, however, did not comply with the direction of the Arbitrator. The Banks took a stand that they will not comply with Ext.P2 order passed by the Arbitrator as the Arbitrator is not a judicial authority.
3. The petitioner states that the Banks operating under a licence of the Reserve Bank of India cannot take such untenable stand. Such disobedience will defeat the very purpose of the Arbitration and Conciliation Act. As per Section 17(2) of the Arbitration and Conciliation Act, an interim order passed by an Arbitrator is enforceable in the same manner as an order of the Court.
4. The petitioner therefore prayed to direct respondents 2 and 3 to comply with Ext.P2 interim attachment order passed 2025:KER:53231 W.P.(C) No.20337/2025 :5: by the Arbitrator appointed by this Court. The petitioner also sought to direct the 1st respondent-RBI to issue a common direction / Circular to all Banks operating under its licence to adhere to and comply with the orders issued by Arbitrators appointed by Courts of law.
5. Standing Counsel representing the 2 nd respondent- Bank resisted the writ petition. The orders passed by an Arbitrator can be enforced only through civil courts, urged the Standing Counsel. Orders of the Arbitrator will have to be executed invoking the provisions of the Code of Civil Procedure. The writ petition is therefore without any merit and is liable to be dismissed, contended the Standing Counsel.
6. I have heard the learned counsel for the petitioner and the learned Standing Counsel representing the 2nd respondent.
7. The argument of the petitioner is that any order or direction given by an Arbitrator appointed under the Arbitration and Conciliation Act is liable to be adhered to by the Banks as 2025:KER:53231 W.P.(C) No.20337/2025 :6: such. The Arbitrator appointed by this Court at the instance of the petitioner has passed an interim order on 12.11.2024 attaching the accounts detailed in the attachment schedule of IA No.1/2024 in AC No.227/2023. Attachment was ordered for satisfying the claim of the petitioner. The Arbitrator ordered that on intimation of the interim order to the concerned Banks, no further transaction shall be effected pertaining to the account under attachment.
8. The Arbitrator has passed Ext.P2 order in exercise of the powers conferred under Section 17 of the Arbitration and Conciliation Act, 1996. Section 17 of the Act, 1996 reads as follows:
17. Interim measures ordered by arbitral tribunal--
(1) A party may, during the arbitral proceedings, apply to the arbitral tribunal--
(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely:--
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
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(c) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient, and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it.
(2) Subject to any orders passed in an appeal under section 37, any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure,1908 (5 of 1908), in the same manner as if it were an order of the Court.
9. It is evident from Section 17(2) that any order issued by the Arbitral Tribunal shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 in the same manner as if it were an order of the Court. Therefore, a person desiring to execute an order of the Arbitral Tribunal has to resort to the provisions of the Code of Civil Procedure, 1908 for enforcement of the interim 2025:KER:53231 W.P.(C) No.20337/2025 :8: order. Such orders cannot be enforced invoking writ jurisdiction of this Court.
10. In the judgment in Pradeep v. Station House Officer [2016 (2) KLT 381], this Court noted that the Hon'ble Apex Court has, in M.D. Army Welfare Housing Organisation v. Sumangal Services Private Limited [(2004) 9 SCC 619], held that no power was conferred on the Arbitral Tribunal to enforce its order nor does it provide for judicial enforcement on their own.
11. The counsel for the petitioner would submit that Ext.P2 is not an order to be enforced and on the other hand, it is to be treated as a direction by a competent court. The argument of the counsel for the petitioner cannot be accepted as such. Considering the fact that there are no provisions in the Arbitration and Conciliation Act for the Arbitrators to enforce their own interim orders, the Law Commission of India has made certain recommendations. The Law Commission recommended amendments to Section 17 of the Act which would give teeth to 2025:KER:53231 W.P.(C) No.20337/2025 :9: the orders of the Arbitral Tribunal and the same would be statutorily enforceable in the same manner as the orders of a Court. The very fact that the Law Commission has made such suggestion would only show that the legislature never had intended the Arbitral Tribunal's order to be enforced by the Tribunal itself. Orders of the Arbitral Tribunal will have to be enforced in the manner provided under the Code of Civil Procedure.
For all the afore reasons, I find that the writ petition is without any merit. The writ petition is hence dismissed.
Sd/-
N. NAGARESH, JUDGE aks/24.06.2025 2025:KER:53231 W.P.(C) No.20337/2025 : 10 : APPENDIX OF WP(C) 20337/2025 PETITIONER'S EXHIBITS Exhibit P1 THE TRUE COPY OF THE JUDGEMENT DTD 21.02.2024 AR NO. 227 OF 2023 OF THIS HON'BLE COURT Exhibit P2 THE TRUE COPY OF THE INTERIM ATTACHMENT ORDER DATED 12.11.2024 IN I.A NO.1 OF 2024 IN A.C NO.227 OF 2023 PASSED BY THE LEARNED ARBITRATOR K.K RAZIYA