Dismissed

M/s. Psr Infrastructures v. The State of Telangana

Telangana HC10 Oct 2025WP/37518/2022

Case brief

AI extract

What is this about?

Partnership firm sought writ of mandamus against cancellation and transfer of its vehicle registration certificate effected pursuant to interim orders of a sole arbitrator during loan-default arbitration. Citing Section 5 of the Arbitration Act and Supreme Court precedent, the court held writ interference impermissible while arbitration subsisted, noting petitioners had already challenged the arbi

What the court decided

AI extract

M/s. Psr Infrastructures Vs The State of Telangana — Arbitration | Telangana HC (2025)

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E LAN^{G AN A} I N^{rH E H I G H} "' (SPectat : :li$[''Hf#::^{Lrl rlprre' ----} til

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PRESENT

THE HONOURABLE^{SRI JUSTICE NAGESHBHEEMAPAKA}

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Between:

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1 Y/'- ti L5,1'e"HLU*"?J'S'n:r?'*43'';'i' iJrreeral^{Courts Apdnltt.,t"o'} ^^^{t t.lestat No.301Block B'}

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524003'

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2BH::?5,3[f#[ffi#?ts:'#,,i;n?;a33;l;]'J3i"l'l'frt:;; 524003. ^. :,-^ c.trr D No.26-1-1576'.^{r!'-t..llY'"J^rr."*524003.} 1$Juot'Lo$'

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aF',t[ir"p,*i,fjl,fl,?sfl v' bourts^{Apartments' Dlrrtaeor} lr#]"1"'.t;]-liJ,h,ilXrllft^{vvrY"' '} ..PETITI.NERS

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..PETITI.NERS

AND

petition under Articre^{226 of the constitutionof rndia praying that in the} circumstances^{stated in the affidavitfiled therewith' the High court may be} pleasedtoissueawritofmandamusoranyotherappropriatewrit,orderor direction^{decraringthe actions of the Respondent No.2 in issuing directionsdated} 06-09-2022^{inMemo No. 3600/A4118 PMl2o22 inApplicationNo'} TS107/36^{oor2oz2tR,and consequenry directions dated 1r-og-2o22in Apptication} No. T5102144243t2o22,^{on the file of the RegionalTransport Authority'} lbrahimpatnam,^{Ranga Reddy District, pursuantto which the RespondentNo'2} has cancetted the Finat^{Registration Certificate in the nameof the PetitionerNo'1}

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with respect to Vchint^ r,^ Responde., ".r,'ll|l: ffi:ne No rs07uE3600, and issued the same to an application made by the R"rpono"nt No.4, and thereafter issuirn ", ;il, and arbitrary and iresar set aside tn",,uliorarive ",^{o,',",i",;TlJHil:Tll:;:} :;*eins nsequenfly

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petition under Section 151 cPc praying that in the circumstar the affidavit fired in support of the the Respondent No.2 not to ent petition, the High court may be 0,""r;:":;:I resistration or ttre vehicr" o"rringu#;ffi:IiT application in respect or the :r"d:' without notice to "i withour providins;,n::ffii""#ffi:-..,T,J

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COUNSCT fOr thE PEtitiONCrS: SRI ACHARYA BHARATH KRISHNA counset for the lrespondent No. 1 & 2:Gp FOR TRANS'.RT Counsel for the Flespondent No. 3 to 5:

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The Court made flre following: ORDER

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HON'BLE SRI JUSTICE NAGESH BHEEMAPAI{A

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WRIT PETITf,ION 37S1a OE 2022

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ORDER:

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Petitioner No.l is a partnership firm involved in the business of real estate and construction; petitioners 2 and 3 are partners of the said firm. Petitioners are the owners of vehicle bearing Registration No. TS 07 UE 3600 (subject vehicle) having purchased the same in 2016. Petitioner No.l purchased through a loan facitity given by Respondent No. 3 - Axis Bank Limited. They had repaid the said mount and the loan account was declared tlosed'. Further, in the course of business, on assessing the repayment history of petitioner No.1, Respondent No.3 offer ed, / granted additional loan facility. Petitioners 2 and 3 -are co-borrowers in-respect of -.the operational e:(penses-----.*-. incurred by Petitioner No.l. Pursuant to the additional loan facility, the subject vehicle was hypothecated with Respondent. No.3. . :

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1 Petitioner No.l due, to outbreak of COVID-19 l t their business and

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could only resume the business in September 2021. They^had paid EMI up to Febnrary 2O2O only pursuant to the additional loan facilit5r availe d. uid.e Agreement dated. 25.:06.2019. Due^to

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non-payment of the loan amount, disputes arose between Respondent No.3 and Petitioner No.l. Therefore, Respondent No.3 - bank initiated arbitration proceedings and in re5pect of the same, Sri K.C. Rirrtestr, Advocate was appointed as the sole arbitrttor for adjudication of the claims between petitioners and Respondent No.3.

