Tata Capital Financial Services Limited v. Saidkhan Pathan

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 1034 OF 2016 Tata Capital Financial Services Ltd .....Petitioner

Versus

SAIDKHAN PATHAN .....Respondent Mr. Nikhil Mehta i/b. KMC Legal Venture for the Petitioner. None for Respondent.

CORAM: S.J. KATHAWALLA, J.

DATED: 1ST DECEMBER 2016 P.C 1.

The above Petition is filed by the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 seeking reliefs as prayed against the Respondent. The Petition is served on the Respondent and Affidavits proving service both dated 30th September, 2016 and 6th October,2016 are on record. The Petition is today taken up for final hearing. However, none appear for the Respondent though served. 2.

By a Loan cum Hypothecation Agreement ("said Agreement") dated 24th June 2014, the Petitioner provided a loan of Rs.21,00,000/- (Rupees Twenty One Lacs Only) to the Respondent for purchase of a commercial vehicle bearing Chassis No. MAT466422E5F05908 and Registration

Nos: MH 17 AG 9640 ("said Asset") more particularly described in paragraph 2 of the Petition and on the terms described in the Loan-cumHypothecation Agreement dated 24TH June 2014. Under the said Agreement, the said Asset was hypothecated with the Petitioner by the Respondent, as security for repayment of the Loan amount. 3.

The Loan amount of Rs.21,00,000/- (Rupees Twenty One Lacs Only) was repayable by the Respondent to the Petitioner with interest @ 13.11% per annum in 60 monthly installments of Rs. 47,900/- each.

4. Clause 17 of the Loan-cum-Hypothecation Agreement provides for the events of default; Clause 18 for the consequences of default; Clause 18.1 provides for Repossession of Asset. Clause 23 provides for Arbitration. There has been a default on the part of the Respondent and the Respondent failed to pay to the Petitioner a sum of Rs. 16,48,515/- (Rupees Sixteen Lacs Forty Eight Thousand Five Hundred and Fifteen Only). The events of default having taken place in terms of the Loancum-Hypothecation Agreement, the Petitioner became entitled to recall and have recalled the entire loan. There was no reply to the Loan Recall Notice dated 2nd May 2016. The Petitioner has yet not invoked the arbitration proceedings and is desirous of doing so and in the meantime has approached this Court for interim relief.

5. In the present Petition, the Petitioner has sought appointment of the Court Receiver, High Court Bombay as the Receiver of the hypothecated

Asset, more particularly described in paragraph 2 to the Petition. The Respondent has not filed his Affidavit in Reply and is also not present before the Court. In absence of any defense or contest by the Respondent, the averments contained in the Petition have remained uncontroverted. I see no reason why the statements/ submissions made by the Petitioner in the Petition should not be accepted. As the Respondent has defaulted in the repayment of the outstanding dues, it is just and necessary to safeguard the interest of the Petitioner by appointing the Court Receiver as Receiver of the Hypothecated Asset. The appointment of the Receiver is necessary in order to ensure that the sad Asset is not wasted or alienated, thereby defeating the rights of the Petitioner.

Further interim injunction in terms of prayer clause (c) also needs to be granted to protect the rights of the Petitioner. The claim of the Petitioner is over Rs. 16 lacs and unless adequately protected, the Petitioner may suffer irreparable harm and injury. Balance of convenience also warrants the grant of relief. Section 9 empowers the Court to pass an interim measure of protection.

a) Pending the hearing and final disposal of the arbitration proceedings, the Court Receiver is appointed as Receiver in respect of the Hypothecated Asset, more particularly described in paragraph 2 to the Petition viz: bearing Chassis No. MAT466422E5F05908 and Registration Nos: MH 17 AG 9640, with direction to take forcible physical

possession of the said Asset with police assistance, if required, and without any prior notice to the Respondent;

(b) The Court Receiver shall within a period of two weeks after taking possession, give an option to the Respondent, in writing to act as an agent of the Receiver in respect of the said Asset. The Respondent shall be given two weeks time by the Court Receiver from the date of receipt of the Court Receivers communication/letter to exercise such option. In the event of the Respondent being desirous of acting as agent of the Receiver, he shall be appointed as agent of the Receiver, subject to deposit of security and payment of 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);

(c ) In the event that the Respondent does not communicate his willingness to the Receiver to act as agent within a period of two weeks from the date of receipt of the communication from the Court Receiver, it would be open to the Petitioner to apply to the Court for further orders including sale of the said Asset by private treaty; (d) There shall also be an interim injunction restraining the Respondent from disposing of, alienating, encumbering, parting with possession or creating any third party rights in respect of the said Asset described in paragraph 2 to the Petition.

6) A copy of this order shall be forthwith served on the Respondent by hand delivery and also by Speed Post A.D 7) The Arbitration Petition is accordingly disposed of. (S.J. KATHAWALLA, J.)