L And T Finance Limited v. Vikas Kumar Jain And 2 ORS.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 1639 OF 2014 L & T Finance Ltd.

...

Petitioner

Versus

Vikas Kumar Jain & Ors.

...

Respondents Mr. Nilesh Gala i/b. Law Square for the Petitioner. None for Respondents.

CORAM

: S.J. KATHAWALLA, J.

DATED : 27 th 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 Respondents. The Petition, is served on the Respondents and an Affidavit proving service is on record. The Petition is today taken up for final hearing. However, none appear for the Respondents.

2.

By a Loan Cum Hypothecation Agreement ("said Agreement") dated 23rd November, 2011, the Petitioner provided a loan of Rs.19,11,000/- (Rupees Nineteen Lakhs Eleven Thousand Only) to the first Respondent for purchase of TATA 3118, 31 (T) 180 (HP) bearing registration no. MP09HG6564, Chassis no.

MAT466385B3N32279 and Engine no. B591803111L63198478 ("said Asset") more particularly described in Exhibit-F to the Petition and on the terms described in the Loan-cum-Hypothecation Agreement dated 23rd November, 2011. Under the said agreement, the said asset was hypothecated with the Petitioner by the Respondent No. 1, as security for repayment of the Loan amount.

3.

The Loan amount of Rs.19,11,000/- was repayable by the Respondents to the Petitioner with interest @ 7% totalling to Rs.24,46,080/- repayable in 45 monthly installments, the 1st installment being Rs.54,460/-.

4.

Respondent No.2 and 3 guaranteed the due repayment of the loan. Clause 12 of the Loan-cum-Hypothecation Agreement provides for the events of default; Clause 13 provides for the consequences of event of default; Clause 14 provides for Repossession of Asset. Clause 17 provides for Arbitration. There has been a default on the part of the Respondents and the Respondents failed to pay to the Petitioner a sum of Rs.11,68,332/- (Rupees Eleven Lakhs Sixty Eight Thousand Three Hundred - Thirty Two Only) due as on 29.09.2014. 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 7th October 2014. The Petitioner therefore invoked the arbitration clause in the Loan-cum-

Hypothecation Agreement dated 23rd November, 2011. 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 Exhibit "F" to the Petition. The Respondents have not filed their Affidavit in Reply and are also not present before the Court. In absence of any defense or contest by the Respondents, 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 Respondents have 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 (e) also needs to be granted to protect the rights of the Petitioner. The claim is over Rs.11.68 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.

(i) Pending the hearing and final disposal of the arbitration

proceedings, the Court Receiver is appointed as Receiver in respect of the said asset, more particularly described in Exhibit "F" to the Petition, with direction to take forcible physical possession of the said asset with police assistance if required, and without any prior notice to the Respondents;

(ii) 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.

with possession or creating any third party rights in respect of the said Asset described in Exhibit "F" to the Petition. (v) The Arbitration Petition is accordingly disposed of. (S.J. KATHAWALLA, J.)