M/S. Hedge Finance Limited Vs Jacob Mathew

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OPC 1986/24

2025:KER:28355

IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE BASANT BALAJI

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TUESDAY, THE 18TH DAY OF MARCH 2025 / 27TH PHALGUNA, 1946

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OP(C) NO. 1986OF 2024

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CMA(Arb) NO.1355 OF 2023 OF DISTRICT COURT & SESSIONS COURT, ERNAKULAM

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PETITIONER/S:

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M/S. HEDGE FINANCE LIMITED,HEDGE HOUSE, MAMANGALAM, PALARIVATTOM,
ERNAKULAM, KOCHI- 682 025, REPRESENTED BY ITS AUTHORIZED SIGNATORY
MR. MADHU E, S/O KELAPPAN, AGED 42, VENKALLULLATHIL HOUSE,
MEPPAYUR, CALICUT DISTRICT., PIN - 673524

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BY ADV C.S.MANILAL

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RESPONDENT/S:

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1 JACOB MATHEW,S/O LATE V C MATHEW, VADAKKAYIL HOUSE, VADAKODU P O, KANGARAPADY, KOCHI, PIN - 682021

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2 ALLAMAH GOLD INDIA PRIVATE LIMITED, RODRICKS OPTICIANS, FOURTH FLOOR, CAPITAL TOWERS, GENERAL HOSPITAL ROAD, MANJALIKULAM, THIRUVANANTHUPURAM DISTRICT, REPRESENTED BY ITS DIRECTOR RAJAN M, THONGAL VILA VEEDU, NELLIMOODU P.O., THIRUVANANTHUPURAM, PIN - 695524

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3 RAJAN M,S/O M MADHAVAN NADAR, THONGAL VILA VEEDU, NELLIMOODU P.O., THIRUVANANTHUPURAM DISTRICT,, PIN - 695524

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4 RASHID AZHIKKODANTEKATH, S/O ABDUL LATHEEF MUKKOTH, AZHIKKODANTEKATH HOUSE, CHALIL, PAPPINISSERY, KANNUR DISTRICT,, PIN - 670561

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BY ADV K.P.ARAVINDAKSHAN

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OTHER PRESENT:

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ADV JACOB MATHEW

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THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 18.03.2025, THE COURT ON

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THE SAME DAY DELIVERED THE FOLLOWING:

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OPC 1986/24

2025:KER:28355

JUDGMENT

(Dated this the 18^th day of March 2025)

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Petitioner is a public limited company, having its registered office at Ernakulam. Respondents 2 to 4 entered into

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a loan agreement on 09.01.2023, with the petitioner for the purchase of a Power Generator. The loan agreement included

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an arbitration clause stipulating that all disputes will be resolved through arbitration under the Arbitration and Conciliation Act

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1996, and an advocate was designated as the sole arbitrator.

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Respondents 1 to 3 received Rs.5,90,000 from the

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petitioner to be paid in instalments, but defaulted on repayment.

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Therefore, the petitioner filed CMA (Arb.) No. 920/2023 in the 2^nd Additional District Court, Ernakulam, seeking the appointment of an Advocate Commissioner to seize the hypothecated generator and due to a mistake, that occurred in the asset's location, the court-ordered seizure could not be

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executed by the Commissioner.

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In the meantime, the 1^st respondent, a non-party, filed an application to get impleaded himself in the proceedings. The petitioner, thereafter, filed a not press memo on 21.10.2023, withdrawing CMA (Arb.) No. 920/2023. Later, the petitioner filed CMA (Arb.) No. 1355/2023 before the VII Additional District Court, Ernakulam, to appoint an Advocate commissioner to take possession of the hypothecated assets, which was allowed and an Advocate Commissioner was deputed for the same. The Commissioner filed an interim report requesting police assistance since she was subjected to physical assault by the first respondent and the court granted the same and the Advocate Commissioner successfully seized the asset and handed it over to the petitioner.

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As per Ext P1, the petitioner issued a notice dated

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10.11.2023, under Section 21 of the Arbitration Act, to

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OPC 1986/24

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Respondents 2 to 4. Subsequently, the petitioner submitted a Claim Statement to the designated Arbitrator and issued notice dated 16.04.2024, to the parties to appear before him in Arb. Ref. No. 613/2023. However, respondents 1 to 3 did not appear and therefore, the petitioner filed IA No.1/2024, seeking permission to sell the repossessed asset. This was allowed by the tribunal, by order dated 31.07.2024.

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The 4^th respondent, who was not initially a party to the proceedings, filed Ext.P10 as I.A. No.07/2024 to be impleaded himself in the party array, without serving a copy on the petitioner. The court, without notice to the petitioner, granted the impleadment by order dated 06.03.2024. The petitioner then filed I.A.No. 09/2024, to set aside the impleadment order and while the said I.A was pending, the 4^th respondent filed I.A.No. 10/2024, seeking permission to

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examine the repossessed asset, to which the petitioner filed a

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5

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OPC 1986/24

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2025:KER:28355 Counter. the 4^th respondent filed a reply affidavit to the counter. The court, after hearing the parties, allowed I.A. No.10/2024, by Ext P15 order dated 14.08.2024, directing the petitioner to release the asset to the 4^th respondent. Challenging Ext P15,

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present O.P.(C) stands filed.

