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
                                                  2025:KER:53231
W.P.(C) No.20337/2025
                            :2:


     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:
                                                                    2025:KER:53231
W.P.(C) No.20337/2025
                                      :3:



                                                                        CR


                             N. NAGARESH, J.

           `````````````````````````````````````````````````````````````
                       W.P.(C) No.20337 of 2025

            `````````````````````````````````````````````````````````````
                  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

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

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

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;

2025:KER:53231

(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

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

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

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