Restraint On Alienation Of EVs And Appointment Of Receiver To Take Possession And Inventory As Interim Relief Under Section 9 Of Arbitration & Conciliation Act

Summary:

^[1]Petition preferred under Section 9 of the Arbitration and Conciliation Act, 1996 seeking restraint on alienation and appointment of receiver for preservation and maintenance of EVs leased to Respondents under Master Lease Agreements for leasing EVs and availing Fleet Management Services of the Petitioner. The Petitioner contended that the Respondents didn’t respond to demands for payment of rent under the aforementioned Lease Agreements. The petitioner also stated that it learned from media reports that the respondents have discontinued their business operations and that SEBI passed an interim order against Gensol Engineering Ltd. (Respondent No. 1) and its founders and promoters restraining them from holding key managerial positions and dealing in securities.

Facts:

• Petitioner and Respondent No.1 entered into a Master Lease Agreement (‘MLA’) dated 26.05.2021 for leasing Electric Vehicles (‘EVs’) and for availing Fleet Management Services offered by the Petitioner. Under the MLA, Petitioner leased 164 EVs to Respondent No.1 and Respondents No.3 and 4 executed Deeds of Guarantee dated 31.05.2021 in favour of the Petitioner providing an unconditional and personal guarantee in favour of the Petitioner ensuring due payment of rentals, interest and other monies owed by Respondent No.1 under the MLA.
• Petitioner and Respondent No.2 entered into MLA dated 23.09.2022 for leasing EVs and availing Fleet Management Services and in lieu of obligations of Respondent No.2, Letter of Guarantee dated 23.09.2022 was issued by Respondent No.2 under the MLA, Petitioner leased 46 EVs to Respondent No.2.
• On 05.04.2025, Petitioner issued several invoices to Respondent No.2 towards lease rent against 46 EVs and Fleet Management Services provided for the month of March, 2025, against which Respondent No.2 issued electronic fund transfer instructions under NACH mandate, however, on 05.04.2025 Petitioner received intimation from its Bank that the electronic fund transfer was dishonoured/failed for the reason ‘Balance Insufficient’.
• Petitioner was constrained to issue legal notice dated 28.04.2025 under Section 25 of Payment and Settlement Systems Act, 2007 against Respondent No.1 for the outstanding amounts followed by termination notice dated 30.04.2025 to Respondents No.1 and 2, terminating the MLAs dated 26.05.2021 and 23.09.2022 as also for repossession of 164 and 46 EVs respectively and for clearing the outstanding amounts within 24 hours, but Respondents failed to honour their commitments.
• The petitioner preferred a petition under Section 9 of the Arbitration & Conciliation Act, 1996 in view of clause C.5 of the MLA, which provided for arbitration.

Issues:

1. Whether the Petitioner is entitled to interim protection barring the respondent from alienating the EVs and appointment of receiver to ensure inventory and maintenance?

Held:

The Hon’ble Court held that the petitioner has made out a prima facie case for grant of interim reliefs prayed for. It directed the following:

1. Respondents shall not sell, alienate, transfer or encumber or in any manner create third party rights in respect of aforementioned EVs, until the next date of hearing
2. Mr. Amit Singh, Mr. Ramesh Taneja and Mr. Hitesh Saini were appointed as Receivers to take possession of the EVs and make an inventory and take photographs etc. after inspection in the presence of the authorised representatives and/or counsels for the parties. They were vested with discretion to take all necessary steps to charge and preserve the EVs so that they remain in good and working condition.
3. When called upon, Respondents will cooperate in identifying the locations where the aforementioned EVs are parked, within two days and will make no attempt to shift the EVs to any other location.
4. Respondents will permit the Receivers to peacefully carry out the execution of the order, without creating hinderance or obstruction of any kind. Receivers may take assistance of the local police station, if circumstances so require and if any assistance is sought, SHO of the concerned Police Station will render full cooperation.

Analysis:

The facts were relatively straightforward, the court noted the petitioner’s pleadings and provided sufficient relief within the boundaries of Section 9 of the Arbitration and Conciliation Act, 1996, which inter alia, enables the court to pass orders for “the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement”

^[1] BEFORE THE HON’BLE HIGH COURT OF DELHI

SMAS AUTO LEASING INDIA PVT. LTD. vs. GENSOL ENGINEERING LIMITED & ORS. 

O.M.P.(I) (COMM.) 163 of 2025

Order Dated: May 07, 2025