Disposed

L and T Finance Limited v. Mrs.Sunita Kashinath Shinde (Borrower W/O. Lkashinath Shinde and Anr.

Bombay HC4 Sept 2014ARBP/432/2013

Case brief

AI extract

What is this about?

In an arbitration petition under Section 9, the Bombay High Court appointed a Court Receiver to take possession of hypothecated equipment amidst loan default. The court issued an injunction to prevent alienation and allowed respondents an option to act as agents.

What did the court decide?

Appointment of Court Receiver with power to take forcible possession; interim injunction against alienation; direction for appointment of agents if respondents apply.

L and T Finance Limited Vs Mrs.Sunita Kashinath Shinde (Borrower… — Arbitration | Bombay HC (2014)

Nitin

ARBP-432-2013

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION PETITION NO. 432 OF 2013

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L & T Finance Limited, a Company

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… Petitioner

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Versus

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Mrs. Sunita Kashinath Shinde & Ors

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… Respondents

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Ms Shakuntala Joshi along with Ms. Nikita Pawar i/b M/s S.I. Joshi & Co. for the Petitioner.

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None for Respondents.

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CORAM : S.J. KATHAWALLA, J. DATED : 4 TH SEPTEMBER, 2014

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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 Respondents. Ad-interim order dated 29.08.2013 was passed by this Court in the above Petition. The said order, along with the Petition, is served on the Respondents and an Affidavit proving service dated 26.08.2014 is on record. The Petition is today taken up for final hearing. However, none appeared for the Respondents.

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The Petitioner had provided a loan of Rs. 31,52,000/- to the first Respondent under a Loan-cum-Hypothecation Agreement entered into on 30.03.2011. The Loan was repayable with interest @ 5.87% p.a. in 47

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Nitin 2 ARBP-432-2013

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monthly installments, i.e., 1^st installment of Rs. 38,980/- in 2 sets amounting to Rs. 77,960/- and 2^nd to 36^th installments of Rs. 42,340/- in 2 sets amounting to Rs. 84,680/- and 37^th to 47^th installments of Rs. 38,980/- in 2 sets amounting to Rs. 77,960/-. The Respondent Nos. 1(a) and 1(b) are legal heirs of the original borrower i.e. Respondent No. 1 and the Respondent No. 2 have guaranteed the due repayment of the loan. Clause 12 of the Agreement provides for the events of default; Clause 13 for the consequences of default; Clause 14 provides for the rights of the Petitioner on default including repossession of the asset. Clause 18 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. 24,67,406/-. 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 2 equipments, more particularly described in Exhibit-F to the Petition. In absence of any defense or contest by the Respondents, the averments contained in the Petition would have to be accepted. There has been a default in repayment 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 2 equipments. The appointment of the

ARBP-432-2013

Nitin

Receiver is necessary in order to ensure that the hypothecated 2 equipments are not wasted or alienated, thereby defeating the rights of the Petitioner. Section 9 empowers the Court to pass an interim measures 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 2 equipments, more particularly described in Exhibit F to the Petition, with direction to take forcible possession of the said 2 equipments 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 2 equipments. 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 an 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

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Nitin 4 ARBP-432-2013

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(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 2 equipments 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 2 equipments described in Exhibit F to the Petition.

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v) The Arbitration Petition is accordingly disposed of.

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(S.J. KATHAWALLA, J.)

L and T Finance Limited v. Mrs.Sunita Kashinath Shinde (Borrower W/O. Lkashinath Shinde and Anr.

Case brief

What is this about?

What did the court decide?

L and T Finance Limited v. Mrs.Sunita Kashinath Shinde (Borrower W/O. Lkashinath Shinde 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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