Remanded

Agro Indus Credits Ltd. v. Joseph K.D

Kerala HC16 Nov 2021RFA (MISC.)/6/2021

Case brief

AI extract

What is this about?

The Kerala High Court allowed an appeal filed by a non-banking financial institution challenging the lower court's finding that attachment of certain properties was due to fraud. The Court found that credibility of evidence regarding the Arbitrator's order schedule required adjudication and remanded the matter for a fact-finding exercise.

What did the court decide?

The finding of fraud in the impugned order was set aside, and the matter was remanded to the lower court for a new hearing with an opportunity to adduce evidence.

Agro Indus Credits Ltd. Vs Joseph K.D — Execution and Attachment | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN

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THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR

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TUESDAY, THE 16^TH DAY OF NOVEMBER 2021 / 25TH KARTHIKA, 1943 RFA (MISC.) NO. 6 OF 2021

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AGAINST THE ORDER DATED 20.01.2021 IN I.A.NO.03 OF 2020 IN I.A.NO.6743 OF 2019 IN CMA(Arb).NO.1159/2019 OF II ADDITIONAL DISTRICT COURT, ERNAKULAM.

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APPELLANT/RESPONDENT NO.1:

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M/S.AGRO INDUS CREDITS LTD. (WRONGLY TITLED AS AGROTECH INDUS CREDITS LIMITED, IN IA.NO. 03/2020 BEFORE TEH COURT BELOW) REGISTERED OFFICE AT MAZHUVANCHERY BUILDING, 34/1873, MAMANGALAM, KOCHI, NOW SHIFTED TO THADIKKARAN CENTRE, PALARIVATTOM, COCHIN, REP. BY ITS POWER OF ATTORNEY HOLDER GEORGEKUTTY ABRAHAM

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BY ADVS. SABU S.KALLARAMOOLA LEEJOY MATHEW.V., SUBHA.S

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RESPONDENT/PETITIONER & RESPONDENTS 2 TO 4:

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1 JOSEPH K.D, AGED 45 YEARS S/O.DEVASSY, KADAPARAMBIL HOUSE, KIZHAKKAMBALAM VILLAGE, MALAYIDAMTHURUTH P.O., ERNAKULAM 683561

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2 TECHNOSKILL ENGINEERS AND CONTRACTORS PRIVATE LIMITED

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DOOR NO XVII-441, CHEMMALAPPAD, KIZHAKKAMBALAM, THAMARACHAL VILANGU P.O., VILANGU, ERNAKULAM, PRESENTLY AT CC. 50/869 B2, SIVASAILAM, CHANGAMPUZHA SAMADHI RD, EDAPPALLY-682024, REPRESENTED BY ITS MANAGING DIRECTOR

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3 JAYAPRAKASH ARIMBOOTH GOPALAN S/O.GOPALAN, ARIMBOOTH HOUSE, KONDIPARAMBU, POONTHANAM P.O., KEEZHATTUR, MALAPPURAM 679325

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4 VIDHYA JAYAPRAKASH W/O.JAYAPRAKASH, ARIMBOOTH HOUSE, KONDIPARAMBU, POONTHANAM P.O., KEEZHATTUR, MALAPPURAM 679325

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5 GOPALAN NARAYANAN S/O.NARAYANAN, ARIMBOOTH HOUSE, KONDIPARAMBU, POONTHANAM P.O., KEEZHATTUR, MALAPPURAM 679325

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BY ADVS. PRAMOJ ABRAHAM FOR R1 SRINATH GIRISH FOR R2 TO R5 P.JERIL BABU FOR R2 TO R5

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THIS REGULAR FIRST APPEAL(MISCELLANEOUS) HAVING COME UP FOR ADMISSION ON 16.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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JUDGMENT

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Anil K. Narendran, J.

