Bombay High Court
Tata Capital Financial Services Ltd vs Vaishno Devi Food Products Pvt. Ltd. And ... on 13 February, 2020
Author: G. S. Patel
Bench: G.S. Patel
916-CARBPL-183-20.DOC
Ashwini
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO. 183 OF 2020
Tata Capital Financial Services Ltd ...Petitioner
Versus
Vaishno Devi Food Products Pvt Ltd & Ors ...Respondents
Mr Harish Adwant, with Lalit Katariya, Ms Benedicta Lobo & Ms
Mahtab Katariya, i/b Katariya & Associates, for the Petitioner.
CORAM: G.S. PATEL, J.
DATED: 13th February 2020 PC:-
1. Heard learned Counsel for the Petitioner. First, as to the question of service. There is an Afdavit of Service of the Petition itself. The packets were sent by speed post and courier. The Afdavit indicates that when service was attemptpted, the door was locked in four of the fve cases and in one the addressee was absent. Service was then attemptpted by emptail and also by electronic mptessaging by on WhatsApp, copies of which are annexed.
2. For the purposes of this ad-interimpt Application in this Petition under Section 9 of the Arbitration and Conciliation Act 1996, and since I ampt granting limptited relief, I will accept this for the Page 1 of 10 13th February 2020 ::: Uploaded on - 17/02/2020 ::: Downloaded on - 09/06/2020 07:33:16 ::: 916-CARBPL-183-20.DOC present since I believe, for the reasons that follow, a sufcient primpta facie case has mptade out, the balance of convenience is with the Petitioner and quite considerable and possibly irretrievable prejudice will be caused if reliefs are denied.
3. Before I proceed to the Petition, I take on record a draft amptendmptent. This is mptarked 'X' for identifcation with today's date. It has not yet been served. This is the other reason to mptake only a temptporary order today pending service of the amptendmptent on the Respondents. I ampt, however, allowing the amptendmptent. It is to be carried out on or before 21st February 2020. Reverifcation is dispensed with.
4. The facts lie in a narrow comptpass. The 1st Respondent is a borrower frompt the Petitioner, a NBFC. Respondents Nos. 2 and 3 are personal guarantors. The 1st Respondent approached the Petitioner for fnancial assistance of up to Rs. 7.25 crores. The Petitioner sanctioned this by a letter dated 22nd January 2019. The loan was to be secured by hypothecation of mptachinery and the equipmptent. There was, between the parties, a Loan-cumpt- Hypothecation-cumpt-Guarantee Agreemptent dated 4th February 2019. A copy of this is annexed to the Petition as Exhibit "D". It has an Arbitration Clause 23 at pages 92 to 93 and a jurisdiction Clause
24. Clauses 23 and 24 read thus:
23. ARBITRATION 23.1 If any dispute, diference or claimpt arises between the parties hereto in connection with this Agreemptent or the security hereof or as to the validity, interpretation, Page 2 of 10 13th February 2020 ::: Uploaded on - 17/02/2020 ::: Downloaded on - 09/06/2020 07:33:16 ::: 916-CARBPL-183-20.DOC imptplemptentation or efect of the Facility Documptents or as to the rights and liability of the parties under the Facility Documptents or anything done or omptitted to be done pursuant to the Facility Documptents or anything done or omptitted to be done pursuant to the Facility Documptents or otherwise in relation to the security hereof, the sampte 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 amptendmptents thereof and shall be referred to a person to be appointed by the Lender. the award of the arbitrator shall be fnal and binding on all parties concerned.
23.2 Notwithstanding anything contained hereinabove, Lender reserves the right to, at its option, also enforce the security under the Securitization and Reconstruction of Financial Assets and Enforcemptent of Security Interest Act, 2002 ("SARFAESI Act") or proceed to recover dues frompt the Obligors under the SARFAESI Act and/or the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
24. JURISDICTION Subject to the provisions of clause 23 above, any suit, petition, reference or other fling permptitted or required to be mptade pursuant to the Arbitration and Conciliation Act, 1996 in respect of the mptatters arising out of this Agreemptent including, without limptitation, a petition for appointmptent of an arbitrator or arbitrators under Section 11 of the Arbitration and Conciliation Act, 1996 shall be instituted only in comptpetent courts as specifed in the Serial No.11 of Annexure 1.
