Disposed

L and T Finance Limited v. Mr. Irshad Ahmed (Borrower) and Anr.

Bombay HC25 Sept 2014ARBP/956/2014

Case brief

AI extract

What is this about?

In an arbitration petition filed under Section 9 of the Arbitration Act, 1996, the High Court appointed a Court Receiver to take forcible possession of a defaulting borrower's hypothecated vehicle to prevent alienation. The Court directed the Receiver to offer the respondents the option to act as agents subject to security, with further orders regarding sale if no agreement is reached.

What did the court decide?

Appointment of Court Receiver with direction to take forcible possession of the described vehicle; offer respondents option to act as agents within two weeks; interim injunction restraining alienation

L and T Finance Limited Vs Mr. Irshad Ahmed (Borrower)… — Specific Performance | Bombay HC (2014)

Nitin

939-ARBP-956-2014

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 956 OF 2014

L and T Finance Ltd.

… Petitioner

Versus

Irshed Ahmed & Anr. … Respondents

¶9

Adv. Vivek Patil alongwith Adv. Sandesh Godse i/by M/s.Vivek Patil & Associates., for Petitioner. None for Respondents.

¶10

CORAM: S.J.KATHAWALLA, J.

¶11

DATE: 25TH SEPTEMBER, 2014

¶12

P.C. :

¶13

This Petition is filed by the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 seeking reliefs as prayed against the Respondent. The Arbitration Petition is served on the Respondent and an Affidavit proving service is on record. The Petition is today taken up for final hearing. However, none appear for the Respondent.

¶14

The Petitioner had provided a loan of Rs.21,00,000/- to the first Respondent under a Loan-cum-hypothecation Agreement entered into on 12.12.2012. The loan was repayable with interest at the rate of 7.30% per annum in 47 monthly installments of 57,758/- X 1 and 57,727 X 46.. The Second Respondent has guaranteed the due repayment of the loan. Clause 12 of the

¶15

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¶16

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.20,53,739/-. The Petitioner has invoked the provision of arbitration.

¶17

In the present Petition, the Petitioner has sought appointment of the Court Receiver as Receiver of the hypothecated TATA 3118 bearing Chassis No. MAT466419C2C06050 and Engine No. B5.91803121C63242888, more particularly described in Exhibit – F to the Petition. In absence of any defense 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 TATA 3118 bearing Chassis No. MAT466419C2C06050 and Engine No. B5.91803121C63242888. The appointment of the Receiver is necessary in order to ensure that the TATA 3118 bearing Chassis No. MAT466419C2C06050 and Engine No. B5.91803121C63242888 is not wasted or alienated, thereby

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defeating the rights of the Petitioner. Section 9 empowers the Court to pass an interim measure of protection. Hence the following order:

¶20

(i) Pending the hearing and final disposal of the arbitration proceedings, the Court Receiver is appointed as Receiver in respect of the TATA 3118 bearing Chassis No. MAT466419C2C06050 and Engine No. B5.91803121C63242888 , more particularly described in Exhibit F to the Petition, with direction to take forcible possession of the said TATA 3118 bearing Chassis No. MAT466419C2C06050 and Engine No. B5.91803121C63242888 with police assistance, if required, and without any prior notice to the Respondents;

¶21

(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 TATA 3118 bearing Chassis No. MAT466419C2C06050 and Engine No. B5.91803121C63242888. 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

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939-ARBP-956-2014

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 Court Receiver to apply to the Court for further orders including sale of TATA 3118 bearing Chassis No. MAT466419C2C06050 and Engine No. B5.91803121C63242888 by public auction or 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 TATA 3118 bearing Chassis No. MAT466419C2C06050 and Engine No. B5.91803121C63242888 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. Mr. Irshad Ahmed (Borrower) and Anr.

Case brief

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L and T Finance Limited v. Mr. Irshad Ahmed (Borrower) and Anr.

Case brief

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