The High Court of Andhra Pradesh has ruled that appellate powers under Section 37 of the Arbitration and Conciliation Act, 1996, are not as broad as the general appellate jurisdiction under the Code of Civil Procedure (CPC). The Division Bench comprising Justice Ravi Nath Tilhari and Justice Maheswara Rao Kuncheam held that such powers are more akin to “superintendence” or “revisionary powers,” confined strictly to the scope of the underlying proceedings.
The court made these observations while dismissing an appeal filed by M/s. JPR Projects, which sought a total lifting of a freeze on its current account. The court upheld a lower court’s order that allowed the account to be operated only for the limited purpose of paying statutory taxes and dues.
Background of the Case
M/s. JPR Projects is a partnership firm involved in construction. Following the death of its Managing Partner, Sri Janga Punna Reddy, disputes arose between the surviving partners (Appellants) and the legal heirs of the deceased partner (Respondents 2 and 3).
The Appellants alleged that the Respondents unilaterally instructed Axis Bank (Respondent 1) to freeze the firm’s current account on May 24, 2024, despite a reconstituted partnership deed dated February 10, 2024, which purportedly gave the Appellants exclusive authority over financial operations. The Appellants argued that the freeze jeopardized ongoing projects, vendor payments, and statutory obligations like GST, TDS, and PF.
Conversely, the Respondents claimed that the Appellants had misappropriated approximately ₹1.55 crore for personal gain and that the reconstituted deed and various Memorandums of Understanding (MoUs) were obtained through fraud and coercion while the late partner was hospitalized.
Trial Court’s Order
The Special Judge for Commercial Disputes, Visakhapatnam, in an order dated July 31, 2025, partially allowed the Appellants’ Section 9 application. The freeze was revoked only for paying taxes and statutory dues to the government for a period of 90 days. The Appellants challenged this “partial” relief, seeking a full defreeze for all business purposes.
Arguments Presented
For the Appellants: Counsel Sri Patanjali Pamidighantam relied on the Allahabad High Court judgment in Modern Metal Industries v. Smt. Shanti Parolla, arguing that a bank account is the “lifeline” of a firm. He contended that since the Special Judge found the freeze was done without consulting the Appellants, the account should have been fully restored to prevent the business from coming to a “grinding halt.”
For the Respondents: Counsel Sri V. V. N. Narasimham argued there was no prima facie case for lifting the freeze entirely, as the Appellants had already diverted substantial funds. They maintained that the interim order protected the firm’s statutory liabilities while preventing further misappropriation.
Court’s Analysis and Observations
The High Court focused on the interplay between Section 9 (interim measures) and Section 37 (appeals) of the Arbitration Act.
1. On the Scope of Appellate Power: The Court emphasized that an appeal under Section 37 is not a regular civil appeal. Citing the Supreme Court in Punjab State Civil Supplies Corporation Limited v. M/s. Sanman Rice Mills, the Bench noted:
“The scope of the Section 37 of the Act is much more summary in nature and not like an ordinary civil appeal… The appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence.”
The Bench further clarified:
“In the exercise of the appellate jurisdiction, this Court cannot go beyond the powers that can be exercised under Section 9 and shall not have such wide powers as under the Code of Civil Procedure. The appellate power shall be like the power of superintendence while exercising revisionary powers.”
2. On Mandatory Commencement of Arbitration: Under Section 9(2), arbitral proceedings must commence within 90 days of an interim order. The High Court observed that the Appellants only issued the Section 21 notice on November 7, 2025, which was beyond the 90-day window from the July 31 order.
“The arbitral proceedings have not been commenced within the statutory period contemplated under Section 9 (2) of the Act 1996… On expiry of 90 days from the Order, the interim measure came to an end.”
3. On the Merits of the Freeze: The Court distinguished this case from Modern Metal Industries, noting that the facts here were “controverted.” The allegations of fraud, misappropriation, and the validity of the partnership deed were matters for the Arbitral Tribunal to decide.
Decision
The High Court found no illegality in the Special Judge’s decision to limit the use of the bank account to statutory dues. The Bench concluded that the Appellants failed to show any error warranting the exercise of supervisory powers.
The appeal was dismissed with no order as to costs.
Case Title: M/s. JPR Projects v. Axis Bank and Others
Case Number: Commercial Court Appeal No. 21 of 2025
