- 1 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF MARCH, 2026 BEFORE THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA MISCELLANEOUS FIRST APPEAL NO.7967 OF 2019 (AA) BETWEEN: SRI SRINIVASA GANIGA S/O. LATE BATCHA GANIGA, AGED ABOUT 64 YEARS, R/AT SHREE KRISHNA SANKIRTHANALAYA, JARJADDU, CHERKADY VILLAGE AND POST, BRAHMAVARA TALUK-576215 UDUPI DISTRICT. …APPELLANT (BY SRI ANIL SHEKAR K.S., ADVOCATE) AND: 1. M/S. SHRIRAM TRANSPORT FINANCE CO. LTD., REGD. OFFICE AT NO.123, ANGAPPAN NAICAKAN STREET, CHENNAI-1, AND BRANCH OFFICE, AT 2ND FLOOR, RAJ TOWER, NEAR CITY BUSTAND, UDUPI-576101 REP. BY GPA HOLDER, PRAKASH MESTA S/O. HONNAPPA, AGED ABOUT 56 YEARS. 2. NEELADHARA SALIAN S/O. CHANDRAVATHI, R/AT H.NO.19-114, MADHAVANAGAR, MOODDABETTU VILLAGE, KODAVOOR POST-576108 UDUPI TALUK AND DISTRICT. …RESPONDENTS (BY SRI M. VAIBHAV ALVA, ADVOCATE FOR SRI M.J. ALVA, ADVOCATE FOR R-1; NOTICE TO R-2 IS SERVED & UNREPRESENTED) Digitally signed by MAHALAKSHMI B M Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 THIS MFA IS FILED UNDER SECTION 37(1)(a) OF THE ARBITRATION AND CONCILIATION ACT, AGAINST THE JUDGMENT AND AWARD DATED 30.07.2019 PASSED IN A.A.NO.1/2019 ON THE FILE OF THE PRL. DISTRICT AND SESSIONS JUDGE, UDUPI, ALLOWING THE PETITION FILED UNDER SECTION 9 OF THE ARBITRATION AND CONCILIATION ACT. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MRS. JUSTICE K.S. HEMALEKHA ORAL JUDGMENT The present Miscellaneous First Appeal is preferred by respondent No.1 in A.A.No.1/2019, on the file of the Principal District Judge, Udupi (‘Trial Court’ for short). By the impugned order dated 30.07.2019, the petition filed by respondent No.1-Company herein under Section 9 of the Arbitration and Conciliation Act, 1996 (‘Act, 1996’ for short) seeking an order of mandatory injunction/appointment of a receiver pending arbitration proceedings against the appellant herein came to be allowed directing the appellant to surrender Mahindra Scorpio bearing registration No.KA-21M-7938 (‘vehicle’ for short) to the custody of the petitioner (respondent No.1 herein) along with all records thereto. - 3 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 2. Parties herein are referred to as per the ranking before the Trial Court for the sake of convenience. 3. The question that falls for consideration before this Court is: “Whether an application under Section 9 (1) of Act, 1996 is maintainable when the arbitration proceedings are pending?” 4. Heard learned counsel for the appellant and learned counsel for the respondents and perused the material on record. 5. The petitioner-Company contended that respondent No.1 had entered into a loan-cum- hypothecation agreement with the petitioner-Company for the purchase of Mahindra Scorpio vehicle bearing KA-21M- 7938. Respondent No.1 was the borrower and respondent No.2 was the guarantor. Pursuant to the agreement, a loan of `4,23,128/- was availed. As the respondents failed to repay the loan in terms of the agreement, they became defaulters. The agreement contained an arbitration - 4 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 clause, and therefore, the dispute was liable to be resolved through arbitration. 6. Pending initiation of the arbitration proceedings, the petitioner-Company filed petition under Section 9 of the Act, 1996 seeking interim protection by way of mandatory injunction directing the respondents to surrender the vehicle for securing the loan amount through appropriate orders. 7. Learned counsel for the appellant, drawing the attention of this Court to Section 9 (3) of the Act, 1996, submits that once an Arbitral Tribunal had been constituted, the Court could not have entertained an application under Section 9 (1) unless it is found that circumstances existed rendering the remedy provided under Section 17 inefficacious. It is contended that no such circumstances exist in the present case and instead of seeking relief before the Arbitral Tribunal, respondent - 5 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 No.1-Company approached the Court under Section 9 (1) which is unsustainable. 