Bombay High Court
Tata Capital Financial Services ... vs Srm Infra Projects And 4 Ors on 22 November, 2022
Author: Bharati Dangre
Bench: Bharati Dangre
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.222 OF 2022
Tata Capital Financial Services Ltd. .. Petitioner
Versus
SRM Infra Projects & Ors. .. Respondents
...
Mr.Nikhil Mehta i/b KMC Legal Venture for the Petitioner.
...
CORAM: BHARATI DANGRE, J.
DATED : 22nd NOVEMBER, 2022
P.C:-
1. The present petition is fled under Section 9 of the
Arbitration and Conciliation Act, 1996 (for short, "the Act") by
the petitioner company involved in the business of providing
fnancial facilities in form of vehicle loan. Upon the
respondents approaching the petitioner, the petitioner
fnanced them for purchase of an asset in their capacity as
borrowers and guarantors of the said loan. A Loan-cum-
Hypothecation Agreement was signed by the respondents,
depicting sanction of loan amount, which was secured by
hypothecation of asset, being a construction vehicle/
machinery.
By virtue of the said agreement, petitioner not only
maintained the lien over the asset, but until the repayment of
loan, also retained the right to sell and assign the said asset to
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meet the default committed by the respondents, pursuant to
the loan agreement.
2. The respondents admittedly committed a default in due
repayment of the loan and, thus, become jointly and severally
liable for default. They avoided repayment of the loan and this
fact is apparently discerned from the documents annexed
alongwith the petition. As on the date of fling of the
application, the defcit amount due and payable by the
respondents jointly and severally to the petitioner on or about
17/03/2022, is approximated to be Rs.88,51,002/-.
3. The Loan-cum-Hypothecation-cum-Guarantee Agreement
consists of an arbitration clause in form of clause No.23.1,
wherein the parties have agreed to resolve their dispute as per
the Act. The clause reads thus :-
"23.1 If Any dispute, difference or claim arises
between the parties hereto in connection with this
Agreement or the security hereof or as to the validity,
interpretation, implementation or effect of the Facility
Documents or as to the rights and liability of the parties under
the Facility Documents or alleged breach of the Facility
Documents or anything done or omitted to be done pursuant
to the Facility Documents or anything done or omitted to be
done pursuant to the Facility Documents or otherwise in
relation to security hereof, the same shall be settled by
arbitration place of arbitration has been detailed in Serial
No.10 of Annexure 1 and to be held in accordance with the
Arbitration and Conciliation Act, 1996 or any statutory
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amendments thereof and shall be referred to person to be
appointed by the Lender. The award of the arbitrator shall be
fnal and binding on all parties concerned. The Parties may
agree to have their dispute resolved by fast track procedure
specifed in Section 29B of the Arbitration and Conciliation
Act, 1996."
The petitioner makes a specifc statement that it is in the
process of invoking the arbitration clause, but in the
interregnum, seeks the relief of appointing the Court Receiver
to take peaceful physical possession under Order XL Rule 1 of
the Civil Procedure Code, in respect of the hypothecated asset,
unaware whether it is in possession of the respondents and/or
any third party. In case of any resistance, it is also prayed that
the Court Receiver shall be allowed to take forcible possession
of the hypothecated asset and which shall, in turn, be handed
over to the petitioner with liberty to dispose off the same by
private treaty with further liberty to adjust the sale proceeds
towards the outstanding dues of the petitioner. Prayer clauses
(d) to (f) of the petition read thus :-
"d. The court Receiver High Court Bombay be appointed
as Receiver and take peaceful physical possession under
Order XL, Rule 1 of CPC 1908 in respect of the properties of
the Respondents as more particularly described in the list
annexed and marked as Exhibit C hereto and this Hon'ble
Court be pleased to direct the Respondents to hand over the
physical, peaceful and vacant possession of the said
properties as described in the said list annexed and marked
as Exhibit C hereto forthwith accordingly to the Court
Receiver. If the Court Receiver is not allowed the physical,
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peaceful and vacant possession of the aforesaid properties by
the Respondents, the Court Receiver be allowed to take
forcible possession of the said properties along with
appropriate Police protection of the Local Police Station. The
Court Receiver High Court, Bombay be further directed to
hand over the aforesaid properties to the Petitioner with
liberty to the Petitioner to dispose off the same by private
treaty with further liberty to adjust the sale proceeds towards
the outstanding dues due to the Petitioner from the
Respondents.
