Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: September 17, 2026

Case Overview

  • Parties: Arth Micro Finance Private Ltd. and others (Appellants) vs. Shivalik Small Finance Bank Ltd. (Respondent).
  • The dispute arose under an arbitration clause in the parties’ agreement. The respondent allegedly appointed an Arbitral Tribunal on consent, issuing a notice on 02.05.2024 (Annexure P2).
  • The appointed Tribunal sent a communication (Annexure P3) which the appellants objected to (Annexure P4), alleging bias due to close links with the respondent.
  • Despite objections, the Tribunal issued three interim orders under Section 17 of the Arbitration and Conciliation Act, 1996 (Annexures P5, P6, P7):
  • Freezing of the appellants’ bank accounts at IDBI, Bank of Baroda, HDFC and ICICI linked to a specific PAN.
  • Permission for the respondent’s bank to take possession of the appellants’ movable and immovable properties.
  • Transfer of amounts deposited by the appellants in the aforementioned banks to the respondent’s bank.
  • The appellants appealed these interim orders before the High Court under Section 37 of the Act. The High Court dismissed the appeal on limitation grounds, noting no application for condonation of delay under Section 5 of the Limitation Act, 1963.
  • Senior Counsel for the appellants: Sri K. Parameshwar; for the respondent: Sri Bishwajit Bhattacharyya.

Final Outcome

  • The Supreme Court set aside the High Court’s order, declaring the initiation of arbitration “non est in law.”
  • All three interim orders (Annexures P5, P6, P7) are hereby set aside.
  • If any amounts have already been transferred to the respondent, they must be remitted back to the appellants within one week from the date of this order. Failure to do so will attract compound interest at 18% per annum, calculated monthly, and the interest amount will be set off against any claim in favour of the respondent.
  • All attachments or takeovers of the appellants’ movable and immovable properties are nullified and must be restored to the appellants.
  • Ms. Mayuri Raghuwanshi, Advocate (Mobile No.: 97173 44186), is appointed as the Arbitrator. The Court Registry shall inform the arbitrator, who will issue notices to the parties and determine her fee in consultation with them.
  • The Court expressly states it has not expressed any opinion on the merits of the dispute; the merits are to be determined by the appointed arbitrator.
  • The appeal is disposed of with the above directions. Any pending applications, if any, are rejected.

Topics: Arbitration, Banking Dispute