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1.2. On 18.09.2021, the sole Arbitrator passed an ex parte.:nterim order, upon an Interlocutory Application filedl by Respo:rdent No.3, permitting Respondent No.3 bank to take posses,sion of the subject vehicle and keep the same in their custoiy until further orders. The relevant portion of the interim order is extracted hereunder:

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" 6. The Tribunal has also carefully gone through the provi:;ions under Section 17 of the Arbitration and Conciliation (Amendment) Act, 20 15, which reads as follows:

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" L7(L) : A party may during the arbitral proceedings or at any time after the making of the arbitral award but before it is enclosed in accordance with Section 36, apply to the arbitral Tribunal.

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(i) For the appointment of a guardian for a minor or 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:

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(a) The trrreservation, interim custody or sale of any goods which are the matter of the arbitiation afreement^-

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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 arbitratiorr, t. as to which any quest.on may arise therein and authorising for any of the aforesaid

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purposes any per-son 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 ma!e, 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,agrintment of a receiver;

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(e) Such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient.

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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.

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Under Section 17 of the Arbitration and conciliation (Amendment) Act, 2or5, the Arbitral rribunal shall have the same power as the court has for the purpose of and in relation to any proceeding before it for granting interim measure of preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement and such other interim measure of protection as may appear to the Arbitral Tribunal to be just and convenient.

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In the case on hand, the subject mater of the dispute is that the claimant has extended financial facility to the re-qpondents for the purchase of the vehicle in reference. However, the respondent have been utilising the vehicle without complying with their terms bf^{:iruiii"ti"ro} interim relief sought for is against the asset which is the subject mattbr of the Loan Agrbeinent in reference. Therefore, this Tribunal has ample power to pass such an ord.er of interim measure of custody. The claimant t "" esiauusn"a prima facie case.

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=In the light of the above, in the interest ofjustice and for the of this claimant's interest in of the of

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the dispute, this Tribunal ORDERS PERMITTING the claimant to

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tetii6kl being AsHoK-f,ElAAmfbeerflng-Registratiori No. -- TS 07 uE 3595 wherever it is found. in a lawful manner with porice protection, if ri:quired and keep the vehicle in their custody tifl further u

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1.3. Pursuant to the said order, Respondent No.3 had taken possession of the subject vehicle on 24.09.2O2L. thereafter, they f,rled another Interlocutory Application seeking a direction:to sell the vehicle and deposit the proceeds to the loan account of Petitioner No.l pending disposal of the main arbitreLtion proceedings. On 26.O2.2022, the sole Arbitrator passec[ the order permitting Respondent No.3 to sell the vehicle and rr:alise the sale proceeds for repayment. Pursuant to the said order, Respondent No.3 scild the vehicle to a third party and isrsued post-sale notice dated 07.O4.2022 to Petitioner No.1 and also further directed them to pay amounts being payable towards additional loan facility pursuant to the Agreement dated i25.O6.2olg.

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L.4. Aggrieved with the said order, petitioner filed CMA No. 196 of 2022 and this Court by order dated 28.O4.2022 in I.A.No. L of 2022 suspended the order dated 26.02.2022 passed by the Sole Arbitrator. According to petitioner, despite the order dated 28.04.2022, Respondent No.3 had filed the Application before Respondent No.2 seeking cancellation of Final Registration Certificate (FRC) in the narne of Petitioner No. 1 and sc,ught for issuance of fresh registration in the name of ResporLdent No.3. Further, Respondent No.3 issued. Form 37

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dated 27.O4.2O22 in respect of the said Application initiated by Respondent No.3 and the sarne was received by Petitioner No.1 on O6.05.2022. According to petitioners, this was belatedly I received by them that too at the wrong addiesses.

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1.5. Petitioner No.l addressed letters dated 1O.O5.2O22 and L2.O5.2O22 to Respond.ent No.2 conve5ring objection for issuance of FRC to Respondent No.3, however, after several correspondence, Respondent No.2 on 22.08.2022 issued NOC for transfer of FRC in favour cif Respondent No.3. Further, Petitioner No.1 when conducted a regular check on O9.O9.2O22, it came to their knowledge that Respondent No.2 had already issued FRC in favour of Respondent No.3, as such, they immediately approached Respondent No.2 on 12.O9.2022 and, --quesfioneA tiariSfer of FRC in fav6ui5f R@6ni1e-n't-Nd3;---'..

