Bangalore District Court
Indusind Bank vs ) Shivakumar S/O Chowdegowda on 15 June, 2021
1 Com.A.A.No.62/2021
In The Court of LXXXIV Additional City Civil and
Sessions Judge (CCH-85-Commercial Court) Bangalore
Dated this the 15th day of June 2021
Present: Smt.H.R.Radha B.A.L., LL.M.
LXXXIV Addl.City Civil and Sessions Judge,
(CCH-85 - Commercial Court)
Bengaluru.
Com.A.A.No.62/2021
APPELLANT: Indusind Bank, No.87, Indusind House,
Bull Temple road, Basavanagudi,
Bengaluru- 560 019.
Rep. By its power of attorney holder
Santosh.N S/o Narayana Rao, Aged
about 34 years, working at Indusind
Bank, Bengaluru- 560019.
Rep. by its
(Rep. by Sri.Omkar Basava Prabhu
Advocate)
Vs
RESPONDENTS: 1) Shivakumar S/o Chowdegowda, Aged
about 36 years, R/at Chellaghatta
Village, Yellappa layout, Near
Muneshwara Temple, Kumbalagodu Post,
Kengeri Hobli, Opp:Al Craft Fabrication
and Engineering Works, Bengaluru - 560
074.
2) Smt.Anitha W/o Shivakumar, Aged
about 34 years, R/at Chellaghatta
Village, Yellappa layout, Near
Digitally signed by
Muneshwara Temple, Kumbalagodu Post,
RADHA H R Kengeri Hobli, Opp:Al Craft Fabrication
DN: cn=RADHA H
R,ou=HIGH COURT and Engineering Works, Bengaluru - 560
RADHA OF
KARNATAKA,o=GO
074.
HR VERNMENT OF
KARNATAKA,st=Ka (Exparte)
rnataka,c=IN
Date: 2021.06.15
17:29:23 IST
2 Com.A.A.No.62/2021
Date of Institution of the 23-03-2021
application
Nature of the application Application U/Sec.9 of the
Arbitration and conciliation Act,
1996
Date on which order was 15-06-2021
pronounced
Total Duration Year/s Month/s Day/s
00 02 22
LXXXIV Addl.City Civil and Sessions Judge,
(CCH-85 Commercial Court) Bengaluru
ORDERS
This is an application U/Sec.9 of Arbitration and
Conciliation Act, 1996 ('The Act' for short) for intern
custody of Toyota Etios Liva bearing Reg.No.KA-05-AE-7017
(Engine No. 1ND1371756 and Chassis No.
MBJK49BT0000612360614), to direct the respondents to
furnish bank guarantee for Rs.3,27,538/- and
movable/immovable property as security to cover the
applicant's interest to the said extent.
2. Brief facts of the applicant's case are that it is a
company registered under the Companies Act 1956 and
governed by Banking Regulation Act 1949. The first
respondent availed loan of Rs.3,00,000/- for purchasing a
3 Com.A.A.No.62/2021
pre-owned Etios Liva ('secured asset' for short) for his
business purpose and executed hire purchase agreement
dated 23-03-2020; and the 2nd respondent, co-borrower has
also signed the agreement guaranteeing due repayment of
the amounts due. Including the interest the first respondent
had to pay Rs.3,67,437.71 in 27 monthly installments as set
out in the 2nd schedule of the loan agreement. But
committed default in payment of monthly installments. It
has made all efforts to recover the amount, but the
respondents failed to pay the same and even issued
cheques without maintaining sufficient balance. As on 18-
03-2021 the outstanding amount against the respondents'
loan account was Rs.3,27,538.39. In order to recover the
due it has terminated the contract and awaits initiation of
arbitration proceedings at Chennai, the venue of Arbitration
as per clause 23 of the agreement. The respondents are
making hectic efforts to sell the properties. In such an event
it would put to irreparable loss. The secure asset's value has
depreciated on account of introduction of BS-VI Emission
Norms. The respondents neither intend to keep the vehicle
for their use nor to repay the amounts due; and their only
intention is to delay the recovery proceedings, so that the
value of the vehicle depreciates. The respondents are using
4 Com.A.A.No.62/2021
criminal force to intimidate it from taking possession of the
vehicle. Under such circumstances interim measure as
prayed may be granted to safeguard its interest.
3. The respondents have remained exparte.
4. The applicant has filed written arguments. I have
perused the same and also the records.
