Neeta Sawant CARBP-104-2025 JUDGMENT.docx

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

COMMERCIAL ARBITRATION PETITION NO. 104 OF 2025

Aditya Birla Housing Finance Ltd. …..PETITIONER

: VERSUS :

Axis Bank Limited & Ors. ….RESPONDENTS

Ms. Megha Gupta with Ms. Lavanita Chityala and Ms. Pranjali Khemnar

i/b. Hedgehog & Fox LLP,for the Petitioner.

Mr. Cyrus Ardeshir, Senior Advocate with Mr. Rushil Mathur, Mr. Aadil

Parsurampuria, Mr. Yash Pitroda, Ms. Amrita Natrajan and Mr. Smit

Solanki i/b. Mr. Mayur Shetty c/o. Kocchar & Co., for Respondent No.1.

Mr. Sarfaraz Shaikh i/b. Mr. Rishi Kapoor and Mr. Ankur G. for

Respondent Nos.2 to 5.

CORAM : SANDEEP V. MARNE, J.

JUDGMENT RESD. ON : 6 JANUARY 2026.

JUDGMENT PRON. ON : 19 JANUARY 2026.

JUDGMENT :

1) This is a petition �led under Section 9 of the Arbitration and

Conciliation Act, 1996 (Arbitration Act) seeking interim measures before

commencement of arbitral proceedings. Petitioner seeks a dire ction

against Respondent No.1-Axis Bank to handover title deeds of the subject

property to it during pendency of hearing and �nal disposal of arbitral

proceedings between the parties.

2) Petitioner is a private limited company engaged in the

business of housing �nance. Respondent No.1 is a banking company doing

business under the Banking Regulation Act, 1949. Respondent Nos. 2 to 5

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PAGE NO. 1 of 18

19 JANUARY 2026

NEETA

SHAILESH

SAWANT

Digitally

signed by

NEETA

SHAILESH

SAWANT

Date:

2026.01.20

09:01:59

+0530

Neeta Sawant CARBP-104-2025 JUDGMENT.docx

are the borrowers, who had availed credit facilities in the form of cash

credit (CC) and overdraft (OD) facility from Respondent No.1. The

borrowers approached the Petitioner on 17 July 2023 for sanction of

credit facilities of 4,70,05,000/- against security. The loan was applied

for the purpose of taking over the CC and OD facilities sanctioned by

Respondent No.1. to the borrowers. In furtherance of their application,

the borrowers submitted copies of foreclosure letters and statement of

accounts issued by Respondent No.1 relating to CC and OD fac ilities.

Petitioner sanctioned loan of Rs.4,70,00,000/- in favour of the borrowers

on 31 August 2023. According to the Petitioner, the loan was sanctioned

against mortgage of the property bearing Plot No. 25, Survey No.20,

Dwarka Service Centre Marble Market, South West Delhi, Delhi owned by

Mr. Surendra Kumar Agarwal (subject property). It appears that the

subject property was also mortgaged with Respondent No.1 for CC and OD

facilities and accordingly, title deeds of the property were in possession of

Respondent No.1-Bank.

3) On 4 September 2023, Petitioner and borrowers entered into

loan agreement, which contained arbitration clause. On 12 September

2023, the borrowers also executed irrevocable Power of Attorney in

favour of Petitioner which,

inter alia authorized the Petitioner to collect

the title documents of subject property from Respondent No.1. At the

request of the borrowers, Petitioner transferred amount of

Rs.17,05,144/- in CC account of Axis Bank of Respondent N o.1 and

Rs.96,25,003/- in OD account of Respondent No.5. On 13 S eptember

2023, Respondent No.5 issued request for debit freeze in respect of the

OD facilities. According to the Petitioner, despite disbursal of the

aforesaid amounts, Respondent No.1 failed to release the title deeds.

