Unity Small Finance Bank Limited vs Prudhvi Traders — Arbitration | Bombay HC (2025)

Unity Small Finance Bank Limited vs Prudhvi Traders — Arbitration | Bombay HC (2025)

What the court decided

AI extract

Outcome

Ad interim relief granted in terms of prayer clause (i): the respective Respondents, their servants, agents, assignees and any person claiming by, through or under them restrained from selling, transferring, alienating, dealing with, disposing or creating third party rights over the Mortgaged Property and all their assets (movable and/or immovable), including bank accounts, investments and other properties, pending consideration of further interim relief by the Arbitral Tribunal to be constituted; liberty reserved to the Respondent to seek variation/alteration/vacation on the next date; actions under the order to be taken upon receipt of a downloaded copy from the Court's website; Petition stood over to March 26, 2025.

Issue for consideration

In a Section 9 petition where the Respondent has defaulted under the Loan Agreement dated June 30, 2023, has not responded to the demand notice dated September 12, 2024 and has not entered appearance despite service, whether ad interim protective relief should be granted restraining alienation of the mortgaged property and the Respondents' other assets, pending consideration of further interim relief by the Arbitral Tribunal to be constituted.

Court's answer

A case has been made out for grant of ad interim relief, which would operate pending the consideration of further interim relief by the Arbitral Tribunal that would be constituted in the matter.

Ratio / Principle

Ad interim restraint ordered in terms of prayer clause (i): the respective Respondents, including their servants, agents, assignees and/or any other person claiming by, through or under them, are restrained from selling, transferring, alienating, dealing with, disposing or creating third party rights with respect to the Mortgaged Property and all of their respective assets (movable and/or immovable), including bank accounts, investments and all other properties owned by the Respondents jointly and/or singly and of any entities owned by them.

Key takeaways

The Respondent is at liberty to appear on the next date and seek variation, alteration or vacation of the ad interim relief granted.ratio¶24

Detailed headnote1 paragraphs

Bombay High Court (Ordinary Original Civil Jurisdiction), Commercial Arbitration Petition No. 115 of 2025, decided March 5, 2025 (Somasekhar Sundaresan, J.) — Unity Small Finance Bank Limited v. Prudhvi Traders & Ors. — Petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interlocutory protective reliefs in respect of disputes under a Loan Agreement dated June 30, 2023, whose Clause 20 contains the arbitration agreement. The Respondent defaulted in servicing the loan; a demand notice was issued on September 12, 2024; the claimed dues were Rs. 1,01,22,123.9/-. Though served, the Respondent did not enter appearance. The Court held that a case had been made out for ad interim relief pending consideration of further interim relief by the Arbitral Tribunal to be constituted, and restrained the Respondents, their servants, agents, assignees and all persons claiming by, through or under them from selling, transferring, alienating, dealing with, disposing or creating third party rights over the Mortgaged Property and all movable/immovable assets including bank accounts, investments and other properties. Liberty was reserved to the Respondent to seek variation, alteration or vacation of the relief on the next date; the Petition stood over to March 26, 2025, with actions under the order to be taken upon receipt of a downloaded copy from the Court's website.

546.CARBP.115.2025.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

COMMERCIAL ARBITRATION PETITION NO.115 OF 2025

Unity Small Finance Bank Limited ….Petitioner Versus Prudhvi Traders & Ors. ...Respondents

Mr. Vishal Maheshwari a/w. Mr. Mihir Beradia i/b. VM Legal, Advocates for Petitioner.

None for the Respondents.

CORAM: SOMASEKHAR SUNDARESAN, J.

DATE : MARCH 5, 2025

PC :

This is a Petition under Section 9 of the Arbitration and Conciliation Act, 1996 (“ the Act ”) seeking interlocutory protective reliefs in connection with disputes and differences relating to a Loan Agreement dated June 30, 2023 ( “Agreement” ). Clause 20 of the Agreement contains the arbitration agreement, which, in the interest of brevity, is not extracted herein.

The Respondent committed a default in servicing the loan. It is seen from the record that defaults occurred under the Agreement and a demand notice was issued on September 12, 2024. Learned Counsel

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Digitally signed by AARTI AARTIGAJANAN GAJANANPALKARDate: PALKAR 2025.04.01 16:39:53 +0530

546.CARBP.115.2025.doc

for the Petitioner submits that the amount due under the Agreement, as claimed by the Petitioner from the Respondent is to the tune of Rs.1,01,22,123.9/-. It is seen from the record that the Petition has been served on the Respondent, but the Respondent has not entered appearance.

Learned Counsel for the Petitioner submits that there is an evident default, and despite issuance of a demand notice there is no response from the Respondent. He submits that the property mortgaged runs the risk of getting alienated, rendering the arbitration infructuous. Consequently, he seeks urgent interlocutory relief.

Since despite notice, the Respondent has not appeared and has not replied to the notice issued by the Petitioner, Learned Counsel seeks reliefs sought in terms of prayer clause (i). A case has been made out for grant of ad interim relief as below, which would apply pending the consideration of further interim relief by the Arbitral Tribunal that would be constituted in the matter : -

“The respective Respondents, including their servants, agents, assignees and/or any other person claiming by, through or under them are hereby restrained from selling, transferring, alienating, dealing with or disposing or creating third party rights with respect to the Mortgaged Property and all of their respective assets (movable and/or immovable) including bank accounts, investments and all other properties owned by the Respondents jointly and/or singly and of any of the entities owned by the Respondents”

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546.CARBP.115.2025.doc

It is made clear that should the Respondent be desirable of varying, altering or vacating the ad-interim relief granted hereby, the Respondent may appear on the next date and present their say.

With the aforesaid directions, this Petition is stood over to March 26, 2025.

All actions required to be taken pursuant to this order, shall be taken upon receipt of a downloaded copy as available on this Court’s website.

[ SOMASEKHAR SUNDARESAN, J.]

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