L And T Finance Limited v. Virendra R. Jat (Borrower)And ANR

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.610 OF 2015 L & T Finance Limited ..... Petitioner

VERSUS

Virendra R.Jat & Anr.

..... Respondents Ms.Shreya Pednekar, i/b. Vivek Patil & Associates for the Petitioner. None for the Respondents.

CORAM :

R.D. DHANUKA, J.

DATED :

8th JULY, 2015 P.C.

This Petition is filed by the Petitioner under section 9 of the Arbitration and Conciliation Act, 1996 for seeking interim measures i.e. for appointment of Court Receiver, injunction and other reliefs.

2.

Learned Counsel appearing for the petitioner states that the respondent no.1 is 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 respondent no.1 though served. Petitioner does not press reliefs against respondent no.2.

3.

The Petitioner had provided a loan of Rs.13,60,000/- to the first Respondent under a Loan-cum-Hypothecation Agreement entered into on 16th September, 2013. The loan was repayable in 40 equated monthly installments. Clause 12 of the agreement provides for events of default; Clause 14 provides for

2/3 repossession of assets. Clause 17 provides for arbitration in respect of disputes between the parties. Petitioner issued legal notices dated 9th March, 2015 and called upon the respondents to pay Rs.11,84,150/- 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, 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. The appointment of the Receiver is necessary in order to ensure that the vehicle 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. 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 Loan-cum-Hypothecation Agreement (Exhibit -A to the Petition).

ii) In the event that the respondents do not communicate their willingness to

3/3 the Receiver to act as agents within a period of two weeks from the date of receipt of the communication from the Court Receiver, Court Receiver to take forcible possession of the vehicle and if necessary with the assistance of police from the respondent no.1. It would be open to the petitioner to apply to the Court for further orders including sale of the vehicle by private treaty. iii) Until the Receiver takes possession, there shall be an interim injunction restraining the Respondent no.1 from alienating, encumbering, parting with possession or creating any third party right in respect of the vehicle 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.]