Petitioner therefore requested Respondent No.1 by letter dated 10

January 2024 to hand over the title deeds of the subject property. On 8

February 2024, the borrowers’ accounts were classi�ed into Non-

Performing Assets

(NPA) as per the RBI guidelines. On 19 June 2024,

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Petitioner issued notice to Respondent No.1 for handing over title deeds

of the subject property. On 15 July 2024, Respondent No.1 replied to the

Petitioner

inter alia contending that sum of Rs.88,90,126/- was pending

in relation to OD facility in the accounts of the borrowers. Petitioner sent

letter dated 27 August 2024 to Respondent No.1 contending that all the

outstanding dues in CC and OD facility were duly paid by the Petitioner. 4) In the above background, disputes and differences have

arisen between the parties. Petitioner intends to invoke arbitration

clause against the borrowers. However, for preservation of subject

matter of arbitration, the Petitioner has �led the present petition seeking

relief essentially against Respondent No.1 in the following terms:

a. That pending the hearing and �nal disposal of arbitration proceedings

and execution of any award that may be passed therein, this Hon'ble

Court may be pleased to direct Respondent No. 1 to handover the Title

Deeds of the Subject Property to the Petitioner;

b. For costs of this Petition; and

c. For such other further reliefs and orders as the facts and

circumstances of the case may require, and this Hon'ble Court may deem

appropriate.

5) On 28 March 2025, this Court issued notice to Respondent

No.1 while restraining it from creating third party rights in respect of the

subject property. Since Respondent No.1 failed to appear before this

Court despite service of notice, this Court passed further ad-interim order

dated 10 July 2025, directing Respondent No.1 to deposit the title deeds

with the Registry of this Court. Request of Respondent No.1 to vary the

ad-interim order dated 10 July 2025 was rejected by the Court by its

order dated 20 August 2025. This Court extended the time for deposit of

title deeds till 26 August 2025. Order dated 20 August 2025 also directed

senior of�cial of Axis Bank to �le af�davit to demonstrate as to how the

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debit freeze was not implemented despite the same being speci�cally

con�rmed in writing by Axis Bank. Respondent No.1 has �led

Commercial Arbitration Appeal (L.) No. 26621/2025 challengi ng the

order dated 20 August 2025 which had directed (i) Axis Bank to deposit

the title deeds of the subject property and (ii) �ling of Af�davit by Axis

Bank of�cial as to why debit freeze was not implemented. The Appeal

Court has passed interim order dated 3 September 2025 staying only the

direction for �ling of the Af�davit and the direction for deposit of title

deeds is not stayed. In compliance with the orders passed by this Court

on 20 August 2025, it appears that the title deeds relating to the subject

property have been deposited by Respondent No.1 in this Court.

6) Ms. Gupta, the learned counsel appearing for the Petitioner

would submit that the Petitioner has already invoked arbitration against

the borrowers by sending them notice under Section 21 of the Arbitration

Act. That the credit facilities are sanctioned to the borrower under

express representation that charge of the Petitioner would be created in

respect of the subject property after release of charge of Respondent

No.1. That the outstanding amounts are directly transferred by the

Petitioner to Respondent No.1 to satisfy the outstanding amounts in the

loan accounts of the borrower with Respondent No.1 Bank. That thus

Respondent No.1 had clear idea of this being a case of loan transfer. She

invites my attention to the debit freeze letter dated 13 September 2023

on which remark is made by Respondent No.1-Bank that debit f reeze

would be marked on 14 September 2023 i.e. after closure of the loan

accounts. That thus Respondent No.1 was fully conversant with the fact

that the transaction involved closure of loan account with Respondent

No.1 for the purpose of taking over the loan by the Petitioner. She would

further invite my attention to Petitioner’s letter dated 10 January 2024

requesting for transfer of title deeds to the Petitioner. She would submit

that no response was given by Respondent No.1 to letter dated 1 0

January 2024. That despite being fully aware of the case be ing of

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transfer of loan, Respondent No.1 unauthorisedly accepted request from

the borrowers on 26 February 2024 for lifting the debit freeze. That the

of�cials of Respondent No.1 were hand-in-gloves with the borrowers, who

fraudulently permitted the borrowers to use OD facility despite being

fully aware that the borrowers had availed loan from the Petitioner

against the very same property

inter alia for the purpose of repayment of

loan sanctioned by Respondent No.1.