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The counsel for the petitioner contends that the petitioner in I.A. No 10/2024, the 1^st respondent, being a stranger to the proceedings, has no locus to get impleaded in the proceedings and does not have vested title over the secured asset. Further, he contended that the trial court, on a wrong perspective, ordered the release of the secured asset to the 1^st respondent, and hence, Ext P15 order is perverse and illegal, and is liable to be set aside, since a third party to the agreement is not entitled to the relief under section 9 of the Arbitration Act.

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The counsel for the 1^st respondent filed a counter

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denying the averments in the petition. In the affidavit along with

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6

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OPC 1986/24

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2025:KER:28355 the impleadment application, it is stated that the petitioner herein was never in possession of the equipment in order to seek possession of the same, whereas, it was in the possession of the 1^st respondent who seeks for impleadment, which confers locus standi upon him. Further, he contends the petition to be not maintainable challenging the validity of the hypothecation agreement so produced. Moreover, since CMA (Arb.) No. 920/2023 was dismissed as not pressed and without getting leave of the court, the petitioner herein is not entitled to file a second petition on the very same cause of action as provided under Order 23 Rule 1(3)(b) CPC. Thus, the petitioner has come up with the present CMA(Arb.), suppressing the fact regarding the earlier petition filed. Thus, prayed for dismissal of this

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O.P.(C).

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Heard counsels appearing on either sides.

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7

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OPC 1986/24

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2025:KER:28355 9. Ext.P12 was filed by the 1^st respondent herein, seeking return of the goods hypothecated to the petitioner on the premise that he wants to proceed against the asset referred to in the present CMA (Arb.). It is found that the CMA (Arb.) which was filed earlier by the petitioner herein, was dismissed as not pressed due to the omission to mention the place where the asset is stationed. This was the reason to not press the erstwhile CMA and to file the present one, after curing the mistake thus occurred. Thus, the present CMA (Arb) cannot be said to be not maintainable.

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It is pertinent to note that the next question arose in this O.P.(C) is that whether the 1^st respondent, who is the petitioner in I.A. No.10/2024, has locus standi to get impleaded in the above proceedings, which is to be decided at a later stage, after having an adjudication on I.A.No.9 of 2024, which is pending. It is apposite in this context to read section 9 of the

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Act, which is as follows;

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“9. Interim measures, etc., by Court .-[(1)] A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a Court:-

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(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or

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(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;

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(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;

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(d) interim injunction or the appointment of a receiver;

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(e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

xxx xxx xxx ”

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On going through the provision, a third party has no right to invoke section 9 of the Arbitration Act. Reliance has been placed on a decision rendered by the apex Court in Firm Ashok Traders v. Gurumukh Das Saluja & Ors. (2004 (3) SCC 155), wherein it was held that the qualification a person should possess while invoking the said section is of being a ‘party’ to the arbitration agreement and a person not party to an arbitration agreement, cannot enter the court for protection under the said section.

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This court in Shoney Sanil v. Coastal Foundations (P) Ltd; reported in (2006 (1) KLT 915) held that the intention of the legislature is explicit from the opening words of sec 9 of the Arbitration Act itself that it confine to the matters relating to the arbitration agreement between the parties only and this can only as against the party to an agreement, or, at best, against

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any person claiming under him.

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OPC 1986/24

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In Vijay Arvind Jariwala v. Umang Jatin

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Gandhi; (2022 KHC 4539), it was held that interim measures under Section 9 of the Arbitration Act are intended to operate between the parties who are bound by the arbitration agreement and including a non-party in Sec 9 of the Arbitration Act proceedings would create complications, as the arbitrator's jurisdiction is limited to disputes between the parties to the arbitration agreement.

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Going through the counter filed by the petitioner

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herein to I.A. No.10 of 2024, the very locus standi of the 1^st respondent is challenged, relying on the dictum in Firm Ashok Traders ( supra), as held by the apex court. It is pertinent to note that the prayer in I.A.No.10 of 2024 was to produce the assets before the court for examination, while the relief granted was to handover the movables to the 1^st respondent, that too,

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when an application as I.A. No.9 of 2024, filed by the petitioner

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11

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OPC 1986/24

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2025:KER:28355 herein, to set aside the order of impleadment of the 1^st

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respondent, is pending consideration. So, it is discernible that

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I.A.No.9 of 2024 was to be considered first by the court below, before passing a judgment in I.A.No.10 of 2024. Therefore, I deem it appropriate to dispose of this O.P.(C) directing the District Court, Ernakulam, to consider I.A.No.9 of 2024, which is filed to set aside the order in I.A.No.7 of 2024, and then resort to I.A.No.10 of 2024. It is also made clear that this court has not gone into the merits of the case and it is left open for the parties to take contentions before the court below.

