The Delhi High Court held that a lender cannot obtain additional interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 when it already possesses mortgage security and has initiated SARFAESI enforcement proceedings, absent proof of an immediate necessity to safeguard the secured asset.
Background & Facts
The Dispute
Axis Finance Limited (petitioner) extended mortgage-backed loan facilities to Mohammed Jahangir and others (respondents) and holds security over the property situated at Premises No. 14, Rafi Ahmed Kidw ei Road, P.S. New Market, Kolkata. After default, the petitioner issued a demand notice under Section 13(2) of the SARFAESI Act on 23.01.2026 and allegedly took symbolic possession of the secured asset on 09.04.2026 under Section 13(4) of the same Act. Aggrieved by the respondents’ alleged threat to alienate the property, the petitioner approached this Court seeking further interim protection under Section 9 of the Arbitration and Conciliation Act, 1996.
Key Facts
- The petitioner’s loan is secured by a mortgage over the Kolkata property.
- Demand notice under SARFAESI Section 13(2) was served on 23.01.2026.
- Symbolic possession under SARFAESI Section 13(4) was taken on 09.04.2026.
- The petitioner had previously sought interim protection under Section 9 in a related matter (M/s Axis Finance Ltd. v. Rishab Mago & Ors.), where the Division Bench refused relief because the dues were already secured by mortgage and SARFAESI proceedings were pending before the Debt Recovery Tribunal.
- No independent material was placed on record to show an imminent threat of alienation or creation of third-party interests.
Procedural History
- The present O.M.P.(I) (COMM.) 376/2026 together with I.A. 23664/2026 was filed before the High Court of Delhi.
- The matter was heard and disposed of by a single judge on 16.10.2026.
- Earlier, the Division Bench of this Court in M/s Axis Finance Ltd. v. Rishab Mago & Ors. (date not specified in the judgment) upheld the refusal of interim protection under Section 9 where the lender’s dues were secured by mortgage and SARFAESI enforcement was pending before the DRT.
Relief Sought
The petitioner sought an order granting interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 to restrain the respondents from alienating or creating third-party interests in the mortgaged property, and consequential relief.
The Legal Issue
The central question was whether the petitioner is entitled to additional interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 when it already holds mortgage security and has invoked SARFAESI enforcement, absent any supporting material establishing an immediate necessity for protection of the secured asset.
Arguments Presented
For the Petitioner
The petitioner contended that, despite the existing mortgage and SARFAESI steps, there was a real and imminent risk that the respondents would alienate the secured property or create third-party interests, thereby defeating the effectiveness of the security. It relied on the principle that interim relief under Section 9 is granted to preserve the subject matter of arbitration and argued that the court should act to prevent apprehended harm.
For the Respondent
The respondents argued that the mortgage security coupled with the SARFAESI notice and symbolic possession already afforded adequate protection; there was no evidence of any imminent alienation or creation of third-party interests. They relied on the Division Bench precedent in M/s Axis Finance Ltd. v. Rishab Mago & Ors., which held that where dues are secured by mortgage and SARFAESI proceedings are pending, additional interim protection under Section 9 is not justified.
The Court's Analysis
The Court examined the scope of Section 9 of the Arbitration and Conciliation Act, 1996, which empowers a court to grant interim measures to protect the subject matter of an arbitration agreement. It observed that the power to grant such relief is not automatic and must be exercised only when there is a demonstrated need to preserve the asset pending arbitration.
The Court quoted its own observation:
"This court is of the view that mere apprehension that the Respondents may alienate their assets or create third-party interests does not, without supporting material establishing an immediate necessity for protection, justify the grant of additional interim relief."
It noted that the petitioner already possessed a mortgage over the property and had taken concrete steps under the SARFAESI Act - namely, a demand notice dated 23.01.2026 and symbolic possession on 09.04.2026. These measures, the Court held, constitute statutory enforcement that secures the creditor’s interest. In the absence of any independent material showing an immediate threat, the apprehension of alienation was insufficient to warrant further interim relief.
The Court further relied on the Division Bench decision in M/s Axis Finance Ltd. v. Rishab Mago & Ors., which had refused similar relief on the ground that the lender’s dues were already secured by mortgage and SARFAESI enforcement was pending before the Debt Recovery Tribunal. The present case was indistinguishable on those facts.
Consequently, the Court concluded that granting additional interim protection under Section 9 would amount to duplicative interim security, unnecessary given the existing mortgage and SARFAESI proceedings.
The Verdict
The petition was dismissed on 16.10.2026. No additional interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 was granted. The parties are to bear their own costs. The Court emphasized that the petitioner’s mortgage security and the SARFAESI steps taken on 23.01.2026 (demand notice) and 09.04.2026 (symbolic possession) already suffice to protect its interest.
What This Means For Similar Cases
Interim Relief Under Section 9 Requires Demonstrated Necessity
Practitioners must now furnish concrete evidence of an imminent threat to the secured asset before seeking interim protection under Section 9. Mere apprehension or speculative risk of alienation is insufficient; the court expects specific material showing immediate necessity.
Mortgage Security and SARFAESI Proceedings Preclude Additional Arbitration Interim Relief
When a lender holds a valid mortgage and has initiated SARFAESI enforcement (notice under Section 13(2) and possession under Section 13(4)), the Court will view any further request for Section 9 relief as duplicative. The existing statutory and contractual security measures are deemed adequate to safeguard the creditor’s interest.
Practical Takeaways for Lenders and Counsel
- Before filing for Section 9 relief, verify whether mortgage or other security interests already exist.
- If SARFAESI steps have been taken, gather concrete proof (e.g., offers to sell, third-party agreements, or actual attempts at alienation) to substantiate the claim of immediate threat.
- In the absence of such proof, consider relying on the mortgage and SARFAESI remedies rather than pursuing duplicative interim arbitration relief.