7) Ms. Gupta would rely upon the provisions of Section 11 of

the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (SARFAESI Act) in support

of her contention that there is a statutory provision for arbitration

between two banks/�nancial institutions even in respect of non-payment

of any amount to one of the �nancial institutions. That intention of the

lawmakers is to ensure that the two banks/�nancial institutions resolve

their disputes relating to claims over the security through private

arbitration. She would therefore submit that the Petitioner is entitled to

seek resolution of disputes through arbitration even against Respondent

No.1. She places on record invocation letter dated 4 December 2025 in

support of her contention that arbitration is invoked even ag ainst

Respondent No.1.

8) Ms. Gupta would further submit that title deeds have already

been deposited by Respondent No.1 in this Court and it is in the interest

of justice that this arrangement is continued till parties resolve their

disputes through arbitration. She accordingly prays for making th e

Arbitration Petition absolute in terms of prayers made therein.

9) Mr. Ardeshir, the learned Senior Advocate appearing for

Respondent No.1-Bank would oppose the petition submitting that there is

no privity of contract between Respondent No.1 and Petitioner, and that

therefore there is no obligation on Respondent No.1 to handover title

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deeds of subject property to the Petitioner. That the case does not involve

assignment of loan and taking over the loan. That Respondent No.1 is not

concerned with the arrangement made by the borrowers with the

Petitioner. That there was outstanding balance in the OD Account even

after payment of amount by the Petitioner. That letter dated 13

September 2023 submitted by the borrowers was only for debit freeze

and not for closure of the OD account. Furthermore, the debit freeze was

to operate till further communication. He would submit that th e

Petitioner failed to take any action for a substantial period of time from

September 2023 to January 2024 and approached Respondent No .1 only

after the account of the borrowers was classi�ed as “NPA”.

10) Mr. Ardeshir would further submit that the Petitioner was

statutorily or contractually bound to close the loan Account of the

borrowers. That borrowers had merely requested for debit feeze and

since the Account was still operational, Respondent No.1 had no option

but to permit operation of Account once debit freeze was lifted by the

borrowers. He would submit that Respondent No.1 has acted with due

diligence and in a

bona �de manner. That Respondent No.1 was under no

obligation to ensure that the credit facilities sanctioned by Petitioner are

duly secured by the charge over the property. On the other han d,

Petitioner has acted negligently by permitting the borrowers to merely

put a debit freeze in OD Account without ensuring that the account was

closed completely. That Respondent No.1 did everything that a prudent

bank would do.

11) Mr. Ardeshir would further submit that Section 11 of

SARFAESI Act has no application in the present case as the Act applies

only to secured creditors. That admittedly, Petitioner is not a secured

creditor as borrowers have admittedly not created mortgage of subject

property in its favour. That therefore provisions of Section 11 of the

SARFAESI Act cannot be invoked. That Section 11 mandates resolution

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of disputes relating to priority of claims over a security. That in the

present case, since no security is created in favour of the Petitioner,

there can be no arbitration between Petitioner and Respondent No.1.

That Petitioner is seeking to elevate its status as that of a secured

creditor in absence of any valid security being created in its favour. That

an unsecured creditor cannot compel a secured creditor to return the

title deeds of the subject property. In support of its contention that a

secured creditor has �rst charge over the property, especially over

unsecured creditors, Mr. Ardeshir would rely upon judgment of the Apex

Court in ICICI Bank Ltd. vs. SIDCO Leathers Ltd. and Ors.

1

and of Division

Bench of Bombay High Court in Asset Reconstruction Company (India )

Ltd. vs. Union of India

2

. He also relies upon judgment of Delhi High Court

in Gatx India Pvt. Ltd Versus. Arshiya Rail Infrastructure Limited and

Anr.

