Disposed

L and T Finance Ltd. v. Sanjay Shah

Bombay HC1 Mar 2013ARBP/196/2013

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 to take possession of hypothecated equipment following a loan default, with directions to allow respondents option to act as agents. An interim injunction restraining alienation was also granted.

What did the court decide?

Appointment of Court Receiver to take possession of equipment; option to act as agent within two weeks; interim injunction restraining alienation; liberty to apply for sale after two weeks.

L and T Finance Ltd. Vs Sanjay Shah — Arbitration | Bombay HC (2013)

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ARBPL-105/13

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY .

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ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION PETITION (L) NO.105 OF 2013.

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L.& T. FINANCE LTD.

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... Petitioner.

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V/s.

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M/S SANJAY SHAH AND ORS. ... Respondents.

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

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CORAM : R.D.DHANUKA J. DATED : MARCH 1, 2013.

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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.

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The Petition has been served on the respondents. The learned Counsel appearing for the Petitioner tenders Affidavit of service proving service dated 4^th February 2013. The same is taken on record. It is stated in the Affidavit that Respondents have accepted the service. Today the Petition is

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taken up for final hearing however, none appears for the Respondents.

Asmita

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The Petitioner had provided a loan of Rs.22,00,000/- to the first Respondent under a Loan-cum-Hypothecation Agreement entered into on 17^th November 2011. The loan was repayable with interest @ 8.60 per annum in 35 monthly installments of Rs.79,074/-. The second Respondent has guaranteed the due repayment of the loan. Respondent Nos.2 to 4 are the partners of the first Respondent Firm. Clause 12 of the Agreement provides for the events of default; Clause 13 provides 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.23,05,581/-. 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, 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 equipment. The appointment of the Receiver is necessary in order to ensure that the equipment is not wasted

Asmita

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or alienated, thereby defeating the rights of the Petitioner. Section 9 empowers

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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 equipment, more particularly described in Exhibit-F to the Petition, with direction to take forcible possession of the said equipment 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 Receiver in respect of the said equipment. 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 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 equipment by private treaty.

Asmita

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ARBPL-105/13

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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 right in respect of the equipment described in Exhibit-F to the Petition.

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The Arbitration Petition is accordingly disposed of.

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( R.D.DHANUKA, J.)

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Asmita

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L and T Finance Ltd. v. Sanjay Shah

Case brief

What is this about?

What did the court decide?

L and T Finance Ltd. v. Sanjay Shah

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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