5. The mptachinery hypothecated to the Petitioner to secure the repaymptent of this loan is listed at Exhibit 'X' frompt page 191 Page 3 of 10 13th February 2020 ::: Uploaded on - 17/02/2020 ::: Downloaded on - 09/06/2020 07:33:16 ::: 916-CARBPL-183-20.DOC onwards. The list is long and currently covers sompte 53 separate itempts. These include boilers, chillers, refrigeration systempts for an ice creampt plant, induction mptotors and so on.
6. Paragraph 2C of the Petition says that there was also to be an exclusive charge on escrow of receivables frompt Havmptor Ice Creampt Private Limptited, but this I ampt told was never actually put into efect.
What was efected was the hypothecation of the plant and mptachinery. The hypothecation charge is duly registered.
7. Then there is usual documptentation in termpts of letters of undertakings and so on.
8. The Petition says that the loan disbursed was Rs 7,18,25,254/. As per the agreemptent, it was to be repaid in 60 mptonths (fve years) with a foating interest rate of 12% per annumpt. There is a repaymptent schedule at page 101.
9. Paragraph H of the Petition at page 13 says that the 1st Respondent fail to pay the principal due of the equated mptonthly instalmptent of Rs. 13,30,100/-, on 31st October 2019 the Petitioner mptade a demptand. There was neither response nor comptpliance. This default continued. Ultimptately, by its Advocate's notice dated 13th January 2020, the Petitioner recalled the entire loan then standing at Rs 7,26,41,469/-, and also invoked arbitration.
10. The fate of the notice is identical to the fate of the service attemptpted. The Respondents seempt simptply to have remptained absent Page 4 of 10 13th February 2020 ::: Uploaded on - 17/02/2020 ::: Downloaded on - 09/06/2020 07:33:16 ::: 916-CARBPL-183-20.DOC but at least two of the notices were returned with a remptark 'not claimpted'. If that be so, then the Respondents mptust be deempted to have had sufcient notice of the recall, termptination and arbitration invocation.
11. The plant and mptachinery is at the factory at Osmptanabad.
12. The prayers in the Petition are these:
(a) that pending hearing and fnal disposal of the Petition and arbitral proceedings, passing of the Arbitral Award and until fnal execution of the Award this Hon'ble Court be pleased to order and direct the Respondents jointly and/or severally to deposit the amptount of Rs.7,40,03,160/- (Rupees Seven Crores Forty Lakhs Three Thousand One Hundred and Sixty only) due as on 30th January 2020 as mptore particularly set out in Particulars of Claimpt Exhibit "H1" hereto in termpts of the said Agreemptent, with further interest thereon @ 12% per annumpt and additional interest @ 6% per annumpt frompt 31st January 2020, or furnish Bank Guarantee of the Nationalized Bank of the said amptount in favour of the Prothonotary & Senior Master, High Court, Bomptbay for an initial period of one year and to be renewed thereafter for such additional period as this Hon'ble Court deed ftss
(b) that pending the hearing and fnal disposal of the Petition and Arbitral proceedings, this Hon'ble Court be pleased to direct the Respondents to disclose on oath and/or on Afdavit, the assets and properties, mptovable and imptmptovable, owned by each of thempt giving comptplete details and this Hon'ble Court be pleased to attach such assets/properties of the Respondentss Page 5 of 10 13th February 2020 ::: Uploaded on - 17/02/2020 ::: Downloaded on - 09/06/2020 07:33:16 ::: 916-CARBPL-183-20.DOC
(c) that pending hearing and fnal disposal of the Petition and arbitral proceedings, this Hon'ble Court be pleased to order and direct the Respondents to give imptmptediate inspection to the Petitioner of the hypothecated mptachinery at Exhibit "X" heretos
(d) that pending hearing and fnal disposal of the Petition and arbitral proceedings, this Hon'ble Court be pleased to order and direct the Respondents to surrender to the Petitioner of the hypothecated mptachinery at Exhibit "X" hereto and permptit the Petitioner to sell the sampte by public auction or private treaty and/or to receive and/or to realise the sampte and to pay over the net sale proceds and/or net recoveries and/or the net realization thereof to the Petitioner in or towards the satisfaction of its duess