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This appeal, filed under Section 96 read with Order XLI

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Rule 1 of the Code of Civil Procedure, 1908, is filed by the 1^st respondent in I.A.No.3 of 2020 in I.A.No.6743 of 2019, in C.M.A(Arb).No.1159 of 2019, who is the applicant in C.M.A(Arb.)No.1159 of 2019 on the file of the Additional District Court-II, Ernakulam.

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The appellant is a non-banking financial institution.

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The 2^nd respondent herein availed a loan for Rs.2 Crores from the appellant on 09.02.2017. In that loan transaction respondents 3 to 5 stood as guarantors. An agreement was executed on 09.02.2017 creating equitable mortgage of the immovable properties owned by the borrower and also the guarantors. When there was default in repayment of loan amount, the appellant invoked the arbitration clause in the aforesaid agreement and referred the dispute for arbitration before the sole Arbitrator. Along with the reference, the appellant filed an application under Section 17 of the Arbitration and Conciliation Act, 1996, seeking attachment of the immovable properties of the borrower and the guarantors.

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The Arbitrator passed an interim order dated 06.05.2019, whereby the borrower and the guarantors were directed to show cause why security should not be furnished for a sum of Rs.2,80,93,537/- on or before 29.05.2019. In the meanwhile, the properties of respondents 2 and 4 therein, described in schedule Nos.1 to 4 annexed to the application for attachment were, conditionally attached for the said amount.

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For enforcing the interim order passed by the Arbitrator, the appellant approached the District Court, Ernakulam by filing C.M.A(Arb.)No.1159 of 2019, invoking the provisions under Section 17(2) of the Act. The court below allowed that application and effected attachment. Subsequently, the 1^st respondent herein filed claim petition under Order XXI Rule 58 read with Order XXXVIII Rules 8 and 9 of the Code in respect of a portion of the land covered by the attachment schedule item No.6, stating that he has purchased

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the same from the 3^rd respondent, before the order of attachment of the Arbitrator. Hence the 1^st respondent sought for an order for lifting the order of attachment over his property. Four others have filed similar claim petitions in

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respect of the property covered under attachment schedule item No.6.

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The appellant opposed the aforesaid applications by filing objection, contending that the respondents have colluded each other and on getting the knowledge of the order passed by the Arbitrator, sale deed was executed in favour of the 1^st respondent and four others on the same day, by way of five sale deeds to defeat the interest of the appellant.

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Before the court below the 1^st respondent and other four claim petitioners challenged the attachment over their properties on the ground that the attachment has been effected after the execution of the sale deeds. That was the only contention raised in their objection. However, at the time of final hearing, the court below found that the interim order passed by the Arbitrator was only to attach the first four items of properties scheduled therein and not the properties covered by the claim petition. According to the appellant it was only a mistake. The appellant pointed out before the court below that though the Arbitrator ordered attachment of only the first four items of properties, that order was accompanied by six schedules, including the property subsequently purchased by

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the 1^st respondent and four others. That interim order was silent about the exclusion of the properties scheduled as item Nos.5 and 6 in the application for attachment. Therefore, the appellant was under the impression that the Arbitrator has passed an interim order as prayed for and hence approached the court below to implement the order of attachment by showing six items of properties.

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After considering the rival contentions the court below allowed I.A.No.3 of 2020 in I.A.No.6743 of 2019 in C.M.A(Arb.)No.1159 of 2019 and also the connected interlocutory applications, thereby lifting the order of attachment dated 23.10.2019 in I.A.No.6743 of 2019 and connected cases. However in paragraph 8 of the order, the court below arrived at a conclusion that the attachment of properties scheduled as item Nos.5 and 6 was wrongly made in pursuance of the fraud committed by the appellant herein. Therefore, I.A.No.3 of 2020 was allowed with costs.

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Feeling aggrieved by the finding of the court below in the impugned order that the order of attachment insofar as petition schedule item Nos. 5 and 6 in I.A.No.6743 of 2019

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was wrongly made in pursuance of the fraud committed by the appellant herein, this appeal has been filed.

