L And T Finance Limited v. M/S. J.B. Construction Company (Borrower)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 89 OF 2016 L & T Finance Limited .....Petitioner

Versus

M/s. J.B.Construction Company & Ors.

....Respondents Ms. Sharayu Pednekar a/w Mr. Sandesh Godse i/by M/s. Vivek Patil & Associates., for Petitioner.

None for Respondents.

CORAM: S.J.KATHAWALLA, J.

DATE: 8th July, 2016 P .

C.

1. This Petition is filed by the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 seeking reliefs as prayed against the Respondents. The Arbitration Petition is served on the Respondent No.1. However, no relief is pressed against the Respondent Nos. 2 to 4 at this stage and liberty is sought to take out fresh Petition seeking relief against Respondent Nos. 2 to 4. 2.

The Petition is today taken up for final hearing. None appear for the Respondents.

3. By an Agreement dated 1 st March 2013 (Exhibit 'A' to the Petition), the Petitioner had provided a loan of Rs. 45,60,000/ to the Respondent No.1 for purchase of Construction Equipment being CE EC-210B PRIME VOLVO CRAWLER EXCAVATOR bearing Serial No. VCEC210BV00050224 and Engine No. 11244537 more particularly described in Exhibit - F to the Petition ("Said Construction Equipment"). By the Loan-cum-Hypothecation Agreement dated 01.03.2013 the said Construction Equipment was hypothecated with the petitioner by the Respondent No. 1.

4.

The Loan amount of Rs. 45,60,000/- was repayable by the Respondents to the petitioner with interest @6.10% per annum in monthly installments commencing from 05.04.2013 and ending on 05.11.2015. Therefore, the aggregate amount payable by the Respondents to the petitioner under the loan agreement was Rs. 53,94,480/-. 5.

Clause 12 of the agreement provides for the events of default; and Clause 17 provides for arbitration. There has been a default on the part of the Respondents. In view thereof both the Respondents became liable to pay to the Petitioner a sum of Rs. 21,64,241/- as on 21.05.2015. The Petitioner therefore invoked the arbitration clause in the Agreement dated 01.03.2013.

6.

In the present Petition, the Petitioner has sought appointment of the Court Receiver, High Court Bombay as Receiver of the said Construction Equipment more particularly described in Exhibit - F to the Petition. In absence of any defense or contest by the Respondents, the averments contained in Petition have remained uncontroverted. I see no reason why the statement/submissions made by the Petitioner in the Petition should not be accepted. Since Respondents have defaulted in repayment of the outstanding dues, it is necessary to safeguard the interest of the Petitioner by appointing the Court Receiver as Receiver of the said Construction Equipment. The appointment of the Receiver is necessary in order to ensure that the said Construction Equipment 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) Pending the hearing and final disposal of the arbitration proceedings, the Court Receiver is appointed as Receiver in respect of said Construction Equipment being CE EC-210B PRIME VOLVO CRAWLER EXCAVATOR bearing Serial No. VCEC210BV00050224 and Engine No.

Receiver in respect of the said Construction Equipment described in Exhibit-F to the Petition. 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 Agreement For Construction Equipment Loan dated 1st March, 2013 (Exhibit A to the Petition); (iii) In the event that the Respondents fails to communicate their willingness to the Receiver to act as agents of the Court Receiver 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 Construction Equipment more particularly described in Exhibit-F to the Petition by private treaty;

(iv) There shall be an interim injunction restraining the Respondents from alienating, encumbering, parting with possession or creating any third party rights in respect of the said Construction Equipment being CE EC-210B PRIME VOLVO CRAWLER EXCAVATOR bearing Serial No. VCEC210BV00050224 and Engine No. 11244537 more particularly described in Exhibit F to the Petition.

7.

copy of this order shall be forthwith served on the Respondents by hand delivery and also by Speed Post A.D.

8. The Arbitration Petition is accordingly, disposed of. (S.J.

KATHAWALLA, J.)