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1.6. Further, Respo4dent No.3, in turn, had sold the ---gg$eg!^{vghicle to RespondentNo.s ylPEdgbo fS9g51:g-IRC} in his name. Therefore, the grievance of petitioners is that when the matter is already ceased of by this Court utde CMA No. 196 of 2022 by way of suspending the order passed by the sole Arbitrator on 26.02.2A^,2, the manner in which Respondent No.2 transferred FRC in favour of Respondent No.3 is bad in

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: ; i I t

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law, as such, the same is^{liable to be set hsid.eas being illegal} and aI'bitrary.

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This court by order^{dated 28.09.2022in I.ANo. 1 of} 2022,trdered that^pending '6r6n"r^{orders, the 2"d respondent is} directr:d not to affect^{furtherregistration} /^{transferof subject} vehicl,: bearing Registration^{No- TS 07 UE 3600'}

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Per contra, it is the^{contentionof RespondentNo.3} that petitioners availed^{additional loan facility and to that effect,} an Ag;reement was executed^{oh 25.06.2019.Petitioner No.l} made payments up to^{February2O2O and thereafterdespite} severeil reminders^{fromRespondents. Having left with no option,} Respondent No.3 invoked^{arbitrationclause which is very much} subsir;ting in Agreement^{dated 25.06.2019 which was executed} for additional loan^{facility between Petitioner No- 1and} Respondent No.3. Accordingly,^{Respondent No.3, after invoking} arbitration clause,^{filed I.A. before the sole Arbitratorseeking} interirn protection under^{Section 17 of the Arbitration and} conciliation^{(Amendment)Act,2015.} Vide order dated ----18.09.2021, the sble Arbitrator had permitted Respondent No.3 to tak:e possession of the^{subject vehicle. Thereafter, petitioner} No.l did not clear the^{outstanding duesdespite several} reminders from Respondent^{No.3, as such they were No.3 was}

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constrained to move another Interlocutory Application before the Arbitrator who uide order dated 26.02.2022 permitted Respondent No.3 to sell the vehicle to realise the loan amount. Accordingly,: Respondent No.3 initiated- proceedings^:before Respondent No.2 for tiansfer of FRC from Petitioner No.l on 22.08.2022, and Respondent No.3 also initiated proceedings before Respondent No.2. for selling the subject vehicle to third party for realisation of loan amount and accordingly, sold. the subject vehicle to Respondent No.S. Therefore, Respondent No.3 has not violated any law and pursuant to the orders obtained from the learned Sole Arbitrator only, they had initiated proceedings before Respondent No.2 for transfer as well as selling the subject vehicle to third parties for realisation of loan amounts actvanced to petltloner 4. Petitioners filed reply almost on similar in the -writ aflidavit. 5. Heard Sri Acharya Bharath Krishna, learned counsel for petitioner as well as learned Government Pleader for Transport on behalf of Respondents I and^:2 and Sri P. Ramachandra, learned counsel for Respondents 3 and 4. 6 It is an admitted fact that dispute was between Petitioner No.l and Respondent No.3 with respect to non-

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paym,snt of loan amounts^'ad.vanced by Respondent No.3 pursuant to the Agreement dated 25.06.2019. Admittedly, agreernent contained the clause with respect to arbitration. As such, Respondent No.3 had initiated arbitral proceedings and accor<lingly, obtained order under Section 17 as an interim measure on 18.09.2O2L and thereafter, another interim order dated 26.02.2022. No doubt, Petitioner No.l filed CMA No. 196 of 2022 and obtained an ord.er wherein the order dated 26.02 2022 of the learned sole drbitrator was suspended. While that treing So, petitioners have chosen to hle the present Writ Petition challenging the action of Respondents 2 and 3.

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It is apposite to refer Section 5 of the Arbitration and Conciliation Act, 1996 which read.s as under:

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-----(^{- --- ---5."-Extent} of^{judicialintervention:} - -Notwithstanding^--- ---anything-contained -in -any-other law for the time -beingin-force,-in mattr:rs governed by this Part, no judicial authority shall intervene except where so provided in this Part."