e. The Respondents be directed by the order and
directions of this Hon'ble Court to hand over the properties as
described in the said list annexed and marked as Exhibit
hereto to the Petition and the Petitioner be allowed to sell the
aforesaid properties accordingly.
f. The Respondents, by themselves, their servants
and/or agents be restrained from dealing, selling, alienating,
disposing and/or creating third party rights in respect of the
properties as described in the said list annexed and marked
as Exhibit C hereto in any manner whatsoever and an order of
permanent injunction be passed in that regard in favour of the
Petitioner."
4. The respondents were served with the copy of the
petition and an affdavit of service was placed before this
Court. The record of the petition would reveal that the
opportunity was afforded to the respondents to appear in the
proceedings and the petitioner was permitted to serve them by
all permissible modes and on all those addresses, which are on
record.
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5. On 29/08/2022, the Court was informed that the
respondents are served by publication, but they chose not to be
represented.
In the wake of the above, it is clear that the respondents
are served, but they have chosen to remain absent. Hence I
deem it appropriate to proceed with the petition.
6. It is apparent that the respondents are not keen to
appear before this Court and the reason appears to be obvious
that they have hypothecated the vehicle towards the security
of repayment of loan, but have failed to clear the same.
The respondents have thus failed to put their appearance
and contest the petition and, therefore, on perusal of the
petition, I deem it necessary to protect the interest of the
petitioner, which can be better secured by appointing the
Receiver to ensure that the asset is not wasted or alienated.
The balance of convenience is in favour of the petitioner, who
has made out substantial prima facie case and if the relief is
refused, it would cause irreparable harm and injury. The
petitioner, therefore, deserves the following relief.
: ORDER :
(a) Pending the hearing and fnal disposal of the arbitration proceedings, the Court Receiver, High Court, Bombay is appointed as a Receiver in respect of the hypothecated asset, namely, 250TPH CRUSHER PLANT make METSO MINERALS (INDIA) PVT. LTD. bearing serial Nos.42217 and 42231, with a direction to take forcible physical possession of the said asset and if M.M.Salgaonkar ::: Uploaded on - 25/11/2022 ::: Downloaded on - 26/11/2022 03:58:52 ::: 6/7 19-f ARBP-222-22.doc required, seek assistance of the police, without any prior notice being issued to the respondents;
(b) In case, the Court Receiver requires the assistance of the police, the Senior Police Inspector of the local police station, in whose jurisdiction the vehicle/machinery is traced out, shall render all necessary assistance to the Court Receiver to ensure compliance of the order, failing which he shall be held liable for not complying with the direction of the Court;
(c) Within two weeks of taking possession, the Court Receiver shall offer the Respondents an option in writing to act as a Receiver's agent for the aforesaid machinery. If the Respondents do not respond to the aforesaid offer, then the Court Receiver shall proceed to sell the said machinery and shall pay over the sale proceeds thereof to the petitioner after deducting his costs, charges and expenses;
(d) If the respondents accept the offer of the Court Receiver to act as his agent, then they shall execute the necessary documents as required by the Court Receiver in that regard. In such an event, the Court Receiver shall determine the amount of security deposit as well as the royalty required to be paid by the respondents to use the said machinery as agent of the Court Receiver. The royalty and security amount shall be on the basis of terms and conditions of the Loan-cum-Hypothecation Agreement;
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(e) The respondents are restrained from disposing
off, alienating, encumbering, parting with possession or creating any third party rights in respect of the said asset, described above.
7. The petition fled under Section 9 of the Act is disposed off in the aforesaid terms with no order as to costs.
8. The petitioner's advocate shall communicate this order to the Court Receiver within a period of one week.
9. All parties to act on an authenticated copy of this order digitally signed by the Private Secretary/Personal Assistant/Associate of this Court.
( SMT. BHARATI DANGRE, J.) M.M.Salgaonkar ::: Uploaded on - 25/11/2022 ::: Downloaded on - 26/11/2022 03:58:52 :::