Allowed

L and T Finance Ltd. v. Debadatta S.B. Swain and 2 Ors.

Bombay HC28 Aug 2012ARBP/437/2012

Case brief

AI extract

What is this about?

In an arbitration petition under Section 9 of the Arbitration and Conciliation Act, 1996, the Bombay High Court appointed a Court Receiver for a hypothecated truck to safeguard the petitioner's interest following a loan default.

What did the court decide?

Appointment of Court Receiver to take possession of hypothecated truck, offer respondents option to act as agents, and restrain alienation.

L and T Finance Ltd. Vs Debadatta S.B. Swain and 2 Ors. — Arbitration | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 437 OF 2012

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L & T Finance Limited … Petitioner Versus Debadatta S. B. Swain & Ors. ...Respondents

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Pramod Bhosle i/b Ms. Disha Karambar for the Petitioner. None for the Respondent.

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CORAM : S. J. KATHAWALLA, J. DATE : 28th August, 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 the Respondents. On 27^th March 2012, an ad-interim order was passed in the above Petition by the Court. The said Petition alongwith the order dated 27^th March, 2012 is served upon the Respondents. The Petitioner undertakes to file affidavit proving service within two weeks from today. The undertaking is accepted. The Petition is today taken up for final hearing. However, none appear for the Respondents.

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The Petitioner had provided a loan of Rs. 11,73,000/- to the first Respondent under a Loan-cum-Hypothecation Agreement entered into on 28.5.2009. The loan was repayable with interest

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at the rate of 8.84% per annum in 47 monthly equated installments of Rs. 33,783/-. The second and third Respondent has guaranteed repayment of the loan. Clause 12 of the agreement provides for the events of default; Clause 13 of 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 is a default on the part of the Respondents. The Respondents are liable to pay to the Petitioner a sum of Rs. 6,99,305/-. The Petitioner has invoked the provision for arbitration.

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In the present Petition, the Petitioner has sought appointment of the Court Receiver as Receiver of the hypothecated truck, more particularly described in Exhibit “G” to the Petition. In absence of any defense or contest by the Respondents, the averments contained in the Petition are accepted. There has been a default in the payment of the outstanding dues. It is therefore necessary to safeguard the interest of the Petitioner by appointing the Court Receiver as Receiver of the hypothecated truck. The appointment of the Receiver is necessary in order to ensure that the truck is not wasted or alienated, thereby defeating the rights of the Petitioner.

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Section 9 empowers the Court to pass interim measures of protection. Hence, the following order :-

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(i) Pending the hearing and final disposal of the

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arbitration proceedings, the Court Receiver is appointed as Receiver in respect of the truck, more particularly described in Exhibit “G” to the Petition, with direction to take forcible possession of the said truck 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 the Receiver in respect of the said truck. 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 Loan – cum – Hypothecation agreement (Exhibit –“A” to the Petition);

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(iii) In the event that the Respondents do not

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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 for sale of the truck by private treaty;

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(iv) Until the Receiver takes possession, there shall

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be an interim injunction restraining the Respondents from alienating, encumbering, parting with possession or creating any third party rights in respect of the truck described in Exhibit “G” to the Petition.

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The arbitration petition is accordingly, disposed of.

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All parties, including the Court Receiver to act on a copy of

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this order duly authenticated by the Associate of this Court.

L and T Finance Ltd. v. Debadatta S.B. Swain and 2 Ors.

Case brief

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What did the court decide?

L and T Finance Ltd. v. Debadatta S.B. Swain and 2 Ors.

Case brief

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