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Sd/-

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BASANT BALAJI JUDGE

dl/

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OPC 1986/24

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	`APPENDIXOF OP(C) 1986/2024`
`PETITIONER EXHIBITS`
`Exhibit P1`	`A COPY OF THE AGREEMENT DATED 09.01.2023 BETWEEN` `PETITIONER AND RESPONDENTS 2 TO 4`
`Exhibit P2`	`A COPY OF THE CMA (ARB.) NO.920/2023 DATED` `08.09.2023 BEFORE THE DISTRICT COURT, ERNAKULAM`
`Exhibit P3`	`A COPY OF THE NOT PRESS MEMO DATED 21.10.2023 IN` `C M A (ARB) NO. 920/2023 BEFORE THE DISTRICT` `COURT ERANAKULAM`
`Exhibit P4`	`A COPY OF THE APPLICATION FILED IN CMA (ARB.)` `NO.1355/2023 DATED 07.12.2023 BEFORE THE DISTRICT` `COURT ERANAKULAM`
`Exhibit P5`	`A COPY OF THE COMMISSION APPLICATION DATED` `07.12.2023 AS IA NO.03/2023 FILED IN CMA (ARB.)` `NO.1355/2023 BEFORE THE DISTRICT COURT ERANAKULAM`
`Exhibit P6`	`A COPY OF THE INTERIM REPORT OF THE ADVOCATE` `COMMISSIONER DATED 26.02.2024 IN IA NO.03/2023 IN` `CMA (ARB.) NO.1355/2023 BEFORE THE DISTRICT COURT` `ERANAKULAM`
`Exhibit P7`	`A COPY OF 2ND COMMISSION REPORT FIELD BY THE` `ADVOCATE COMMISSIONER 2024 IN IA NO.03/2023 IN` `CMA (ARB.) NO.1355/2023 BEFORE THE DISTRICT COURT` `ERANAKULAM`
`Exhibit P8`	`A COPY OF THE NOTICE DATED 10.11.2023 UNDER` `SECTION 21 OF THE ARBITRATION AND CONCILIATION` `ACT`
`Exhibit P9`	`A COPY OF THE ORDER IN IA NO.1/2024 DATED` `31.07.2024 IN ARB. REF. NO.613/2023 BEFORE THE` `ARBITRAL TRIBUNAL KOCHI`
`Exhibit P10`	`A COPY OF THE APPLICATION TO IMPLEAD THE 4TH` `RESPONDENT AS IA NO.7/2024 DATED 04.03.2024 IN` `CMA (ARB.) NO.1355/2023 BEFORE THE DISTRICT COURT` `ERANAKULAM`
`Exhibit P11`	`A COPY OF IA NO.09/2024 IN IA NO.7/2024 IN DATED` `25.03.2024 IN CMA (ARB.) NO.1355/2023 BEFORE THE` `DISTRICT COURT ERANAKULAM`

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OPC 1986/24

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`Exhibit P12`	`A COPY OF THE IA NO.10/2024 DATED 18.05.2024 IN` `CMA (ARB.) NO.1355/2023 BEFORE THE DISTRICT COURT` `ERANAKULAM`
`Exhibit P13`	`A COPY OF THE COUNTER AFFIDAVIT IN IA NO.10/2024` `IN CMA (ARB.) NO.1355/2023 DATED 29.06.2024` `BEFORE THE DISTRICT COURT ERANAKULAM`
`Exhibit P14`	`A COPY OF THE REPLY AFFIDAVIT IN IA NO.10/2024 IN` `CMA (ARB.) NO.1355/2023 DATED 5.7.2024 BEFORE THE` `DISTRICT COURT ERANAKULAM`
`Exhibit P15`	`A COPY OF THE ORDER DATED 14.8.2024 IN IA` `NO.10/2024 IN CMA (ARB.) NO.1355/2023 OF THE` `DISTRICT COURT ERANAKULAM`
`Exhibit P16`	`A COPY OF THE IA NO.11/2024 DATED 14.08.2024 IN` `CMA (ARB.) NO.1355/2023 BEFORE THE DISTRICT COURT` `ERANAKULAM`
`RESPONDENT EXHIBITS`
`Exhibit R1(b)`	`True copy of the certified copy of the CMA` `(Arb)No. 920/2023 (Exhibit P4) dated 08.09.2023`
`Exhibit R1(c)`	`True copy of the certified copy of invoice dated` `07.12.2023`
`Exhibit R1(a)`	`True copy of the certified copy of the CMA` `(Arb)No. 1355/2023 (Exhibit P4) dated 07.12.2023`

M/S. Hedge Finance Limited v. Jacob Mathew

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M/S. Hedge Finance Limited v. Jacob Mathew

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