8. Per contra, learned counsel for respondent No.1-Company sought to justify the order passed under Section 9(1) of the Act, 1996 and submits that, pursuant to the deposit made by the appellant before the Executing Court in Ex.C.No.168/2019, respondent No.1 has withdrawn the amount and addressed a letter stating that the matter has been settled and requesting withdrawal of the appeal. 9. In this context, learned counsel for the appellant submits that there is no such settlement and the arbitration proceedings are still pending adjudication. It is submitted that any amount withdrawn by respondent No.1 shall be subject to the final outcome of the arbitral proceedings in Arbitration Application No.17/2019. 10. The said submission is recorded. - 6 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 11. This Court has carefully considered the rival submissions and perused the material on record. 12. It is undisputed that there existed a loan-cum- hypothecation agreement between respondent No.1 and petitioner-Company. It is also not in dispute that respondent No.1 had availed financial assistance for purchase of the vehicle and has defaulted in repayment. In view of the arbitration clause, the proceedings are pending adjudication. When such was the case, the petitioner-Company filed a petition under Section 9 (1) of the Act, 1996 seeking a mandatory injunction/appointment of a receiver pending arbitration proceedings against the respondent. 13. Section 9 (3) of the Act, 1996 reads as under: “Section 9(3): Once the Arbitral Tribunal has been constituted, the Court shall not entertain an application under Sub-Section 1, unless the Court finds the circumstances exists which may not render the remedy provided under Section 17 efficacious.” - 7 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 14. The above provision clearly envisages that once an Arbitral Tribunal has been constituted, the Court shall not entertain an application under Section 9 (1) unless it records a finding that circumstances exist which render the remedy under Section 17 inefficacious. The said provision is couched in mandatory terms and restricts the jurisdiction of the Court to grant interim measures once the Tribunal is in consideration of the dispute. In the present case, the Trial Court while allowing the petition under Section 9(1) has proceeded on the basis that there exist a prima facie case and that the claim of the petitioner requires to be secured. However, the Trial Court has not recorded any finding whatsoever that remedy available to the petitioner under Section 17 of the Act 1996 before the Arbitral Tribunal was inefficacious or incapable of granting adequate relief. 15. The impugned order is thus silent on the mandatory requirement of Section 9(3) of the Act 1996. In the absence of such satisfaction being recorded, the - 8 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 petition itself was not maintainable before the Court. It is well settled law that once the Arbitral Tribunal is constituted, the parties are required to seek interim measures before the Tribunal under Section 17, unless exceptional circumstances are made out. Accordingly, this Court is of the considered view that the impugned order passed by the Trial Court allowing the petition under Section 9(1) of the Act 1996 is unsustainable and liable to be set aside. Hence, the point framed for consideration is answered and this Court pass the following: ORDER i. The Miscellaneous First Appeal is allowed. ii. The Order dated 30.07.2019 in A.A.No.1/2019 on the file of the Principal District Judge, Udupi is hereby set aside. iii. It is made clear that any amount withdrawn by respondent No.1-Company shall be subject to final outcome of the arbitral proceedings pending in A.C.No.17/2019. - 9 - HC-KAR NC: 2026:KHC:18275 MFA No. 7967 of 2019 iv. It is needless to say that arbitration proceedings shall be concluded as expeditiously as possible. Sd/- _____________________ JUSTICE K.S. HEMALEKHA AT List No.: 1 Sl No.: 31