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Tata Capital Financial Services Limited v. Maa Kali Civcon Corporation Pvt. Ltd. and Another

Bombay HC7 Jan 2015ARBP/178/2015

Case brief

AI extract

What is this about?

The court entertained an arbitration petition filed by the petitioner for appointment of a Court Receiver over a hypothecated asset and grant of interim injunction due to respondent's default in loan repayment, in the absence of the respondent.

What did the court decide?

Appointment of Court Receiver as Receiver of the hypothecated asset with direction to take forcible possession and an interim injunction restraining respondents from disposing of or alienating the ass

Tata Capital Financial Services Limited Vs Maa Kali Civcon… — Arbitration | Bombay HC (2015)

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ARBPL-742-2014

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION PETITION (L) NO. 742 OF 2014

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TATA Capital Financial Services Ltd

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… Petitioner

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Versus

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Maa Kali Civcon Corporation Pvt. Ltd. & Anr. .. Respondents

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Mr. Nikhil Mehta i/b. KMC Legal Venture for the Petitioner. None for Respondents.

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CORAM : S.J. KATHAWALLA, J. DATED : 7TH JANUARY 2015

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P.C. :

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The above 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. The Petition, is served on the Respondents and an Affidavit proving service is on record. The Petition is today taken up for final hearing. However, none appear for the Respondents.

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By a Loan cum Hypothecation Agreement (“said Agreement”) dated

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31ST October 2012, the Petitioner provided a loan of Rs.5,04,000/(Rupees Five Lakhs Four Thousand Only) to the Respondents for purchase of DG SET 125 KVA bearing Chassis/Machine Nos: 3308041209120 (“said Asset”) more particularly described in paragraph 2 of the Petition and on the terms described in the Loan-cum-Hypothecation Agreement dated 31ST October 2012. Under the said Agreement, the said Asset was hypothecated

ARBPL-742-2014

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with the Petitioner by the Respondents, as security for repayment of the Loan amount.

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The Loan amount of Rs.5,04,000/- (Rupees Five Lakhs Four Thousand Only) was repayable by the Respondents to the Petitioner with interest @ 12.99% repayable in 23 monthly installments , the 1st installment being Rs 26,049/- and the 2nd to the 23rd Installment being Rs 94,900/- each.

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Respondent No. 2 has guaranteed the due repayment of the loan. Clause 17 of the Loan-cum-Hypothecation Agreement provides for the events of default; Clause 18 for the consequences of default; Clause 18.1 provides for Repossession of Asset. Clause 23 provides for Arbitration. There has been a default on the part of the Respondents and the Respondents failed to pay to the Petitioner a sum of Rs.2,98,010.06/(Rupees Two Lakhs Ninety Eight Thousand Ten and Paise Six Only) as on 15.04.2014. The events of default having taken place in terms of the Loancum-Hypothecation Agreement, the Petitioner became entitled to recall and have recalled the entire loan. There was no reply to the Loan Recall Notice dated 19th December 2013. The Petitioner therefore invoked the arbitration clause in the Loan-cum-Hypothecation Agreement dated 31st October 2012.

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ARBPL-742-2014

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In the present Petition, the Petitioner has sought appointment of the Court Receiver, High Court Bombay as the Receiver of the hypothecated Asset, more particularly described in paragraph 2 to the Petition. The Respondents have not filed their Affidavit in Reply and are also not present before the Court. In absence of any defence or contest by the Respondents, the averments contained in the Petition have remained uncontroverted. I see no reason why the statements / submissions made by the Petitioner in the Petition should not be accepted. As the Respondents have defaulted in the repayment of the outstanding dues, it is just and necessary to safeguard the interest of the Petitioner by appointing the Court Receiver as Receiver of the Hypothecated Asset. The appointment of the Receiver is necessary in order to ensure that the sad Asset is not wasted or alienated, thereby defeating the rights of the Petitioner. Further interim injunction in terms of prayer (c) also needs to be granted to protect the rights of the Petitioner. The claim of the Petitioner is over Rs.2.98 lakhs and unless adequately protected, the Petitioner may suffer irreparable harm and injury. Balance of convenience also warrants the grant of relief. Section 9 empowers the Court to pass an interim measure of protection. Hence, the following order is passed :

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(a) Pending the hearing and final disposal of the arbitration proceedings

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and the execution of Award, if any under Section 36 of the Arbitration &

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ARBPL-742-2014

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Conciliation Act 1996, the Court Receiver is appointed as Receiver in respect of the Hypothecated Asset, more particularly described in paragraph 2 to the Petition, with direction to take forcible physical possession of the said Asset with police assistance, if required, and without any prior notice to the Respondents;

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(b) The Court Receiver shall within a period of two weeks after taking possession, give an option to the Respondents, in writing to act as an agent of the Receiver in respect of the said Asset. The Respondents shall be given two weeks time by the Court Receiver from the date of receipt of the Court Receivers 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 deposit of security and payment of 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); (c ) 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 said Assets by private treaty;

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(d) There shall also be an interim injunction restraining the Respondents from disposing of, alienating, encumbering, parting with possession or creating any third party rights in respect of the said Asset described in paragraph 2 to the Petition.

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1. The Arbitration Petition is accordingly disposed of.

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(S.J. KATHAWALLA, J.)

Tata Capital Financial Services Limited v. Maa Kali Civcon Corporation Pvt. Ltd. and Another

Case brief

What is this about?

What did the court decide?

Tata Capital Financial Services Limited v. Maa Kali Civcon Corporation Pvt. Ltd. and Another

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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Statutes considered

Parties & counsel

Coram

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