Bombay High Court Vacates JSW Steel’s Coil Attachments After Arbitration Withdrawal; Orders Warehouse Costs With Interest and Rejects Continued Section 9 Protection After IBC Resolution
Bombay High Court Orders Release of Steel Coils Attached for JSW’s Money Claim; Says Interim Protection Ends When Arbitration Itself Terminates
Facts
The dispute arose from a Section 9 petition filed by JSW Steel Ltd. against Delta Iron & Steel Co. Pvt. Ltd., Yatin Steels India Pvt. Ltd. and ARK Industries Pvt. Ltd. JSW claimed that it had supplied hot-rolled steel coils to Delta under a Franchise Agreement dated 1 July 2018 but had not received payment.
On 23 August 2019, JSW obtained an ex parte interim order pursuant to which the Court Receiver attached, sealed and took possession of about 160 steel coils lying in different warehouses. Eleven of those coils became the subject of applications filed by Aashna Yatin Khanna, proprietress of Aashna Steel Traders, who claimed that she had purchased them independently from Aeon Creations Pvt. Ltd.
Eight of the eleven subject coils were eventually stored at Paramshakti Steel Ltd. and three at Rishabh Digha Steel & Allied Products Ltd. Aashna relied upon invoices, confirmation letters and banking material to establish her purchase from Aeon.
The Section 9 petition itself was disposed of in June 2022 after constitution of the Arbitral Tribunal. Subsequently, however, Delta and Yatin entered Corporate Insolvency Resolution Process under the IBC, JSW lodged its claims in the CIRP, and on 11 November 2025 JSW withdrew the arbitration proceedings.
Despite termination of arbitration, the attachments and Court Receiver’s custody continued, leading to the present dispute over release of the coils, warehouse charges and the consequences of the earlier interim order.
Issues
The Court principally considered whether Section 9 attachments could continue after the arbitration proceedings for which they were granted had ended; whether JSW retained any enforceable claim or lien over coils it had already delivered; whether Aashna and Karu Metals, despite being non-signatories to the arbitration agreement, could seek modification or vacation of the Section 9 order; who should bear the substantial storage charges generated by the Court-ordered custody; and whether the resolution of the corporate debtors under the IBC left any residual cause of action capable of supporting continuation of Section 9 protection.
Applicant Aashna Khanna’s Arguments
Aashna contended that she was a stranger to the contractual dispute between JSW and Delta and had acquired the eleven coils from Aeon for value.
She relied upon invoices, warehouse confirmations and banking records to show the transaction and argued that JSW could not continue tracing goods into the hands of a bona fide subsequent purchaser merely because it remained unpaid by Delta.
She further contended that the very basis for the attachment disappeared when JSW withdrew the arbitration in November 2025. Section 9 relief was only ancillary to arbitration and could not survive indefinitely after the main proceedings had terminated.
Aashna also sought liberty to pursue compensation or restitution for depreciation, legal expenses and other losses caused by the prolonged attachment, although she acknowledged that quantified damages had not been pleaded in the present applications.
Karu Metals’ Arguments
Karu Metals complained that its warehouse space had been occupied by coils placed under the Court Receiver’s custody for years without payment of proper storage charges.
It argued that the attachment existed because JSW had obtained the Section 9 order and therefore JSW could not require an innocent warehouse keeper to bear the economic consequences of judicial custody created at JSW’s instance.
Karu claimed approximately ₹3 lakh in legal costs in addition to its storage charges.
JSW Steel’s Arguments
JSW opposed Aashna’s and Karu’s applications primarily on the ground that they were third parties to the arbitration agreement and therefore lacked privity to invoke Section 9 jurisdiction.
On the merits, JSW maintained that it was the original manufacturer and unpaid seller of the coils. It questioned Aashna’s invoices and supporting records, alleged inconsistencies in coil identification and sought a declaration that the coils belonged to JSW.
JSW accepted that the arbitration had been terminated but argued that it was compelled to withdraw because the corporate debtors had undergone CIRP. It stressed that, as an operational creditor, it recovered nothing under the approved resolution plan and therefore contended that its substantive claim continued notwithstanding completion of the insolvency process.
JSW also denied liability for all warehouse charges, relying particularly upon Aashna’s 2022 undertaking concerning storage after the coils were shifted to Paramshakti.
Analysis of the Law
Section 9 Relief Cannot Survive the Arbitration
This was the central holding.
