Tata Capital Financial Services Ltd. v. Manubhai Rajabhai Dabhi

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.(L) 1602 OF 2014 TATA Capital Financial Services Ltd .....Petitioner

Versus

MANUBHAI RAJABHAI DABHI .....Respondent Mr. Nikhil Mehta i/b. KMC Legal Venture for the Petitioner. None for Respondents.

CORAM: S.J. KATHAWALLA, J.

DATED: 28th January 2015 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 an Affidavit proving service is on record. The Petition is today taken up for final hearing. However, none appear for the Respondent.

2.

By a Loan cum Hypothecation Agreement ("said Agreement") dated 18TH January 2012, the Petitioner provided a loan of Rs. 309059/- (Rupees Three Lakhs Nine Thousand and Fifty Nine Only) to the Respondent for purchase of a TRACTOR bearing Chassis No: WWTG78619104826, Engine No: 3RSC00204 and Registration No: GJ 11 AD 4562 ("said Asset") more particularly described in paragraph 2 of the Petition and on the terms described in the Loan-cum-Hypothecation Agreement dated 18th January 2012. 1/5

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. 309059/- (Rupees Three Lakhs Nine Thousand and Fifty Nine Only) was repayable by the Respondent to the Petitioner with interest @ 18.00% per annum in equated monthly installments. 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. 376416/- (Rupees Three Lakhs Seventy Six Thousand Four Hundred and Sixteen only) as on 20.08.2014. The events of default having taken place in terms of the Loan-cum-Hypothecation Agreement, the Petitioner became entitled to recall and have recalled the entire loan. There was no reply to the Loan Recall Notice dated 15.03.2014. The Petitioner therefore invoked the arbitration clause in the Loan-cumHypothecation Agreement dated 18th January 2012. 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 Affidavit in Reply and is also not present before the 2/5

Court. In absence of any defence 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 said 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.3.

76 lakhs 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.

and without any prior notice to the Respondents; (b) The Court Receiver shall within a period of two weeks after taking possession, give an option to the Respondents, in writing to act as an agent of the Receiver in respect of the said Asset. The Respondents 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/s being desirous of acting as agents of the Receiver, they shall be appointed as agents of the Receiver, subject to deposit of security and payment of royalty.

(d) There shall also be an interim injunction restraining the Respondents 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.

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6.

The Arbitration Petition is accordingly disposed of. ( S.J.KATHAWALLA, J. ) 5/5