3

in support of its contention that no order can be made against third

party who is not a party to the arbitration agreement. Mr. Ardeshir

would accordingly pray for dismissal of the arbitration petition.

12) I have also heard Mr. Sarfaraz Shaikh, the learned counse l

appearing for Respondent Nos. 2 to 5 (borrowers).

13) The borrowers in the present case had initially availed credit

facilities in the form of CC limit and OD from Axis Bank. To secure the

said credit facilities, they created mortgage over subject property in

favour of Axis Bank. During currency of the said credit facilities, the

borrowers approached the Petitioner by �ling application dated 17 July

2023 for sanctioning of loan for business purposes of Rs.4,70,05,000/-. It

appears that the outstanding amounts in the loan accounts with Axis

Bank at that time were comparatively low of about 17 lakhs in CC limit

and 96 lakhs in OD facility. After clearing the outstanding loan amounts

with Axis Bank, the borrowers were to secure balance credit facilities to

1 (2006) 10 SCC 452

2 2024 SCC Online Bom 845

3 2014 SCC OnLine Del 4181

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the extent of about 3.5 crores from Petitioner. With this plan, the

borrowers intended to close the loan accounts with Axis Bank for the

purpose of availing credit facilities with larger limits by creation of

charge of the Petitioner over the subject property to cover the loan

sanctioned by it.

14) The borrowers approached Axis Bank and secured

foreclosure letters dated 28 August 2023 indicating that the total sum

payable in respect of the cash credit account was Rs. 17,05,144/-. The

borrowers also submitted statement of accounts in respect of both the

accounts with Axis Bank. Petitioner sanctioned loan of Rs.4,70,00,000/-

to the borrowers. Out of the said sanctioned loan of Rs.4,70,00,000/- the

borrowers requested the Petitioner to transfer amount of Rs.17,05,144/-

in CC Account and Rs.96,25,003/- in OD facility account with Axis Bank.

The balance amount of Rs.3,54,46,805/- was requested to be disbursed in

the name of Respondent No.2-Company. Petitioner acted on the said

request of the borrowers and directly transferred amount of

Rs.17,05,144/- in CC Account and Rs.96,25,003/- in OD A ccount.

However it appears that there was some gap in the foreclosure letters (28

August 2023) and the disbursals (13 September 2023) in borrow er’s

loan accounts with Axis Bank. This gap apparently left some outstanding

amount of only Rs. 2,36,963.29/- in the OD account. The borrowers have

taken disadvantage of this insigni�cant differential amount in the OD

facility account, which was frozen on receipt of disbursal from Petitioner,

and is apparently revived by the Axis Bank at the borrowers’ request.

Revival and operation of the OD account is the reason why Axis Bank

contends that its charge over the mortgaged asset continues. Thus what

is done by the borrowers is to misuse the insigni�cant outstanding

amount of Rs. 2 odd lakhs to ensure that the charge over the mortgaged

property is not transferred from Axis Bank to Petitioner. The position

that obtains as of today is that Axis Bank has permitted the borrowers to

draw more amounts from the OD account which was supposed to be

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closed on account of foreclosure proposal resulting in debit balance of Rs.

77 odd lacs therein as in July 2025. Now the Axis Bank refuses to release

the charge over the mortgaged property leaving the signi�cant amount of

loans sanctioned and disturbed by the Petitioner unsecured. While there

can be little doubt that the borrowers have acted mala�dely in doing so,

the issue for consideration is whether the Axis Bank is party to this act of

the borrowers. I proceed to examine the issue.

15) It appears that Axis Bank had a fair idea of the nature of

transaction where the borrowers intended to shift the loan facilities from

Axis Bank to the Petitioner. This is clear from the foreclosure letters

followed by direct disbursal of amounts by the Petitioner in the Axis

Bank. If any doubt remained, letter dated 13 September 2023 requesting

for debit freeze in respect of the OD account makes the position further

clear. The said letter dated 13 September 2023 reads thus:

To

Bank Manager,

Axis Bank

Vikaspuri, Delhi

Subject- Request for Debit Freeze A/C No. - 920030068593519

Dear Sir/Mam,

I, Sunita Aggarwal, am holding an OD limit A/C with your bank with A/C

No. - 920030068593519. I want you to put Debit Freeze the said account

till further communication. I authorize Mr. Jagbeer Singh Aadhar No.

