Allowed

L and T Finance Limited v. Baban Shrirang Kharat and Another

Bombay HC8 Oct 2014ARBP/471/2014

Case brief

AI extract

What is this about?

High Court appointed a Court Receiver as Receiver of a hypothecated vehicle under Section 9 of the Arbitration Act, granting powers to take forcible possession and restricting respondent's alienation pending final disposal of arbitration proceedings.

What did the court decide?

Appointment of Court Receiver to take forcible possession of hypothecated vehicle and restrain alienation.

L and T Finance Limited Vs Baban Shrirang Kharat and Another — Arbitration | Bombay HC (2014)

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ARBP-471-2014

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION PETITION NO. 471 OF 2014

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L & T Finance Ltd. … Petitioner

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Versus

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Mr. Baban Shrirang Kharat & Anr. … 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 : 8TH OCTOBER, 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. The said Petition is served on the Respondent Nos.1 and 2 and Affidavits proving service dated 10.09.2014 and 07.10.2014 respectively are on record. 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. 9,65,000/- (Rupees

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Nitin 2

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ARBP-471-2014

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Nine Lacs Sixty Five Thousand only) to the first Respondent (Borrower) under a Loan-cum-Hypothecation Agreement entered into on 30.04.2013. The Loan was repayable with interest @8.60% p.a. in 35 monthly installments i.e. 1^st installment of Rs.34,850/- and 2^nd to 34^th Installment of Rs.34,680/-. Respondent No. 2 has 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 Petitioners 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.11,54,143/-. 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, 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 vehicle. The appointment of the Receiver is necessary in order to ensure that the hypothecated Vehicle

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ARBP-471-2014

are 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 proceedings, the Court Receiver is appointed as Receiver in respect of the Vehicle, more particularly described in Exhibit “F” to the Petition, with a direction to take forcible possession of the said Vehicle 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 Vehicle. 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 (Exhibit “A” to the Petition);

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4 ARBP-471-2014

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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 Vehicle 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 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.)

L and T Finance Limited v. Baban Shrirang Kharat and Another

Case brief

What is this about?

What did the court decide?

L and T Finance Limited v. Baban Shrirang Kharat and Another

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

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