Allowed

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

Bombay HC7 Sept 2012ARBP/779/2012

Case brief

AI extract

What is this about?

In an arbitration petition, the High Court ordered appointment of a Court Receiver to take possession of a hypothecated vehicle following loan default. The court granted interim injunction restraining respondents from alienating the asset and directed the receiver to offer the respondents option to act as agents.

What did the court decide?

Appointment of Court Receiver for hypothecated vehicle; interim injunction restraining alienation; direction to give respondents option to act as agents.

Citicorp Finance (India) Ltd. Vs Kamruzzama Faridi S/O Abdul Aziz… — Arbitration | Bombay HC (2012)

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ARBP 779 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.779 OF 2012

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Citicorp Finance (I) 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 an order dated 07-02-2012 an ad-interim 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.14,97,000/- to the first Respondent under a Loan-cum-Hypothecation Agreement entered into on 30-02-2009. The loan was repayable with interest at the rate of 16.12% per annum in 35 monthly installments. The first installment was of

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ARBP 779 OF 2012

Rs.57,989/- and remaining 34 monthly installments of Rs.55,799/-. The Second Respondent has guaranteed the due repayment of the loan. 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.4,99,598.84/-. 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 Vehicle Taurus , 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 of the hypothecated Vehicle Taurus . The appointment of the Receiver is necessary in order to ensure that the Vehicle Taurus 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

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ARBP 779 OF 2012

following order:

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

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proceedings, the Court Receiver is appointed as Receiver in respect of the Vehicle Taurus , more particularly described in Exhibit F to the Petition, with direction to take forcible possession of the said Vehicle Taurus 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 Vehicle Taurus . 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

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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

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ARBP 779 OF 2012

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 Vehicle Taurus 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 Vehicle Taurus 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.)

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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.