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Heard the learned counsel for the appellant, the

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learned counsel for the 1^st respondent and also the learned counsel for respondents 2 to 5.

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During the course of arguments, the submission made by the learned counsel for the appellant is that, as pointed out before the court below, in the application filed under Section 17(2) of the Act before the court below, the schedule of item Nos.5 and 6 properties were included by mistake, without noticing the fact that while passing the interim order dated 06.05.2019, the Arbitrator confined the order of attachment to properties described in schedule Nos.1 to 4 alone. The learned counsel would also point out that a copy of the interim order of the Arbitrator, which is available at page Nos.16 to 24 of the memorandum of appeal bears the signature of the sole Arbitrator in the attachment schedule in respect of item Nos.1 to 6 properties. Therefore, it was only on account of inadvertent mistake, while approaching the court below with an application under Section 17(2) of the Act, relief

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was sought for in respect of petition schedule item Nos.5 and 6 as well.

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Per contra, the learned counsel for respondents 2 to 5 would contend that, in the copy of the interim order of the Arbitrator dated 06.05.2019 in I.A.No.08 of 2019 in Arbitration Reference No.13 of 2019 (Agro), which was served on the said respondents, the attachment schedule of item Nos.1 and 2 alone are there. Therefore, it cannot be contended that the filing of an application under Section 17(2) of the Act before the court below with the attachment schedule with all the six items of properties was only a mistake committed by the appellant. The learned counsel would also point out that a copy of the said interim order of the Arbitrator, served on respondents 2 to 4, was placed on record before the court below along with additional counter affidavit filed by the said respondents.

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Having considered the pleadings and materials on record and also the submissions made by the learned counsel on both sides, this Court finds that if, as a matter of fact, the order of the Arbitrator dated 06.05.2019 in I.A.No.08 of 2019 in Arbitration Reference No.13 of 2019 was having the

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schedule of only four items of properties, i.e., item Nos.1 to 4, the filing of I.A.No.6743 of 2019 in C.M.A(Arb.)No.1159 of 2019 with an attachment schedule consisting of six items of properties, i.e., item Nos.1 to 6, cannot be said to be a mistake on the part of the appellant. On the other hand, if the order passed by the Arbitrator dated 06.03.2019 was having the attachment schedule consisting of six items of properties, as seen from the document available at page Nos.16 to 24 of the memorandum of appeal, the learned counsel for the appellant may be justified to certain extent in contending that filing of such an application was on account of a mistake. The aforesaid question requires a proper adjudication at the hands of the court below, before arriving at a conclusion that the order of attachment granted on 23.10.2019 in I.A.No.6743 of 2019 in C.M.A(Arb.)No.1159 of 2019 in respect of item Nos.5 and 6 properties in the attachment schedule petition was wrongly made in pursuance of the fraud committed by the appellant herein. Therefore it is for the court below to reconsider the aforesaid aspect, after affording both sides an opportunity to adduce evidence.

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In such circumstances, this appeal is disposed of by setting aside the finding to that effect of II Addl. District Court, Ernakulam, in the impugned order dated 20.01.2021 in I.A.No.3 of 2020 in I.A.No.6743 of 2019 in C.M.A(Arb.).No.1159 of 2019, by remitting the matter to that court, for fresh consideration of the aforesaid question, after affording both sides an opportunity to adduce evidence, both oral and documentary.

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Both parties shall appear before the court below on 15.12.2021 and the court below shall pass fresh orders on the aforesaid question, without any delay.

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It is made clear that by this judgment, this Court has not, in any manner, interfered with the order of the court below lifting the order of attachment over the property in question.

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Sd/-

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ANIL K. NARENDRAN, Judge Sd/-

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P. G. AJITHKUMAR, Judge

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bkn/-

Agro Indus Credits Ltd. v. Joseph K.D

Case brief

What is this about?

What did the court decide?

Agro Indus Credits Ltd. v. Joseph K.D

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

Parties & counsel

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