Authority: High Court of Judicature at Bombay

Order Date: September 9, 2026

Case Overview

  • Parties: IIFL Finance Limited (Petitioner) vs. DS Trading Company & Others (Respondents).
  • Petition: Filed under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim protection pending arbitration.
  • Loan Details: On 6 December 2023, IIFL Finance sanctioned a business loan of Rs 25,00,000 to the respondents; the loan agreement and disbursement were executed on the same day.
  • Default: Respondents failed to pay instalments as agreed, leading to continuous default.
  • Recall Notice: A Loan Recall Notice dated 22 April 2025 demanded repayment of the entire outstanding amount within seven days. IIFL claimed Rs 31,13,580.99 together with interest accruing from 14 April 2025 until payment or realisation, as per the loan agreement.
  • Non‑Compliance: Respondents neither replied to the recall notice nor cleared the dues. They also failed to appear before the Court despite proper service and did not comply with an earlier Court order directing disclosure of their movable and immovable assets.
  • Alleged Asset Disposition: IIFL alleges that respondents are attempting to dispose of or transfer assets to defeat recovery, though no direct evidence of such transfers was produced.
  • Legal Reasoning: The Court considered the Supreme Court judgment in Essar House (P) Ltd. v. Arcellor Mittal Nippon Steel (India) Ltd. (2022) 20 SCC 178, emphasizing that Section 9 allows wide powers to protect the subject matter of arbitration, that a prima facie case, balance of convenience, and absence of undue delay are key factors, and that proof of actual asset alienation is not mandatory when there is a reasonable apprehension of asset dissipation.
  • Court Findings: The loan agreement, recall notice, and statement of outstanding dues are undisputed. Respondents’ non‑appearance, failure to file a reply, and non‑compliance with asset‑disclosure order create a reasonable apprehension that the amount may become unrecoverable without interim protection.

Final Outcome

  • The petition is allowed in respect of prayer clause (a).
  • Interim Protection Order: Attachment/Freeze of the respondents’ bank accounts to the extent of Rs 31,13,580.99, restraining withdrawal or transfer of funds from the following accounts:

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

| DS | 59209826032324 | HDFC | HDFC BANK LTD |

| TRADIN | | Bank | GROUND FLOOR |

| G | | Limited | 612 GRAM |

| COMPAN | | | NARWAL |

| | | | SECTORF |

| | | | SANWER ROAD |

| | | | INDORE MADHYA |

| | | | PRADESH |

| | | | IFSC Code: HDFC0009403 |

  • The observations made in this order are prima facie and confined to the Section 9 application; the Arbitral Tribunal will decide the dispute independently on its merits.
  • The petition is disposed of with no order as to costs.

Topics: Arbitration, Loan Default, Bank Account Attachment