Allowed

L and T Finance Ltd. v. Orriom Constructions and 3 Ors.

Bombay HC26 Jun 2012ARBP/235/2012

Case brief

AI extract

What is this about?

This arbitration petition was filed to appoint a Court Receiver of hypothecated goods after loan default. With no respondent appearance and accepted petitioner instances of default, the High Court appointed a Court Receiver to take possession and safeguard the asset, granting the Petitioner time to consider the arrangement or apply for sale.

What did the court decide?

Appointment of Court Receiver for hypothecated Loader with direction to take forcible possession, option to respondents to act as agents, and interim injunction.

L and T Finance Ltd. Vs Orriom Constructions and 3 Ors. — Arbitration | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.235 OF 2012

L. & T. Finance Ltd.

...Petitioner

Versus

Orriomm Construction & ors. ...Respondents

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Ms.Shakuntala Joshi i/b. S.I.Joshi & Co. for Petitioner. None for Respondents.

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CORAM: S.J.KATHAWALLA, J.

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June 26, 2012.

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P.C.

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This Petition is filed by the Petitioner under Section 9 of the

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Arbitration and Conciliation Act, 1996 seeking reliefs as prayed against

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the Respondent. By an order dated 1^st March, 2012 an ad-interim order was passed in the above Petition by this Court. The said order along with

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the Petition is served on the Respondent and an Affidavit proving service

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dated 2^nd May, 2012 is on record. The Petition is today taken up for final hearing. However, none appear for the Respondent.

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The Petitioner had provided a loan of Rs.15,00,000/- to the first Respondent under a Loan-cum-Hypothecation Agreement entered into on 26^th October, 2009. The loan was repayable with interest at the rate of 7.50 % per annum in 35 monthly equated installments of Rs.52,500/-. The Second Respondent has guaranteed the due repayment of the loan. Respondent Nos.2, 3 and 4 are partners of the First Respondent firm. Clause 12 of the agreement provides for the events of default; Clause 13 of the consequences of default and 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. The Respondents were liable to pay to the Petitioner a sum of Rs.9,18,994/-. The Petitioner has invoked the provision of arbitration.

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In the present Petition, the Petitioner has sought appointment of the Court Receiver as Receiver of the hypothecated Loader, more particularly described in Exhibit – F to the Petition. In absence of any defence or contest by the Respondents, the averments contained in Petition would have to be accepted. There has been a default in payment of the outstanding dues. It would, therefore, be necessary to safeguard the interest of the Petitioner by appointing the Court Receiver as Receiver

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of the hypothecated Loader. The appointment of the Receiver is

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necessary in order to ensure that the Loader 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:

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(i) Pending the hearing and final disposal of the arbitration proceedings, the Court Receiver is appointed as Receiver in respect of the Loader, more particularly described in Exhibit F to the Petition, with direction to take forcible possession of the said Loader with police assistance, if required, and without any prior notice to the Respondents.

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(ii) The Court Receiver shall within a period of two weeks after taking possession, give an option to the Respondent in writing to act as agents of Receiver in respect of the said Loader. 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

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security and royalty having regard to the terms and conditions contained in the loan-cum-hypothecation agreement (Exhibit A to the Petition).

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(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 Petitioner to apply to the Court for further orders including sale of the Loader by private treaty.

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(iv) Until the Receiver takes possession, 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 Loader described in Exhibit-F to the Petition.

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The Arbitration Petition is accordingly, disposed of.

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(S.J.KATHAWALLA, J.)

L and T Finance Ltd. v. Orriom Constructions and 3 Ors.

Case brief

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L and T Finance Ltd. v. Orriom Constructions and 3 Ors.

Case brief

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