M/S Axis Finance Ltd vs Rishab Mago & Ors.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Order reserved on: 24.08.2026
Order pronounced on: 01.09.2026
Order uploaded on: 01.09.2026
# CNR No. DLHC010271852026
+ FAO(OS) (COMM) 157/2026 and CM APPL. 40223/2026
M/S AXIS FINANCE LTD .....Appellant
Through: Ms. Bhairavi S. N., Mr. Gaurav
Nair, Ms. Nishtha Kumar, Ms.
Veera Mathai, Mr. Shrom Sethi,
Mr. Varun Agarwal, Ms.
Adwitiya Ray and Ms. Kashish
Bhushan, Advs.
versus

RISHAB MAGO & ORS. .....Respondents
Through: None.

CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE AMIT MAHAJAN
O R D E R
ANIL KSHETARPAL, J.:
1. Through the present Appeal filed under Section 37(1)(b) of the
Arbitration and Conciliation Act, 1996 [hereinafter referred to as the
‘A&C Act’], read with Section 13 of the Commercial Courts Act,
2015, the Appellant assails the correctness of the Order dated
28.04.2026 [hereinafter referred to as the ‘Impugned Order’] passed
by the learned Single Judge in O.M.P.(I)(COMM.) No.184/2026,
whereby the application filed by the Appellant under Section 9 of the
A&C Act came to be dismissed.
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
FAO(OS) (COMM) 157/2026 Page 1 of 9

2. The Appellant had approached the learned Single Judge seeking
interim measures for securing its outstanding dues of Rs.3,03,71,992/-
pending commencement of arbitral proceedings. The learned Single
Judge, however, declined to grant any interim protection, principally
on the ground that the subject matter of the arbitration already stood
secured by the mortgage created over the property furnished as
security under the loan facilities.
3. Before proceeding further, it may be noted that the Respondents
have also instituted proceedings before the Debts Recovery Tribunal
[hereinafter referred to as the ‘DRT’] in relation to the measures
initiated by the Appellant under Section 13 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 [hereinafter referred to as the ‘SARFAESI Act’].
The said proceedings are pending. The question which consequently
arises for consideration is whether, in the facts and circumstances of
the present case, the Appellant ought to be granted further interim
protection under Section 9 of the A&C Act for securing the
outstanding amount, notwithstanding the remedy of filing application
before the DRT for securing the due amount.
4. The facts, insofar as relevant for adjudication of the present
Appeal, may briefly be noticed.
5. The Appellant, a Non-Banking Financial Company, extended
two separate credit facilities to the Respondents under two Mortgage
Loan Agreements, both dated 01.09.2023 [hereinafter collectively
referred to as the ‘Agreements’]. Under the first Agreement, a credit
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
FAO(OS) (COMM) 157/2026 Page 2 of 9

facility of Rs.1,64,64,000/- was extended under Loan Account No.
0456AHA00007294, while under the second Agreement, a credit
facility of Rs.1,21,72,838/- was extended under Loan Account No.
0456MMA00010841. The two facilities, accordingly, aggregated to
Rs.2,86,36,838/-. Both Agreements contain arbitration clauses.
6. As security for the aforesaid facilities, the Respondents created
a mortgage by deposit of title deeds in respect of property bearing
House No.543, Shivalik Enclave Ext. 5, Village Sante Majra, Hadbast
No.186, Tehsil Kharar, District SAS Nagar, Mohali, Punjab-140301
[hereinafter referred to as the ‘Mortgaged Property’]. The mortgage
was recorded through Memorandums of Entry dated 28.09.2023.
7. The Respondents thereafter allegedly committed defaults in
repayment of the monthly instalments. In terms of the Agreements,
such failure constituted an Event of Default and entitled the Appellant
to take steps for recovery of the amounts due and enforcement of the
security. The Loan Accounts were consequently classified as Non-
Performing Assets with effect from 03.08.2025. The Respondents
were intimated of such classification through letters dated 07.08.2025.
8. In view of the continued default, the Appellant initiated
proceedings under the SARFAESI Act and issued a notice dated
30.09.2025 under Section 13(2) thereof, demanding an amount of
Rs.2,82,26,538/- under the two Loan Accounts.
9. As the outstanding dues remained unpaid, the Appellant
thereafter issued a notice dated 03.11.2025 under Section 13(4) of the
SARFAESI Act for taking symbolic possession of the Mortgaged
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
FAO(OS) (COMM) 157/2026 Page 3 of 9

