Dismissed

M/s.Equitas Small Finance Bank Limited v. M/s.Vnr Auto Logistics Rep.by its Proprietor Mr.Nageswara Rao and 2 others

Madras HC2 Feb 2021A/2098/2020

Case brief

AI extract

What is this about?

The High Court dismissed applications seeking a prohibitory order to restrain a garnishee from making payments to loan defaulters. The court held that the earlier award relied upon for relief was set aside for failure to prove the debt, rendering the applications unsustainable.

What did the court decide?

Applications prayers for prohibitory order and restraint against the garnishee were dismissed.

M/s.Equitas Small Finance Bank Limited Vs M/s.Vnr Auto Logistics… — Arbitration | Madras HC (2021)

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A.Nos.2098 to 2100, 2185 & 2186 of 2020

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Dated : 02.02.2021

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CORAM

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THE HONOURABLE Ms. JUSTICE P.T. ASHA

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A.Nos.2098 to 2100, 2185 & 2186 of 2020
&
A.No.44 of 2021
M/s.Equitas Small Finance Bank Limited
4 th Floor, Phase – II, Spencer Plaza,
769, Anna Salai, Chennai,
Tamil Nadu – 600 002
Represented by its Authorised Signatory
Mr.R.S.Bharath (Emp. No. 31681) ... applicant
Vs.
1.M/s.VNR AUTO LOGISTICS,
Rep by its Proprietor,
Mr.Nageswara Rao,
No.4/84, 1 st Cross Street, Thirumal Nagar,
Poonamallee, Tiruvallur – 600056.
2.Mr.Ajay Kumar VN
3.INDIA YAMAHA MOTOR Pvt Ltd,
Registered Office at 1 st Floor,
The Great eastern Centre,
70, Nehru Place, New Delhi – 110019.
1/7

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https://www.mhc.tn.gov.in/judis/

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A.Nos.2098 to 2100, 2185 & 2186 of 2020

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Also at: Having Corporate Office at: A-3, Industrial Area, Noida – Dadri Road, Surajpur, Gautam Budh Nagar, Uttar Pradesh – 201306.

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... respondents

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Prayer : Judges summons filed under Order XIV Rule 8 of OS Rules read with Section 9 (2) (b) of the Arbitration and Conciliation Act, 1996 to pass an order to prohibiting the Garnishee / respondent 3 from making payment of Rs.12,27,502.00/- or any amount to the respondents 1 and 2 or to their mens, agents, representatives or to any one claiming on respondents 1 and 2 behalf and restrain the respondents or their men, agents representatives or any one claiming on respondents 1 and 2 from receiving a sum of Rs.12,27,502.00/- or any amount from the garnishee / respondent 3 and further direct the respondent / garnishee 3 to deposit any amount to the credit of the above application.

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For Applicant : Mr.A.Damodaran For Respondent 3 : Mr.Rahul Malhotra

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COMMON ORDER

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The applications have been filed by the applicant Bank for a

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prohibitory order against Garnishee / 3^rd respondent from making

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2/7

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https://www.mhc.tn.gov.in/judis/

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A.Nos.2098 to 2100, 2185 & 2186 of 2020

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payments to respondents 1 and 2.

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2.It is the case of the applicant that the 1^st respondent had entered

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into a loan agreement with them for the purchase of various heavy and commercial vehicles and that they had committed a default in the payment of equated monthly installments. It is their case that they had therefore recalled the loan, terminated the agreement and initiated arbitration proceedings in all the matters. The arbitral tribunal had passed an award in favour of the applicant. The applicant has thereafter come forward with the above applications.

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3.In the affidavit filed in support of the applications, they would

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submit that there is no other security from out of which the amounts can be recovered from the 1^st respondent.

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counter affidavit in which they have stated that there is no contract

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between the Garnishee and the 1^st respondent and that the contract is only

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3/7

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https://www.mhc.tn.gov.in/judis/

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A.Nos.2098 to 2100, 2185 & 2186 of 2020

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with a private limited company called M/s.VNR Auto Logistics Private Limited and therefore no amounts due to the 1^st respondent or the 2^nd respondent was available with them. They therefore sought for the dismissal of the applications.

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5.A reply affidavit was filed by the Bank inter alia contending that

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the persons in management of the Private Limited company are the partners in the 3^rd respondent / Garnishee company and therefore considering the fact that the partners have been granted the loan the garnishee should directed to deposit the said amount.

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6.The 1^st and 2^nd respondent have filed a counter in which they had stated that the award of the sole arbitrator had been challenged by filing Section 34 application before this Court and that therefore the application is not maintainable. Further, there was no contract between the 1^st respondent and the 3^rd respondent / Garnishee.

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https://www.mhc.tn.gov.in/judis/

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A.Nos.2098 to 2100, 2185 & 2186 of 2020

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7.By my order dated 03.12.2020 as an interim measure, I had

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directed Garnishee to deposit a sum of Rs.55,00,000/- to the credit of O.P.No.482 of 2020 within a period of 4 weeks. However, the garnishee

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had not deposited the said sum since in the interregnum, this Court had set aside the award passed by the learned arbitrator and the garnishee sought further orders from this Court. The matter was being adjourned for the parties to produce a copy of the order passed in O.P.Nos.482 to 486 of

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The copy of the order has also been produced before this Court.

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8.A perusal of the order dated 21.12.2020 would indicate that not

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only as the award been set aside on a technical ground but the learned Judge has also observed that the applicant / bank has not produced any details regarding the number of equated monthly installments that were paid, the number of installment that were not paid, the number of days delay as well as the number of installments that have been paid in part. In short, the learned Judge has held that the applicant Bank has not proved the amounts that are actually due from the respondent.

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https://www.mhc.tn.gov.in/judis/

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A.Nos.2098 to 2100, 2185 & 2186 of 2020

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9.It is also informed that pursuant to the award being set aside, the

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applicant Bank has initiated fresh arbitration proceedings. Considering the above there is absolutely no necessity for this Court to pass a prohibitory order since the applications have been moved based on the earlier award which the Court has set aside on the ground that the claim has not been

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proved.

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10.The continuance of order dated 03.12.2020 would work to the

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prejudice of the respondent. In the result, the applications are dismissed. It is need less to state that it is well open to the applicant to approach the arbitral Tribunal for such interim measures as it deems fit.

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11.In the light of the dismissal in A.Nos.2098 to 2100, 2185 & 2186

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of 2020 nothing survives for consideration in A.No.44 of 2021. The application is closed.

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02.02.2021 Internet : Yes/No Index :Yes/No Speaking / Non-Speaking kan

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https://www.mhc.tn.gov.in/judis/

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A.Nos.2098 to 2100, 2185 & 2186 of 2020

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P.T. ASHA. J,

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kan

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A.Nos.2098 to 2100, 2185 & 2186 of 2020
&
A.No.44 of 2021
02.02.2021

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7/7

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https://www.mhc.tn.gov.in/judis/

M/s.Equitas Small Finance Bank Limited v. M/s.Vnr Auto Logistics Rep.by its Proprietor Mr.Nageswara Rao and 2 others

Case brief

What is this about?

What did the court decide?

M/s.Equitas Small Finance Bank Limited v. M/s.Vnr Auto Logistics Rep.by its Proprietor Mr.Nageswara Rao and 2 others

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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