XXXXXXXX to deposit cheque & letter on my behalf.

Thanking you,

Your Sincerely,

Sunita Aggarwal

16) On the debit freeze letter dated 13 September 2023, the

of�cial of Axis Bank made an endorsement that ‘

debit freezing will be

marked subject to system validation on 14/9/2023

’.

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17) Thus, on 13 September 2023, Axis Bank received payments

in both the loan accounts of the borrowers alongwith speci�c letters from

the Petitioner (which bears acknowledgment of Axis Bank), as well as

request for debit freeze from the borrowers. Apparently, same of�cial of

Axis Bank has acknowledged all the three letters and the said of�cial

clearly had knowledge of payments being made by the Petiti oner for

closure of loan accounts. The debit freeze letter was secured possibly to

ensure that the OD Account is not operated beyond 13 September 2023.

18) It is the case of Axis Bank that what was submitted by

borrowers was merely ‘debit freeze’ letter and not account closure letter.

In my view

prima facie, this submission is without any substance since

Axis Bank was clearly aware of the nature of transaction and the purpose

for which debit freeze was requested by letter dated 13 September 2023.

It was not an ordinary debit freeze request for suspension of the account.

Debit freeze request was obtained to ensure that the OD facility is not

operated till all formalities for closure of the accounts were complete.

19) Since Axis Bank failed to return the title documents,

Petitioner wrote to Axis Bank on 10 January 2024, speci�cally informing

Axis Bank that the Petitioner had taken over the two loans of the

borrowers with Axis Bank and that the two payments of Rs.17,05,144/-

and 96,25,003/- was disbursed towards closure of CC and OD Accounts.

Axis Bank was clearly informed by the Petitioner that the borrowers

were deliberately not submitting their title documents and had also

started defaulting payments of EMIs. The Axis Bank was requested not

to return the title documents to the borrowers in absence of of�cer

authorised by the Petitioner.

20) The letter dated 10 January 2024 made it further clear to

Axis Bank that the transaction was a loan transaction and that Axis

Bank was not supposed to continue the loan account on the strength of

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title deeds since the loans were taken over by the Petitioner. Axis Bank

failed to respond to the letter dated 10 January 2024. Axis Bank thus

had clear idea that the loan account was intended to be transferred. It

ought to have communicated that some balance had remain ed

outstanding in the OD account due to the time gap in foreclosure letters

and remittance by the Petitioner to Axis Bank. Axis Bank however chose

to maintain silence, which conduct is not of a prudent banker.

21) As observed above, on account of the time gap between

foreclosure letters (28 August 2023) and the date of payment ( 13

September 2023), there was still a debit balance of Rs.2,36,963.29/- in

the OD Account. This enabled Axis Bank and the borrowers to treat the

OD loan account as operational, on which a mere freeze was placed. The

borrowers, who had started defaulting repayment of loan to Petitioner,

mala�dely approached Axis Bank with request for lifting of freeze on OD

Account. Despite being fully aware that the case involved transfer of

Loan Accounts to the Petitioner, of�cials of the Axis Bank

prima facie

acted hand-in-gloves with the borrowers and participated in thei r

nefarious activity and entertained their request to lift the debit freeze

submitted vide letter dated 26 February 2024 and permitted the

borrowers to borrow from the OD Account. This enabled the borrowers,

who were defaulting repayment of loan to Petitioner, to procure further

credit facilities from OD account which they got re-operationalized. As

per the reply �led by Respondent No.1, the amount of Rs.77,00,066.18/-

was payable for foreclosure of OD Account as on 24 July 2025. This

means that despite being fully aware of the fact that the loan in the OD

Account was transferred from Axis Bank to the Petitioner, Axis Bank

permitted the borrowers to operate the OD Account and released further

payments to the borrowers. This is done

prima facie by misusing the

position that the OD Account was not fully closed and security on the

subject property still continued in favour of Axis Bank.

