Allowed

Citicorp Finance (India) Ltd. v. Kamruzzama Faridi S/O Abdul Aziz and Anr.

Bombay HC7 Sept 2012ARBP/775/2012

Case brief

AI extract

What is this about?

The Court appointed a Court Receiver for hypothecated equipment under Section 9 of the Arbitration Act to prevent alienation, allowing the Petitioner to secure recovery pending final disposal of the arbitration petition.

What did the court decide?

Appointment of Court Receiver for TATA LPK 2518, interim injunction on alienation, and option to Respondents to act as agents.

Citicorp Finance (India) Ltd. Vs Kamruzzama Faridi… — Execution and Attachment | Bombay HC (2012)

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ARBP 775 OF 2012

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION PETITION NO.775 OF 2012

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Citicorp Finance (India) Ltd. …..Petitioner Versus Mr.Kamruzzama Faridi and Anr. ....Respondents

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Ms.Shakuntala Joshi i/by M/s.S.I.Joshi and Co., for Petitioner. None for Respondents.

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CORAM: S.J.KATHAWALLA, J.

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DATE: 7 th SEPTEMBER 2012

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P.C.

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This Petition is filed by the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 seeking reliefs as prayed against the Respondent. By the orders dated 07-02-2012 and 10-04-2012, an adinterim order was passed in the above Petition by this Court. The said order along with the Petition is served on the Respondent and an Affidavit proving service dated 14-08-2012 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.16,83,000/- to the first Respondent under a Loan-cum-Hypothecation Agreement entered into on 02-11-2009. The loan was repayable with interest at the rate of 14.87% per annum in 46 monthly installments of Rs.48,818/-. The Second

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ARBP 775 OF 2012

Respondent has guaranteed the due repayment of the loan. Clause 5 of the agreement provides for the events of default; and Clause 6 provides for the rights of the Petitioner on default including repossession of the asset. Clause 16 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.11,55,804.25. 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 Equipment - TATA LPK 2518, more particularly described in Exhibit – E 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 of the hypothecated Equipment - TATA LPK 2518. The appointment of the Receiver is necessary in order to ensure that the Equipment - TATA LPK 2518 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

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ARBP 775 OF 2012

proceedings, the Court Receiver is appointed as Receiver in respect of the Equipment - TATA LPK 2518 , more particularly described in Exhibit E to the Petition, with direction to take forcible possession of the said Equipment - TATA LPK 2518 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 Respondents in writing to act as agents of the Receiver in respect of the said Equipment - TATA LPK 2518. The respondents shall be given two weeks time by the Court Receiver from

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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 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

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ARBP 775 OF 2012

including sale of the Equipment - TATA LPK 2518 by private treaty;

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(iv) Until the Receiver takes possession, there shall be an interim

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injunction restraining the Respondents from alienating, encumbering, parting with possession or creating any third party rights in respect of the Equipment - TATA LPK 2518 described in Exhibit-E to the Petition.

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The Arbitration Petition is accordingly, disposed of.

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( S.J.KATHAWALLA, J.)

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Citicorp Finance (India) Ltd. v. Kamruzzama Faridi S/O Abdul Aziz and Anr.

Case brief

What is this about?

What did the court decide?

Citicorp Finance (India) Ltd. v. Kamruzzama Faridi S/O Abdul Aziz and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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Citicorp Finance (India) Ltd. Vs Kamruzzama Faridi S/O Abdul Aziz and Anr.