Authority: High Court of Judicature at Bombay

Order Date: 7 October 2026

Case Overview

  • Parties: Petitioner – IIFL Finance Limited; Respondents – Urban Garden Store & Nursery (and others). Petition filed as Arbitration Petition No. 549 of 2025.
  • Legal Basis: Petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, invoking Clause 20 of the Business Loan Agreement which contains an arbitration clause.
  • Loan Details: In August 2023, IIFL Finance sanctioned an SME business loan of Rs 10,00,000 to the respondents. The loan agreement was executed on 21 August 2023 and the amount was disbursed.
  • Default: Respondents failed to pay instalments. IIFL issued a Loan Recall Notice on 22 April 2025 demanding repayment of the entire outstanding amount within seven days.
  • Outstanding Amount: IIFL claims Rs 12,75,622.79, inclusive of interest accrued from 14 April 2025 until payment or realisation, as per the loan agreement.
  • Respondents’ Conduct: No reply filed; respondents did not appear before the Court despite service. Earlier Court order directing disclosure of movable and immovable assets remains uncomplied.
  • Petitioner’s Allegations: Respondents are allegedly attempting to dispose of or transfer assets to defeat recovery.
  • Court’s Reasoning: The Court noted the prima facie existence of a money dispute, the respondents’ non‑appearance, failure to disclose assets, and the risk of asset dissipation. Citing Supreme Court’s Essar House (P) Ltd. v. Arcellor Mittal Nippon Steel (India) Ltd. (2022) principles, the Court held that proof of actual asset transfer is not mandatory where there is a reasonable apprehension of loss.

Final Outcome

  • The petition is partly allowed. The Court orders attachment/freezing of the respondents’ bank accounts up to Rs 12,75,622.791 and restrains any withdrawal or transfer of funds from the specified account:

| Bank Account Holder | Account No. | Bank Name | Branch Address |

| Urban Garden Store & Nursery | 8238986806 | Kotak Mahindra Bank | Shop No.50, 51 & 52, A Block, Ground Floor, Amrapali Complex, Bopal Cross Road, Ambli Bopal, 380 058 |

IFSC Code: KKBK0003019

  • The observations are prima facie and limited to the Section 9 application; the arbitral tribunal will decide the dispute on its merits.
  • IIFL Finance is directed to constitute the arbitral tribunal within 90 days from the date of this order.
  • The petition is disposed of with no order as to costs.

Topics: Arbitration, Loan Default, Interim Relief