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22) The above actions of Axis Bank are described by Mr.

Ardeshir as ‘prudent’ act which every banker would perform. I am unable

to agree. This is not a prudent or

bona �de act of Axis Bank. The Axis

Bank was made aware of the position that the borrowers had starte d

defaulting repayment of loan of the Petitioner, which they had got

transferred from Axis Bank to the Petitioner. Axis Bank took

disadvantage of the position that the loan was not fully foreclosed and the

title deeds remained with it, and continued doing business of disbursing

further loans to the borrowers who were defaulting the loans of the

Petitioner. This conduct on the part of Axis Bank is far from

bona �de.

Axis Bank has thus done business at the risk of the Petitioner. In my

view, therefore a

prima facie case is made out for taking away the title

deeds of the subject property from Axis Bank.

23) Since I have found a prima facie case in favour of the

Petitioner, it is not really necessary to go into the issue as to whether the

Petitioner is a secured creditor and whether Section 11 of the SARFAESI

Act is attracted in the present case or not. Whether there can b e

arbitration between the Petitioner and Respondent-Axis Bank is

something which need not be decided in the present petition. It is well-

settled position of law that interim measures can be directed even against

a third party for the purpose of preserving the subject matter of

arbitration. The subject matter of arbitration is the right over the

property mortgaged with the Axis Bank towards credit facilities

disbursed by the Petitioner to the borrowers. The credit facilities

advanced by the Petitioners were also supposed to be secured by

mortgage of the very same subject property. In that view of the matter, a

perfect case is made out for directing interim measures against Axis

Bank irrespective of the position as to whether there can be arbitration

between the Petitioners and Axis Bank. In that view of the matter, I am

not delving deeper into the issue of applicability of Section 11 of

SARFAESI Act. For the very same reason, it is not necessary to discuss

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the ratio of the judgment of the apex Court in Bank of India vs. Sri Nangli

Rice Mills Private Limited and Ors.

4

Similarly it is also not necessary to

go into the issue of priority of charge of secured creditor over unsecured

creditor and therefore I am not discussing the ratio of judgment in ICICI

(supra) and of Division Bench of this Court in Asset Reconstruction Co.

Ltd. (supra).

24) Mr. Ardeshir has also relied upon judgment of Single Judge

of Delhi High Court in Gatx India Pvt. Ltd. (supra) in support of his

contention that no interim measures under Section 9 of the Act can be

directed against Axis Bank. He relies on following observations of the

Delhi High Court in para-71 of the judgment:

71. Undoubtedly, section 9 provides that the court shall have the same

powers for making interim orders under section 9 as a civil court has for

the purpose of, and in relation to, any proceedings before it, and the

powers of a civil court in this regard are very wide. The civil courts - as

and when required, and deemed appropriate in the facts and

circumstances of a particular case have been making interim orders in

respect of third parties, such as : interim injunction restraining third

party-banks from honouring bank guarantees; attaching defendant's

monies/property in hands of third party-trustee, debtor, agent etc;

restraining third party-subsequent transferee/person claiming rights in

suit property from disposing of the same, and the like. As a corollary, the

power of the court to issue interim orders under section 9 cannot be

con�ned only to the parties to arbitration agreement. However, a

signi�cant parameter - inherent in section 9, for exercise of this power

against a non-signatory to arbitration agreement, is that the purpose of

section 9 is to aid arbitration between the parties thereto, and the

interim orders thereunder have to be with regard to subject matter of

arbitration/in connection with the arbitral proceedings. In this context, it

is relevant to draw a distinction between orders granting interim relief

against a party to the arbitration agreement - which incidentally affects a

third party, on one hand, and orders granting relief directed against a

third party, on the other. While the former is ordinarily acceptable as

being within the scope of section 9, the power with respect to the latter

should be exercised sparingly. For instance, an order appointing a third

party as a receiver or guardian of a minor/person of unsound mind is not

an order against the third party, or detrimental to its rights as such.