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Section 5 of the Act minimises judicial interference in art,itral proceedings, confining interventions^-strictly to the - - --EFcffi e:- Thi;'

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grappled with circumstances whe,re exercising writ powers were deemed necessary to preserve justice. However, the Honble scope oI judicial interference

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affirming two fundamental principles. I) writ jurisdiction of high courts remain intact despite section 5 of the Arbitration Act; (ii) exercise must be limited to rare and exceptional cases such as those involving manifest lack of juristtiction, bad taith or violation of principles of natural justice. 9. It is to be noted that the Arbitration Act establishes a --*obust -legal framework designed to facilitate dispute resolution through arbitration. This legislation was drafted to minimise judicial intervention and promote party autonomy, thereby aligning Indian practice with international norms and expectations. In spite of section 5 of the Act, the courts are expressly prohibited from interfering in matters governed by the Arbitration Act, except as explicit situation within its

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10 ln Deep Industries o. ON@t, the Hon,ble Supreme Court has

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1n explicit terms, held that'writ should be exercised sparingly, primarity -when petitioner has no alternative remedies or when one party demonstrates clear bad faith. It is also to be noted that-section 5 of tlre Act stipulates: -that^{there shall be .no judicial} interference in arbitration' proceedings -exdept where so provided. in lhisJart Jlndoubtedly, .-,

t 1zozoy 15 scc 706

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this p::ovision includes ion-obstante^{clause hotwithstanding} anything contained in law'. This clause brings^{out the} legislative intent to grant the Act overriding^authority, reStricl.ing Court interference tO only those^{instAnceswhere the} Act exolicitly provides for it. The clear'language of^Section5 reinfor,:es the self-corjLtained langUage^{of the ArbitrationAct and} explicit:ly prohibits any external^{judicial interventionunless}

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specifir:ally provided for in the Arbitration^Act.

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Reference is also made to the^judgments of^the

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Honbl: Supreri're Court, in the following^cases:

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I\tnjrrb State Pouer Corporatlon Limited^{a. EMTA Coat Ltd.-z}

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Odisha Stolte Road Ttanqtor-t, Corporation^{u. ARSSBus Tertninal} ['ut. Ltd.3

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I;BP & Co. a. Patet Etqg. Ltd..e

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L2 From legal precedents, it iS clear that Section 5 of the Act does not allow^{judicial intervention.} 13. In the case on hand, admittedly, Respondent^No.3 had iilready initiated arbitral^proceedings by^invoking arbitra tion^-clause pursuant^-to the agreement dated^€ 5il620^{I 9 .-'-''} Petitioirers werrf a-[S<i party-:ta the same^befoie-th. Sd.^*b-i.&etoi and ttrey had suffered orders passed by the arbitrator mbre

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. (2020) 17 scc 93 3 z0zt Scc online ozu 898 4 lzoos;8 scc 618

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particularly the order dhted 26.02.2022. Therefore petitioners chose to challenge the said order before this Court in CMA No. 196 of 2022 and by order dated 28.04.2022 obtained interim suspensioh of the order dated 26.02.2022. This, clearly demonstrates, petitioners have subjected themselves to the arbitration proceedings and thereupon, filed CMA No. L96 of 2}22--before^.this Court and^- obtained interim -ord.er-dated-^- 28.04.2022. Petitioners are not remediless. If they feel that FRC is transferred to Respondent No.3'in contravention of the orders passed in CMA, they c€Ln as well move an Application complaining violation of the or.der of this Court. Though petitioners are having remedy of approaching this Court with respect to violations .that took place, they have not chosen to-to'" same

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while Arbitration proceedings are .subsisting. The law with regpgct t9.- .e-ntertainijrg_yrit petitionS against arbitration proceedings is very much clear from the above enunciation of law. Admittedly, Respondent No.3 as well as petitioners entered into aibitration proceedings- and whili"^'' those

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proceedings is subsisting, entertaining the Writ Petition is not permissiblb-more-so,.when-thereisnopleaof1ackofjurisdiction--or bad faith. Petitioneis"thdmselves have challenged the order

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i I -'!. I ; I ,i

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'i :',: '

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.i^1, .{', .. . l;;..:*...-..-.

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dated 26.02.2022 and obtained interim^{suspension of the said} order, ,a's such, this Court feels that^{petitioners are having} efficacious remedy of approaching this Court^{and complain} about: violation committed by Respondent^{No.3. Without} : resorting to such procedure, paralelly filing Writ^Petition challen;3ing the action of Respondent^{No.3 is impermissible.} L4. In the result, the:Writ -Pe.ti-f.ion is dismissed.^No costs.

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Consequently, miscellaneous Applications, if any shall stand closed.

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BHAVANI SWAMY ANT RE

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//TRUE COPY//

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ON OFFICER 1 One CC to SRI ACHARYA BHARATH KRTSH NA, loPUCl 2 Two CC:; to GP FOR TRANSPORT , High Court for of Telangana tourl 3 Two CD Copies MMT GJP W

To,

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HIGH COURT

DATED:1011012025