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Iifl Finance Limited v. Shri Balaji Industries

Bombay HC18 Jun 2025CARBP/465/2025

Case brief

AI extract

What is this about?

Section 9 Arbitration and Conciliation Act 1996; ad-interim relief; ex parte interim measures; restraint on alienation and encumbrance of assets; disclosure on oath of assets and bank accounts; bank guarantee to secure outstanding loan; loan default notice; IIFL Finance Limited v. Shri Balaji Industries & Ors; Bombay High Court Commercial Division CARBP 465 of 2025; pre-arbitration asset protection; liberty to file Section 11 application.

What did the court decide?

Ad-interim reliefs in terms of prayer clauses (A), (B) and (C) granted pending consideration of further interim relief by the Arbitral Tribunal; liberty to file the Section 11 application within 30 days from upload of the Order; Petition listed along with the Section 11 Application on August 8, 2025. ¶20

Iifl Finance Limited vs Shri Balaji Industries — Arbitration | Bombay HC (2025)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether ad-interim protective reliefs ought to be granted under Section 9 of the Arbitration and Conciliation Act, 1996 to protect the subject-matter of the arbitration agreement, given the Respondents' default in servicing the loan, issuance of notice(s), and non-appearance despite service, pending constitution of the Arbitral Tribunal.

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Court's answer

A case having been made out, the Court granted ad-interim reliefs in terms of prayer clauses (A), (B) and (C): (A) temporary restraint on the Respondents from selling, transferring, alienating, encumbering or otherwise dealing with their movable or immovable assets wheresoever situated to the extent of the amounts owed to the Petitioner; (B) disclosure on oath by the Respondents of all bank accounts, properties and assets, movable or immovable, with details of encumbrances and/or fetters; and (C) furnishing of a bank guarantee to secure the Outstanding Loan Amounts with further and future interest at contractual rates till realization.

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Ratio / Principle

The ad-interim reliefs would apply pending the consideration of further interim relief by the Arbitral Tribunal to be constituted in the matter.

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Key takeaways

If the Respondents desire variation, alteration or vacation of the ad-interim relief, they may appear before the Arbitral Tribunal and present their say.ratio¶28
Liberty granted to the Petitioner to file the Section 11 application within 30 days from upload of the Order on the Court's website, to invoke arbitration afresh; the Petition to be listed along with the Section 11 Application on August 8, 2025.ratio¶29

Detailed headnote1 paragraphs

Bombay High Court, Commercial Division (O.O.C.J.), Commercial Arbitration Petition No. 465 of 2025, decided July 9, 2025 (Somasekhar Sundaresan, J.). IIFL Finance Limited filed a Petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interlocutory protective reliefs in respect of a loan under an Agreement dated January 20, 2024 (Clause 26 arbitration clause), claiming Rs. 32,94,210.18 as due after the Respondents (Shri Balaji Industries & Ors) defaulted in servicing the loan; a notice issued April 2, 2025 drew no response and the Respondents did not enter appearance despite service. Holding a case made out, the Court granted ad-interim reliefs in terms of prayers (A)-(C): restraint on sale, transfer, alienation, encumbrance or other dealing with the Respondents' movable and immovable assets to the extent of the amounts owed; disclosure on oath of all bank accounts, properties and assets with encumbrance details; and furnishing of a bank guarantee securing the Outstanding Loan Amounts with contractual interest till realization. The reliefs operate pending consideration of further interim relief by the Arbitral Tribunal to be constituted, before which the Respondents may seek variation or vacation. Liberty was given to file the Section 11 application within 30 days of upload of the Order; the Petition is listed with the Section 11 Application on August 8, 2025.

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501-CARBP-465-2025.doc

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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IN ITS COMMERCIAL DIVISION

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COMMERCIAL ARBITRATION PETITION NO. 465 OF 2025

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IIFL Finance Limited …Petitioner

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Versus

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Shri Balaji Industries & Ors …Respondents

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Mr. Harsh Sheth, a/w Rajlaxmi Pawar, i/b MDP Legal, for the Petitioner.

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None for Respondents.

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CORAM : SOMASEKHAR SUNDARESAN, J. DATE : JULY 9, 2025

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ORDER :

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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 an Agreement dated January 20, 2024 ( “Agreement” ). Clause 26 of the Agreement contains the arbitration clause, which, in the interest of brevity, is not extracted herein.

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The Respondents have evidently committed a default in servicing the loan. It is seen from the record that a notice in this regard

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Digitallysigned byASHWINI ASHWINIJANARDANVALLAKATI JANARDANVALLAKATIDate:2025.07.1418:27:40+0530

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Page 1 of 4 July 9, 2025

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Ashwini Vallakati

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501-CARBP-465-2025.doc

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was issued on April 2, 2025. Learned Counsel for the Petitioner submits that the amount due under the Agreement, as claimed by the Petitioner from the Respondents is to the tune of Rs. 32,94, 210.18. It is seen from the record that this Petition has been served on the Respondents, but the Respondents have not entered appearance.

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Learned Counsel for the Petitioner submits that there is an evident default, and despite issuance of a notice(s), there is no response at all, necessitating the protection of the subject-matter of the arbitration agreement. It is submitted that the subject-matter of the arbitration agreement runs the risk of being dissipated and denuded, rendering the very arbitration infructuous. Consequently, urgent interlocutory relief is sought.

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Since despite notice, the Respondents have not appeared, Learned Counsel seeks reliefs sought in prayer clauses (A), (B) and (C). A case has been made out for grant of ad interim reliefs, and moulding, if any, is as considered appropriate by this Court. Such ad interim reliefs would apply pending the consideration of further interim relief by the Arbitral Tribunal that would be constituted in the matter:

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A. The Respondents are temporarily restrained from selling, transferring, alienating, encumbering and/or in any manner

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Page 2 of 4 July 9, 2025

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Ashwini Vallakati

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501-CARBP-465-2025.doc

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whatsoever dealing with their assets (immovable or movable and wheresoever situated) to the extent of the amounts owed to the Petitioner;

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B. The Respondents shall disclose on oath all their bank accounts and their properties and assets, whether movable or immovable or of whatsoever nature, along with details of any encumbrances and/or fetters on the same;

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C. This Hon’ble Court be pleased to pass an order directing the Respondents to furnish a bank guarantee to secure the Outstanding Loan Amounts, along with further and future interest at contractual rates till the realization of the amount, sought for hereinabove;

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It is made clear that should the Respondents be desirous of varying, altering or vacating the ad-interim relief granted hereby, the Respondent may appear before the Arbitral Tribunal, and present its say.

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Learned Counsel for the Petitioner undertakes that an application under Section 11 of the Act is yet to be filed but will be filed. Liberty to do so within a period of 30 days from the upload of this Order on this Court’s website to enable time to invoke arbitration afresh and file the same. In these circumstances list this Petition along with the Section 11 Application on August 8, 2025.

Page 3 of 4

July 9, 2025

Ashwini Vallakati

501-CARBP-465-2025.doc

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