Rather, it is a relief granted to the petitioner in support of the arbitral

proceedings, and affects the party to the arbitration agreement.

4 (2025) 9 SCC 225

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Similarly, when a subsequent transferee, or a person claiming title under

a party to arbitration is ordered to maintain status quo, or not to dispose

of property - which is subject matter of arbitration, it is again ancillary to

arbitral proceedings in as much, as, it is for protection of the subject

matter of arbitration that the order is passed. An injunction, or order of

attachment with respect to the properties belonging to/monies owed to a

party to arbitration, but in hands of a third party for/on behalf of the said

party, is effectively a relief against the said party, which incidentally

affects the third party. Pertinently, it is expressly provided in the C.P.C.

that attachment before judgment shall not affect the prior existing rights

of third parties in the property of the defendant sought to be attached.

Injunction against a third party - bank from honouring a bank guarantee

is consequential to interim relief of restraining a party from encashing

the same against the petitioner. To sum up, the court may issue interim

orders against the third parties to arbitration only in exceptional

circumstances - which are such that denial thereof might frustrate the

petitioner's rights in arbitration; defeat the very object of arbitration

between the parties thereto; render the arbitration proceedings

infructuous; lead to gross injustice; and/or, leave the petitioner

remediless, depending on facts of each case.

25) The Delhi High Court in Gatx India Pvt. Ltd. has drawn a

distinction between exercise of power under Section 9 for gr anting

interim relief against a party to arbitration agreement which incidentally

affects a third party, and orders granting relief directed against a third

party. It is held that while the former is ordinarily acceptable, the power

in respect of the latter should be exercised sparingly. Thus, there is no

allergy to exercise of power under Section 9 of the Arbitration Act by

granting relief even directly against a third party, though the same

should be resorted to only under exceptional circumstances. In the

present case, it is not necessary to travel to such extreme end. Petitioner

has invoked arbitration both against borrowers as well as Axis Bank by

notice dated 4 December 2025 issued under Section 21 of the Arbitration

Act. Even if the issue of permissibility to invoke arbitration against Axis

Bank is momentarily ignored, the case would still �t into the former

category. There is no dispute that there is arbitration agreement at least

qua the borrowers. In the arbitral proceedings to be conducted between

Petitioner and the borrowers, Petitioner is bound to seek relief

qua the

subject property, and this is how the arbitral proceedings are bound to

affect the Axis Bank. If the interim measures are not granted against

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Axis Bank, it would frustrate the Petitioner’s claim against the borrowers

by selling the subject property. Petitioner would suffer irreparable loss if

interim measures are not granted. Therefore, making interim measures

against the third party-Axis Bank is clearly warranted in the facts of the

present case.

26) There is no dispute to the position that the Loan Agreement

contains arbitration clause at clause no.10. As of now, I have steered

clear of the issue of arbitrability between the Petitioner and Axis Bank in

the light of provisions of Section 11 of SARFAESI Act and the said issue

can be considered in appropriate proceedings. Therefore, as of now, Axis

Bank is being treated as a third party to the arbitration proceedings.

However, there is clear interlink between the credit facilities disbursed

by the Petitioner and by Axis Bank to the same borrowers. If there was

no link between the two loan transactions even to the same borrowers,

what is submitted by Axis Bank could have been correct and this Court

would have been loathe in passing any interim order against Axis Bank in

relation to possible arbitration between the Petitioner and the borrowers.