Property. When the Appellant proceeded further with the recovery
process, the Respondents approached the DRT by filing S.A. No.42 of
2026. The DRT, vide order dated 22.01.2026, directed the parties to
maintain status quo till the next date of hearing.
10. In view of the challenge raised by the Respondents to the
SARFAESI proceedings, the Appellant recalled the notices issued
under the SARFAESI Act and relinquished the symbolic possession
taken pursuant thereto. The Respondents, however, did not pursue
S.A. No.42 of 2026, which consequently came to be dismissed for
non-prosecution on 26.02.2026.
11. The Appellant thereafter reinitiated the statutory process and
issued a fresh notice dated 11.03.2026 under Section 13(4) of the
SARFAESI Act in respect of the Mortgaged Property. The said
proceedings were again questioned before the DRT by Respondent
No.1 by filing M.A. No.44 of 2026 in the earlier proceedings. The
said proceedings before the DRT are stated to be pending.
12. Meanwhile, as on 13.04.2026, the outstanding amount payable
by the Respondents under the two Loan Accounts had risen to
Rs.3,03,71,992/-, apart from further interest.
13. The Appellant claims that the realisable value of the Mortgaged
Property may not be sufficient to satisfy the entire outstanding
liability. It accordingly relied upon certain other assets stated to
belong to the Respondents, including two vehicles, stated to be valued
at approximately Rs.10 lakhs and Rs.50 lakhs respectively, as well as
certain bank accounts. The Appellant apprehended that such assets
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
FAO(OS) (COMM) 157/2026 Page 4 of 9

may be alienated or encumbered, thereby prejudicing its ability to
recover the amount which may ultimately be awarded in arbitration.
14. Since both Agreements contain arbitration clauses, the
Appellant states that it is in the process of commencing arbitral
proceedings for recovery of the outstanding dues. Pending
commencement of arbitration, the Appellant approached this Court by
filing O.M.P.(I)(COMM.) No.184/2026 under Section 9 of the A&C
Act.
15. In the Section 9 Petition, the Appellant, inter alia , sought orders
restraining the Respondents from alienating, transferring or creating
third-party rights in respect of their assets, including the Mortgaged
Property. The Appellant also sought disclosure of the Respondents’
assets, particulars of their bank accounts and other financial
information, as well as other protective measures, including
appointment of a Receiver.
16. The learned Single Judge, vide the Impugned Order, dismissed
the Section 9 Petition. The learned Single Judge proceeded on the
basis that the parties had, at the inception of their relationship, secured
the subject matter of the arbitration by creation of the mortgage over
the Mortgaged Property and that the Appellant had not pleaded any
requirement for additional protection, preservation or safeguarding of
the Mortgaged Property. The learned Single Judge accordingly held
that the subject matter of the arbitration already stood adequately
secured and that no further interim protection was warranted.
17. Aggrieved by the aforesaid order, the Appellant has preferred
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
FAO(OS) (COMM) 157/2026 Page 5 of 9

the present Appeal under Section 37(1)(b) of the A&C Act.
18. Heard learned counsel representing the Appellant at length and,
with their able assistance, perused the record.
19. Learned counsel representing the Appellant submits that she is
confining the relief sought in the present Appeal qua prayer (b),
namely, restraining the Respondents from transferring, alienating or
creating any third-party rights in respect of any of their
assets/properties, including the Mortgaged Property.
20. Learned counsel representing the Appellant further submits that
the learned Single Judge has proceeded on an erroneous understanding
of the expression ‘subject matter of the arbitration’ and has treated the
Mortgaged Property itself as the subject matter of the arbitration. It is
submitted that the dispute between the parties concerns the
outstanding amounts payable under the two Loan Agreements and that
the Mortgaged Property is merely the security furnished for the said
liability.
21. Learned counsel submits that the mere existence of a mortgage
cannot, by itself, establish that the entire outstanding amount stands
adequately secured. The outstanding liability, as on 13.04.2026, was
Rs.3,03,71,992/-, whereas the Appellant had specifically pleaded
before the learned Single Judge that the Mortgaged Property may not
be sufficient to satisfy the entire outstanding dues.
22. It is further submitted that Section 9(1)(ii)(b) of the A&C Act
expressly empowers the Court to pass an order for securing the
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
FAO(OS) (COMM) 157/2026 Page 6 of 9

