Delhi HC sets aside arbitrator order against Indiabulls in Shipra Mall dispute

Pulling up an arbitrator for exceeding its remit, the Delhi High Court on Tuesday set aside its order quashing Indiabulls Housing Finance's sale notices issued to enforce its security interest of around Rs 1,500 crore in Shipra Mall in Ghaziabad.

"Since a specific right is vested in a secured creditor to enforce a security interest, by issuance of a sale notice under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfaesi Act), that specific right cannot be ousted by an order made by an arbitral tribunal," a single judge bench of Justice Anup J Bhambhani said.

The arbitrator had set aside Indiabulls' four sale notices issued under the SARFAESI Act and Security Interest (Enforcement) Rules, 2002 in June last year after Shipra Estate, Shipra Hotels, and Shipra Leasing approached it, seeking to maintain status quo in relation to the securities provided by them against loan availed from the non-banking finance company.


The Delhi High Court has now ruled that the exercise of a secured creditor's right to enforce a security interest under the Sarfaesi Act is not arbitrable at all and there is no discretion vested in the arbitrator that it could have exercised.