L And T Finance Limited v. Mr. Sachin G. Virkar (Borrower) And 2 ORS.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.455 OF 2016 L & T Finance Ltd.

.. Petitioner V/s.

Sachin Gulabrao Virkar & Ors.

.. Respondents Shakuntala Joshi a/w Anand Poojari, Nikita Pawar, Jalpa Pithadia i/b S.I. Joshi & Co. for Petitioner.

None for Respondents.

CORAM : S.J. KATHAWALLA, J.

DATED : 21 st April, 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 Respondents. The Petition is served on the Respondents and an Affidavit proving service dated 17.11.2015 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 dated 28.10.2013, the Petitioner provided a loan of Rs.20,11,000/- to the first Respondent for purchase of an asset more particularly described in Exhibit "F" to the Petition and the said Asset was hypothecated with the Petitioner by the Respondent No.1. 3.

The Loan amount of Rs.20,11,000/- was repayable by the Respondents to the Petitioner with interest @8.12% p.a. in 48 monthly installments commencing from 1/4

15.12.2013 and ending on 15.11.2017. Therefore, the aggregate amount payable by the Respondents to the Petitioner under the Loan-cum-Hypothecation Agreement was Rs.26,64,384/-.

4.

Respondent No.2 and 3 have guaranteed due repayment of the loan. Clause 12 of the Agreement provides for the events of default; Clause 13 for the consequences of default; Clause 14 provides for the rights of the Petitioner on default including repossession of the 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.17,12,783/- (Rupees Seventeen Lakhs Twelve Thousand Seven Hundred and Eighty Three Only) as on 24.04.2015 the Petitioner therefore invoked the arbitration clause in the Agreement dated 28.10.2013. 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 the 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. Section 9 empowers the Court to pass interim measures of protection. Since 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 2/4

of the hypothecated Asset. The appointment of the Receiver is necessary in order to ensure that the hypothecated Asset is not wasted or alienated, thereby defeating the rights of the Petitioner. 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 the Asset, more particularly described in Exhibit "F" to the Petition, with a direction to take 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 Receiver's communication/letter to exercise such an 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. 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);

(iii) In the event that the Respondents do not communicate their willingness to the Receiver to act as agents within a period of two weeks from the date of receipt of the communication from the Court Receiver, it would be open to the 3/4

Petitioners to apply to the Court for further orders including sale of the said Asset by private treaty;

(iv) 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 Asset as described in Exhibit "F" to the Petition.

6.

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

7.

The Arbitration Petition is accordingly disposed off. (S.J. KATHAWALLA, J.) 4/4