Kerala High Court Dismisses Cholamandalam Appeal, Reiterates Threshold For Intra-Court Appeals

The Kerala High Court on 19 June dismissed a writ appeal filed by Cholamandalam Investment and Finance Company Limited after holding that a purely procedural interim order, which does not affect substantive rights or cause serious prejudice, cannot be appealed under Section 5(i) of the Kerala High Court Act, 1958.

A Division Bench of Justices Anil K Narendran and Muralee Krishna S ruled that an intra-court appeal lies only against orders that substantially affect the rights or liabilities of parties or cause serious prejudice. The judges held:

“The impugned order issued by the learned Single Judge, which is merely procedural in nature, is not an appealable order against which an intra-court appeal can be maintained under clause (i) of Section 5 of the Kerala High Court Act.”

The case arose from a writ petition filed by borrower Azhar K.M., who availed a vehicle loan of Rs.10.83 lakh from Cholamandalam Investment and Finance Company, a Non-Banking Financial Company, to purchase a goods carriage vehicle. After an alleged repayment default, the NBFC repossessed the vehicle and issued a pre-sale notice dated 11 February 2026 proposing its sale.

Azhar approached the High Court seeking quashing of the pre-sale notice, restoration of possession of the vehicle, and regularisation of his loan account. The NBFC opposed the writ petition, contending that the dispute arose from a contractual arrangement governed by an arbitration clause and that no writ petition would lie against it.

During the proceedings, the Single Judge directed the NBFC to file a counter affidavit disclosing details of the seizure and proposed sale of the vehicle, including the reasons for initiating an urgent sale. The NBFC challenged this interim direction by filing a writ appeal under Section 5(i) of the Kerala High Court Act.

While interpreting Section 5 of the Act, the Division Bench held that clause (i) allows an appeal from a judgment or order of a Single Judge exercising original jurisdiction, while clause (ii) governs appeals arising from appellate jurisdiction over subordinate court orders. It observed:

“As per clause (i) of Section 5 of the said Act, an appeal shall lie to a Bench of two Judges from a judgment or order of a Single Judge in the exercise of original jurisdiction. Clause (ii) of Section 5 provides for such an appeal from a judgment of a Single Judge in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of original jurisdiction by a subordinate court.”

The Court held that an intra-court appeal under Section 5(i) remains maintainable only when the impugned order substantially affects substantive rights or causes serious prejudice. It added that courts do not normally interfere with discretionary interim orders unless they lack jurisdiction, violate law, suffer from perversity, or result in irreparable prejudice.

It further noted that the Single Judge did not decide the NBFC's objection on maintainability at the interim stage. It also recorded that the NBFC failed to show that the direction to file a counter affidavit affected its right to proceed with the proposed sale under the pre-sale notice. The Bench observed:

“The impugned order dated 01.06.2026 of the learned Single Judge cannot be termed as an order issued during the pendency of W.P.(C) No.9036 of 2026, which substantially affects or touches upon the substantial rights or liabilities of the respondents (appellants herein) or are matters of moment and cause substantial prejudice to the respondents, to maintain an intra-court appeal under clause (i) of Section 5 of the Kerala High Court Act.”

Accordingly, the High Court dismissed the writ appeal. However, it clarified that it left open all rival contentions on maintainability of the underlying writ petition for consideration by the Single Judge.

For Appellant: Advocate Binoy Vasudevan

For Respondent: Advocate A Ahzar