Citicorp Finance (India) Ltd. v. Somabhai Bharvad (Borrower) And Sureshbahi Bharvad (Guarantor)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 209 OF 2015 Citicorp Finance (India) Ltd.

..... Petitioner

VERSUS

Somabhai Bharvad & Anr.

..... Respondents Mr.Vivek Patil, a/w.Sandesh Godse, i/b. Vivek Patil & Associates for the Petitioner.

None for the Respondents.

CORAM :

R.D. DHANUKA, J.

DATED :

1st JULY, 2015 P.C.

This Petition is filed by the Petitioner under section 9 of the Arbitration and Conciliation Act, 1996 for seeking reliefs as prayed against the respondents. 2.

Learned Counsel appearing for the petitioner states that the respondents are served and undertakes to file affidavit of service in the office of the Prothonotary and Senior Master within two weeks from today. Undertaking is accepted. None appeared for the respondents though served.

3.

The Petitioner had provided a loan of Rs. 21,79,800/- to the first Respondent under a Loan-cum-Hypothecation Agreement entered into on 2nd January, 2013. The loan was repayable in 47 equated monthly installments. Clause 6 of the agreement empowers the lender to repossess the hypothecated assets in the event of borrowers committing default. Clause 16 provides for arbitration in respect of disputes between the parties. Petitioner issued legal notices dated 22nd

2/3 January, 2014, 23rd April, 2014 and 13th May, 2014 and called upon the respondents to pay Rs.17,45,314.19 with further interest thereon. There was no response to the notice of demand. A perusal of record prima facie indicates that respondents have committed default in making payment of installments. The petitioner has invoked the provision of arbitration. 4.

In the present petition, the petitioner has sought appointment of the Court Receiver as Receiver of the hypothecated vehicle/machine, more particularly described in Exhibit-F to the Petition. In absence of any defence or contest by the Respondents, the averments contained in Petition would have to be accepted. There has been a default in payment of the outstanding dues. It would, therefore, be necessary to safeguard the interest of the petitioner by appointing the Court Receiver as Receiver of the hypothecated vehicle/machine. The appointment of the Receiver is necessary in order to ensure that the vehicle/machine is not wasted or alienated, thereby defeating the rights of the petitioner. Section 9 empowers the Court to pass an interim measure of protection.

Hence, the following order:- i) The Court Receiver shall give an option to the respondents in writing to act as agents of Receiver in respect of the said vehicle/machine. The Respondents shall be given two weeks time by the Court Receiver from the date of receipt of the Court Receiver's communication letter to exercise such option. In the event of the respondent/s being desirous of acting as agents of the Receiver, they shall be appointed as agents of the Receiver, subject to security and royalty. The Receiver shall determine the quantum of security and royalty having regard to the terms and conditions contained in the Loancum-Hypothecation Agreement (Exhibit -A to the Petition).

3/3 receipt of the communication from the Court Receiver, Court Receiver to take forcible possession of the vehicle/machine and if necessary with the assistance of police from the respondent. It would be open to the petitioner to apply to the Court for further orders including sale of the vehicle/machine by private treaty.

iii) Until the Receiver takes possession, there shall be an interim injunction restraining the Respondents from alienating, encumbering, parting with possession or creating any third party right in respect of the vehicle/machine described in Exhibit-F to the Petition.

5.

Petitioner is directed to approach the office of the Court Receiver for enforcement of this order within 4 weeks from today. 6.

If the petitioner does not take steps for appointment of the arbitrator within four weeks from today, if not already appointed, interim order passed today to stand vacated without further reference to the Court. 7.

The Arbitration Petition is accordingly disposed of. No order as to costs. 8.

Parties as well as the Court Receiver to act on an authenticated copy of this order.

[R.D. DHANUKA, J.]