Shriram Finance Must Start Arbitration Within 90 Days Or Vehicle-Repossession Order Lapses: Madras HC

Shriram Finance applied under Section 9 of the Arbitration and Conciliation Act, 1996, seeking repossession of vehicles under hire-purchase agreements.

The Single Judge appointed an Advocate Commissioner to repossess the vehicles.

After the Commissioner was obstructed, the High Court issued a non-bailable warrant against the second appellant and his son; they later appeared, tendered unconditional apologies, and undertook not to repeat their conduct.

The contempt proceedings were dropped, and the appellants were given an opportunity to settle the amount.

The appellants filed these appeals challenging the orders concerning the Section 9 applications.

At the appeal hearing, the Court was told that part payment had been made, four vehicles had been returned to the appellants, and one remained to be returned.

Section 9 of the Arbitration and Conciliation Act, 1996, permits a party to seek interim measures of protection; it does not, by itself, enable recovery of the underlying amount as a final remedy without a proper arbitral award.

The appeals were filed under Section 37 of the Arbitration and Conciliation Act, Section 13(1A) of the Commercial Courts Act, 2015, and Clause 15 of the Letters Patent.

No judicial precedents were cited in the judgment.

The Court took account of the parties’ position that part payment had been made and that four vehicles had been returned, but treated those circumstances as not altering the limited purpose of the Section 9 proceedings.

It held that the respondent could not use the interim proceedings to realise the debt itself; it had to pursue arbitration and obtain a proper award.

To ensure that the interim repossession order was not left in place indefinitely without arbitration, the Court imposed a 90-day deadline, with automatic vacation of the interim order upon non-compliance.

The Court disposed of the appeals, directing the respondent to commence arbitration within 90 days.

If arbitration was not initiated within that period, the interim order made by the Single Judge would stand vacated automatically.

No costs were awarded, and the connected miscellaneous petitions were closed.