amount in dispute in the arbitration. According to learned counsel, the
power under Section 9 is not confined to the security already created
under the loan transaction and may extend to other unencumbered
assets of the debtor where the circumstances warrant such protection.
23. At the outset, it may be noted that once a property is mortgaged,
any subsequent transfer thereof does not affect the rights of the
Mortgagee and remains subject to the existing mortgage. The rights of
the Mortgagee, therefore, continue to have priority over any rights
created in favour of a third party subsequent to the creation of the
mortgage. Consequently, the apprehension expressed by the Appellant
regarding creation of third-party rights in the Mortgaged Property, by
itself, does not furnish sufficient ground for granting the relief sought.
24. It may further be noted that Section 9 of the A&C Act enables
the Court to pass interim measures for protection and preservation of
the subject matter of the Arbitration Agreement and for securing the
amount in dispute in arbitration. The power under Section 9, however,
is to be exercised having regard to the facts and circumstances of each
case and the nature of the protection sought. In the present case, the
Mortgaged Property has already been furnished as security for the
amount in dispute in arbitration and the Appellant has also initiated
proceedings under the SARFAESI Act for enforcement of the said
security.
25. As regards the prayer for securing the amount in dispute in
arbitration, the Appellant has stated that the outstanding amount is
Rs.3,03,71,992/- as on 13.04.2026, apart from further interest. The
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
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Appellant’s principal contention is that the realisable value of the
Mortgaged Property may not be sufficient to satisfy the entire
outstanding amount and that the other assets of the Respondents
ought, therefore, to be protected. However, the mere apprehension that
the value of the secured property may ultimately prove insufficient, in
the absence of any further material demonstrating an immediate
necessity for protection under Section 9, cannot by itself justify the
grant of the wide restraint sought by the Appellant in respect of all the
assets of the Respondents.
26. Clause (b) of Section 9(1)(ii) of the A&C Act undoubtedly
enables the Court to pass an order for securing the amount in dispute
in arbitration. However, in the present case, arbitration has not yet
been invoked by the Appellant. At the same time, proceedings
initiated by the Respondents before the DRT in relation to the
measures taken by the Appellant under the SARFAESI Act are
pending. The Appellant is, therefore, not without a remedy for seeking
appropriate protection in respect of the amount claimed by it. The
Appellant can seek appropriate relief before the DRT in the pending
proceedings. Permitting parallel proceedings before different forums
for securing the same outstanding amount would not be appropriate.
27. It is also relevant that, apart from the two (02) vehicles and
three (03) bank accounts, the Appellant has not disclosed any other
assets of the Respondents against which protection is sought. It has
also not been disclosed as to what amount is lying in the three bank
accounts. The Appellant, in fact, seeks a direction requiring the
Respondents to disclose their assets. In the facts of the present case,
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
FAO(OS) (COMM) 157/2026 Page 8 of 9

such relief can more appropriately be sought before the DRT, where
proceedings arising out of the enforcement measures taken by the
Appellant under the SARFAESI Act are already pending.
28. In view of the aforesaid circumstances, particularly the
existence of the Mortgaged Property as security, the pendency of
proceedings before the DRT and the fact that the Appellant has not
demonstrated sufficient circumstances warranting parallel interim
protection under Section 9 of the A&C Act, this Court finds no ground
to interfere with the Impugned Order passed by the learned Single
Judge.
29. Accordingly, the present Appeal, along with the pending
application, is dismissed.
ANIL KSHETARPAL, J.

AMIT MAHAJAN, J.
SEPTEMBER 01, 2026
s.godara/shah
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:01.09.2026
15:05:56
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