High Court of Delhi holds that ex-parte disposal of petitions under Section 9 of
the Act violates principles of natural justice
New Morning Star Travels (“Petitioner”), being a bus service, purchased 16 vehicles under loan-cum-hypothecation agreements with Volkswagen Finance Private Limited (“Respondent”), and defaulted on the repayment of certain instalments of the loan due to COVID-19 adversely affecting the Petitioner’s business. Thereafter, the Petitioner came to know that 16 petitions under Section 9 of the Arbitration and Conciliation Act, 1996 (“Act”) were filed by the Respondent with a prayer for ex-parte relief. The trial court passed 16 identical ex-parte orders (“Orders”) wherein loan recall notices were issued by the Respondent and the Petitioner was called upon to pay the total outstanding of INR 7,139,808/-. Moreover, on the ground that the Petitioner did not pay the said amount and expressing an apprehension that the vehicles may be disposed of, the trial court appointed a receiver to take possession of the vehicles. In this manner, the main petition under Section 9 of the Act was disposed of without notice calling upon the Petitioner to file a reply or be present at the hearing. Therefore, the Petitioner filed a writ petition before the High Court of Delhi (“High Court”) challenging the Orders passed by the trial court.
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