The Court held that the jurisdiction under Section 9 of the Arbitration and Conciliation Act is inherently ancillary to arbitration. Its protective and preservative powers exist only to protect the subject matter or efficacy of arbitral proceedings.
Once arbitration itself terminates and there is no longer any prospect of adjudication through that arbitration, interim protective measures granted in its aid must ordinarily terminate as well.
JSW had withdrawn the arbitration. Consequently, the foundation upon which the 2019 attachment rested had disappeared.
The Court therefore ordered the ex parte interim attachment to be vacated.
IBC Resolution Gave the Earlier Claims Quietus
The Court separately addressed JSW’s argument that its claim survived because it had recovered nothing under the resolution plan.
It rejected that contention.
Where a corporate debtor undergoes CIRP and a resolution plan is duly approved, the debtor emerges with a “clean slate.” Pre-resolution claims are dealt with through the insolvency process, regardless of whether a creditor ultimately recovers all, part or none of its claim.
Accordingly, JSW could not rely upon its unpaid pre-CIRP claim against the resolved corporate debtor to maintain an attachment under Section 9 after the arbitration had ended.
The Court noted that even if JSW had obtained an arbitral award before commencement of CIRP, it would essentially have held an unsecured monetary claim subject to the insolvency process.
JSW Lost Its Unpaid Seller’s Lien After Delivery
The Court also revisited earlier rulings arising from the same litigation.
It noted that in the Vanit Gupta proceedings, the Bombay High Court had already examined Sections 47 and 49 of the Sale of Goods Act and held that JSW had lost the unpaid seller’s lien once it delivered possession of the goods to Delta.
There was no reservation of a right of disposal capable of preserving the lien after delivery.
The Court therefore rejected JSW’s attempt to revive substantially the same arguments seven years later.
Bona Fide Purchaser Without Notice
The earlier rulings had also applied Section 30(2) of the Sale of Goods Act.
Where a buyer in possession sells the goods to another person who acquires them in good faith and without notice of the original seller’s lien, title passes to that subsequent purchaser as if the lien did not exist.
The present Court held that Aashna’s position as a purchaser without notice was supported by the record and by the principles already applied in Vanit Gupta and Kothari Steel.
In any event, after the arbitration was withdrawn, JSW no longer had a basis to maintain attachment while demanding a fresh adjudication of ownership.
Third Parties Can Approach the Section 9 Court
JSW’s argument that Aashna and Karu could not maintain applications because they were not parties to the arbitration agreement was expressly rejected.
The Court held that these parties were directly affected by the ex parte Section 9 order. They could not have been heard before that order was passed.
They were therefore entitled to approach the same Section 9 Court to demonstrate that the interim order had wrongly affected their property or imposed hardship upon them. The principle underlying Order XXXIX Rule 4 CPC permits such an affected party to seek vacation or modification of the interim protection.
The Court described JSW’s attempt to re-agitate this maintainability objection despite earlier rulings in the same proceedings as inappropriate.
Warehouse Charges
The Court applied the equitable principle that acts of the Court should prejudice no one.
Where property remains immobilised because a litigant obtained an interim order and Court Receiver, the litigant obtaining that benefit must ordinarily bear the expenses generated by such custody.
The Court held that JSW could not enjoy a “free ride” from the receivership while leaving innocent warehouse keepers uncompensated.
It therefore allocated storage charges as follows:
- Seven coils stored at Karu: JSW must pay charges until 10 November 2022.
- The eighth coil at Karu: Aashna must pay charges until 10 November 2022 because that coil entered receivership only later.
- Eight coils thereafter stored at Paramshakti: JSW must pay storage from 10 November 2022 onward.
- Three coils stored at Rishabh Digha: JSW must pay storage throughout the period beginning with attachment and continuing until release.
JSW was directed to pay verified warehouse invoices with interest at 12% per annum for the storage period.
Precedent Analysis
Vanit Gupta Judgment — Commercial Notice of Motion (L) No. 2044 of 2019
This was the most important earlier decision arising from the same Section 9 proceedings.
The Court had already held that JSW, after delivering the goods, could no longer exercise an unpaid seller’s lien under Sections 47 and 49 of the Sale of Goods Act.
It had also rejected JSW’s attempts to create doubt by relying upon alleged discrepancies in coil numbers and accepted documentary material establishing a third party’s bona fide purchase.
The present Court considered JSW’s current objections materially similar to those previously rejected.