5. As per Sec.9 of the Act a party to an arbitration
agreement can approach the court before or during arbitral
proceedings or at any time after the making of the arbitral
award but, before it is enforced in accordance with section
36, for an interim measure of protection in respect of any of
the following matters, namely:
(a) Preservation, interim custody or sale of
any goods which are the subject-matter of
the arbitration agreement;
(b) Securing the amount in dispute in
arbitration;
(c) Detention, preservation or inspection of
any property or thing which is the subject-
matter of the dispute in arbitration, or as to
which any question may arise therein and
authorizing for any of the aforesaid purposes
any person to enter upon any land or
building in the possession of any party, or
authorizing any samples to be taken or any
observation to be made, or experiment to be
tried, which may be necessary or expedient
5 Com.A.A.No.62/2021
for the purpose of obtaining full information
or evidence;
(d) Interim injunction or the appointment of a
receiver;
(e) Such other interim measure of protection
as may appear to the court to be just and
convenient, and the Court shall have the
same power for making orders as it has for
the purpose of, and in relation to, any
proceedings before it.
6. The original loan agreement dated 23-03-2020
executed by the respondents and the first schedule key fact
statement accompanying the same as well as the
irrevocable power of attorney of the even date makes it
clear that they had hypothecated Toyota Etios Liva GD
bearing Reg. No.KA-05-AE-7017 in favour of the applicant for
securing repayment of loan of Rs.3,00,000/- and authorized
it to take possession of secured assets in case of default as
per the terms of loan agreement, to transfer, sell and
dispose of the same and to receive the sale proceeds and to
appropriate the same to amortize the dues.
7. Clause 14 of the loan agreement defines as to what
constitute "events of default" and it includes the borrower
failing to repay the loan installments and other amounts due
remain unpaid even after the due date etc.,. Clause 2.9
6 Com.A.A.No.62/2021
places obligations on the respondents to repay the loan and
the interest in installments as agreed and time to be the
essence of the contract. According to the applicant, the
contract expires on 21-04-2022, but the respondents have
not repaid the loan and the interest in monthly installments
as per the schedule of the repayment at 2nd schedule and
therefore it is entitled to repossess the secured asset, in
terms of clause 15 of the agreement.
8. The statement of accounts pertaining to the
respondents show that the cheques issued by the
respondents have not been honoured due to insufficient
funds and they are due a sum of Rs.3,30,429.20 as on 19-
03-2021. The secured asset is registered in the name of the
first respondent as per B register Extract issued by the RTO
office, Jayanagar, Bengaluru.
9. Clause 23 of the loan agreement provides for
resolution of all disputes, differences and/or claim arising
out of or touching upon the agreement, whether during its
substance or thereafter, by way of arbitration in accordance
with the provisions of the Act and the award to be final and
the dispute for the purpose of arbitration includes default
7 Com.A.A.No.62/2021
committed by the borrower as per clause 14 of the
agreement.
10. The respondents have remained exparte, as such
there is nothing to disbelieve the applicant's claim that the
respondents are trying to sell the property to defeat its
claim and that it is intending to initiate arbitration
proceedings to recover the amounts due under the loan
agreement.
11. Sec. 9(2) of the Act provides that the applicant who
has obtained interim measure of protection under Sub-
Section (1) before the commencement of arbitral
proceedings shall have to commence the arbitration
proceedings within a period of 90 days from the date of
such order or within such time as the court may determine.
12. By order dated 29-03-2021, this court permitted the
applicant to repossess the secured asset with the help of
jurisdictional police. However, the applicant has not stated
anything in the written arguments about taking steps to
initiate arbitration proceedings till date or about
repossessing the secured asset.
8 Com.A.A.No.62/2021
13. The question of selling the secured asset and
appropriating the sale proceeds towards the outstanding
liability arises only after determination of the actual amount
due, is made by a duly constituted arbitral tribunal and not
before that. Therefore, I am of the opinion that, the
applicant shall keep the secured asset in its safe custody
and not sell the same until the dispute is resolved by a duly
constituted arbitral tribunal.
14. In the result, I pass the following
ORDER
Application U/Sec.9 of the Arbitration and Conciliation is allowed with cost.
Interim order dated 29-03-2021 is made absolute. However, the applicant shall keep the secured asset in its safe custody and not sell the same until the dispute is resolved by a duly constituted arbitral tribunal.
9 Com.A.A.No.62/2021Issue copy of the judgment to the parties through e-mail as provided U/o XX Rule 1 of CPC if mail ID is furnished. (Dictated to the stenographer and typed by her directly on the computer, corrected and then pronounced by me in through video conference on this the 15th day of June 2021) (Smt.H.R.Radha) LXXXIV Addl.City Civil and Sessions Judge, (CCH-85 Commercial Court) Bengaluru