However, once this Court is satis�ed that Axis Bank had full knowledge of

its loan facilities being taken over by the Petitioner and still misused

pendency of title deeds with it for doing further business by disbursing

additional amounts to the borrowers, can this Court still refuse interim

order in favour of the Petitioner on a specious ground that Axis Bank

may not be a party to the arbitration proceedings? The answer, to my

mind, appears to be emphatically in the negative. Once this Court is

convinced that the �rst Respondent - Axis Bank has taken disadvantage

of a paltry sum remaining unpaid under the OD Account for the purpose

of recommencement of the otherwise closed OD Account, Axis Bank must

be made to face the music at least by directing interim measures against

them. To dissociate itself with the loan transaction between the Petitioner

and the borrowers, it was necessary for Axis Bank to come clean on facts,

in which it has thoroughly failed. Axis Bank has

prima facie not acted

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prudently and bona�dely and therefore this Court feels no hesitation in

making

prima facie observations that of�cials of the Axis Bank have

aided and encouraged the borrowers in ensuring that the credit facilities

disbursed by the Petitioners remained unsecured. The borrowers have

prima facie played a trick in ensuring that some amount remained

outstanding in the OD Account representing Petitioners that the Account

was closed (in the form of debit freeze) and thereafter requested Axis

Bank to lift the debit freeze for securing disbursal of additional amounts.

This is done by failing to repay the EMIs in respect of loans secured from

Petitioners. Unfortunately, Axis Bank is found to have been

prima facie

responsible for encouraging these activities of the borrowers. In that

view of the matter, if custody of the title deeds in respect of the subject

property are continued with Axis Bank, two eventualities may happen.

Firstly, Axis Bank may sell the subject property to recover the sums

which are disbursed by it despite full knowledge of transaction of taking

over of loan by the Petitioners. Secondly and which is more worrisome,

the borrowers may repay the outstanding amount of Rs.77,00,066.18/- to

Axis Bank and get back the title deeds and create third party rights in

the subject property. In my view, it is necessary to prevent either of the

two possibilities till arbitration proceedings by Petitioner against the

borrowers get adjudicated.

27) Taking away title deeds from Axis Bank would also ensure

that Axis Bank would stop disbursing any further amounts to the

borrowers on account of temporary inability to deal with the secured

interests. This would protect the interest of Axis Bank as well as the

possibility of its of�cials further colluding with the borrowers and

disbursing additional credit facilities on the strength of deposit of title

deeds can be ruled out. If title deeds are taken away from Axis Bank, it

would not suffer any irreparable loss. Even in the worst case scenario of

sale of the subject property by Petitioner, Axis Bank can always stake its

claim to the sale proceeds on the strength of mortgage created in its

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favour. It is also seen that the outstanding amount of Axis Bank is

signi�cantly lower than the liability of borrowers towards Petitioner. The

balance of convenience is also in favour of Petitioner and against the

Respondent. It is another matter that the said outstanding amount of

Axis Bank is

prima facie on account of possible collusion by its of�cials

with the borrowers.

28) By way of interim order passed by this Court, Axis Bank has

already deposited the title deeds of the subject property with the Registry

of this Court. In my view, this arrangement can be continued during

pendency of arbitral proceedings between the Petitioners and the

borrowers. The issue as to whether Axis Bank can be party to such

arbitral proceedings is left open to be determined in appropriate

proceedings. Preservation of subject matter of arbitration proceedings

being the objective behind Section 9 of the Arbitration Act, it is necessary

that Axis Bank is prevented from either selling the property or returning

the title deeds to the borrowers. This is ensured by deposit of title deeds

in respect of the subject property with the Registry of this Court. I am

inclined to extend this arrangement till disposal of the arbi tral

proceedings.

29) In my view therefore, perfect case is made out by the

Petitioner for grant of interim measures against Axis Bank under Section

9 of the Arbitration Act. The petition accordingly succeeds, and I proceed

to pass the following order:

(i) During pendency and conclusion of arbitral proceedings

between Petitioners and borrowers, the title deeds

pertaining to the subject property shall continue to

remain deposited with the Registry of this Court.

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(ii) Depending on the outcome of the arbitral proceedings,

parties would be at liberty to seek directions for release of

the title deeds.

(iii) The issue of arbitrability of dispute between Petitioner

and Axis Bank is left open to be decided in appropriate

proceedings.

30) With the above directions, the Arbitration Petition is allowed

and disposed of.

[SANDEEP V. MARNE, J.]

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