Kothari Steel — Interim Application No. 93 of 2019, Order dated 5 April 2022
A second Bombay High Court ruling followed the same approach.
It held that JSW had not reserved a right of disposal after delivery and that property could validly pass to a bona fide purchaser for value without notice of any alleged lien.
The Court had also rejected discrepancies concerning tax receipts and coil weights and permitted the affected third party to seek relief despite being outside the arbitration agreement.
Sections 47 and 49, Sale of Goods Act
The judgment reiterated that an unpaid seller’s lien is fundamentally possessory.
Once the seller voluntarily delivers the goods and does not reserve disposal rights, the lien ordinarily terminates.
That principle directly undermined JSW’s attempt to reclaim the coils merely because payment from Delta had remained outstanding.
Section 30(2), Sale of Goods Act
The Court also endorsed the earlier application of Section 30(2): where the buyer in possession resells goods to a person acting in good faith without notice of the original seller’s rights, that purchaser may obtain good title.
Court’s Reasoning
The Court considered continued attachment particularly untenable for three cumulative reasons.
First, the arbitration itself had ended. Section 9 relief could not independently survive when there was no arbitration left to protect.
Second, JSW’s pre-resolution monetary claim had been subjected to the IBC process. Its failure to receive payment under the approved plan did not preserve an independent post-resolution cause of action against the corporate debtor.
Third, JSW’s substantive arguments about an unpaid seller’s lien and third-party title had already been substantially rejected in earlier orders passed in the very same litigation.
The Court additionally found that the eleven subject coils were not identifiable within Exhibit B of JSW’s original Section 9 petition, and JSW had previously conceded that coils outside Exhibit B should not be attached.
There was therefore no legitimate basis to keep the coils under Court Receiver attachment.
Costs and Restitution
The Court examined statements of legal costs filed by the parties.
Considering the prolonged continuation of the dispute even after arbitration was terminated, it directed JSW to pay:
₹1.50 lakh to Karu Metals, and
₹2.50 lakh to Aashna Khanna,
within four weeks.
The Court did not adjudicate Aashna’s wider claims for depreciation, loss of opportunity, reputational damage or restitution because those damages had not been quantified in the applications and could not properly be tried in the summary Section 9 jurisdiction.
Aashna and Karu were therefore granted liberty to pursue damages in appropriate separate proceedings.
Conclusion
The Bombay High Court recalled the ex parte interim order dated 23 August 2019 and released every attachment created pursuant to it. The Court Receiver was directed to intimate all concerned warehouses that the attachments stood discharged.
JSW was directed to bear the applicable storage charges, with the limited exception of the identified eighth coil for the relevant pre-November 2022 period payable by Aashna. The warehouses were directed to raise invoices through the Court Receiver, and JSW was required to pay the verified amounts with 12% annual interest.
The Court Receiver was discharged without passing accounts, with JSW directed to bear the Receiver’s charges and costs of the report.
The broader ruling is that Section 9 protection is inseparably connected with the arbitration it supports: once that arbitration terminates, an attachment granted only in its aid cannot continue as an independent security mechanism for an extinguished or discharged monetary claim.
Case Details
Case: Aashna Yatin Khanna v. JSW Steel Ltd. & Ors., in JSW Steel Ltd. v. Delta Iron & Steel Co. Pvt. Ltd. & Ors.
Connected Applicant: M/s Karu Metals Private Limited
Court: High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction
Case Numbers: Interim Application No. 542 of 2019 and Interim Application (L) No. 16520 of 2024 in Commercial Arbitration Petition No. 1558 of 2019; Interim Application No. 1537 of 2026; connected Court Receiver Report No. 102 of 2025.
Neutral Citation: 2026:BHC-OS:19086
Judge: Justice Somasekhar Sundaresan
Reserved On: 24 August 2026
Date: 27 August 2026
Underlying Proceeding: Section 9, Arbitration and Conciliation Act, 1996
Subject Matter: Eleven hot-rolled steel coils forming part of a larger attachment of 160 coils.
Key Issue: Whether Section 9 attachment could survive after JSW withdrew the arbitration following resolution of the corporate debtors under the IBC.
Result: Interim attachment recalled and all coils released; JSW directed to bear applicable warehouse and Court Receiver expenses, including verified storage charges with 12% interest; ₹1.50 lakh costs awarded to Karu and ₹2.50 lakh to Aashna; liberty granted to pursue separate damages claims.