(e) that pending the hearing and disposal of the Petition and Arbitration proceedings, mptaking of the Arbitral Award and until fnal execution of the Arbitral Award, the Respondents, by themptselves, their emptployees, servants and/or agents or otherwise howsoever be restrained by an order and injunction frompt in any mptanner selling, transferring, disposing of, or alienating or encumptbering or pledging or mptortgaging or hypothecating or charging or parting with possession of or transferring or creating any right, title or interest or license in favour of anyone else in respect of the (I) mptachinery hypothecated (Exhibit "X"
hereto) to the Petitioner and (ii) other assets/properties, mptovable and imptmptovable, that mptay be disclosed by the Respondents on oath and/or an afdavits (f ) that pending the hearing and disposal of Arbitration proceedings, mptaking of the Arbitral Award and until fnal execution of the Arbitral Award, Court Receiver, High Court, Bomptbay or sompte ft and proper person including the Ofcer of the Petitioner be appointed Receiver with all Page 6 of 10 13th February 2020 ::: Uploaded on - 17/02/2020 ::: Downloaded on - 09/06/2020 07:33:16 ::: 916-CARBPL-183-20.DOC powers under Order XL Rule 1 of the Code of Civil Procedure 1908, of the mptachinery (Exhibit "X" hereto) hypothecated to the Claimptant and to take forcible physical possession of the said mptachinery frompt any person in possession thereof, with the help of police, if required, and sell the sampte by public auction or private treaty and/or to receive and/or to realise the sampte and to pay over the net sale proceeds and/or net recoveries and/or the net realization thereof to the Petitioner in or towards the satisfaction of its duess
(g) that pending the hearing and disposal or Arbitration proceedings, mptaking of the Arbitral Award and until fnal execution of the Arbitral Award, Court Receiver, High Court, Bomptbay or sompte ft and proper person be appointed Receiver with all powers under Order XL Rule 1 of the Code of Civil Procedure 1908, of the other assets/properties, mptovable and imptmptovable, that mptay be disclosed by the Respondents on oath and/ or on afdavits"
13. For the present, I ampt inclined to mptake an ad-interimpt order in termpts of prayer clauses (b) and (e) and partly in termpts of prayer clause (f ).
14. As regards the disclosure in prayer (b), this is to be in the following termpts of the Respondents' mptovable and imptmptovable assets, including their personal assets. The Respondents are to disclose--
(a) Immovable properties: All imptmptovable properties wherever situated, whether in India or overseas, with comptplete details sufcient to identify the properties. If any of these are in any way encumptbered, full particulars Page 7 of 10 13th February 2020 ::: Uploaded on - 17/02/2020 ::: Downloaded on - 09/06/2020 07:33:16 ::: 916-CARBPL-183-20.DOC of such encumptbrance/s and the amptounts yet due as secured by those properties will also be disclosed.
(b) Movable Assets
(i) Non-financial: All non-fnancial mptovable
assets of the acquisition or replacemptent value of mptore than Rs. 50,000/- including all particulars as described above.
(ii) Financial assets: All investmptents and demptat accounts with full particulars, including all holdings and encumptbrances.
(iii) Bank accounts: All bank accounts with account numptbers, bank namptes, branches, account types and holding patterns. Bank statemptents for the last one year are required for all accounts.
(iv) Bank Lockers: Contents of all safety deposit vaults and bank lockers.
(c) Tax and Financial Returns: Copies of all tax and fnancial returns for the last three years, including all supporting balance sheets, Proft & Loss accounts, incompte-expenditure statemptents and comptputations of incompte.
(d) Disclosures to be on Afdavit:
(i) All disclosures mptust be on properly sworn
afdavits.
(ii) Each deponent will mptake a separate afdavit.
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(iii) Each afdavit is to be afrmpted before a court
ofcer.
(iv) Afdavits to be serially paginated.
(v) Each afdavit to have its own detailed index
identifying each disclosure.
15. The Afdavits of Disclosures are to be fled and served on or before 28th February 2020.
16. As far as prayer (f ) is concerned, I ampt appointing the Court Receiver as an ad-interimpt Receiver because the Respondent has chosen not to reply, not to pay, and not to accept service. The Receiver will frst mptake an inventory of the plant and mptachinery at the factory and then take symptbolic possession of such of the mptachinery at site as can be correlated to the list of hypothecated mptachinery in Exhibit 'X'. It is clarifed that if there is any other mptachinery on site and which is not listed in Exhibit 'X', the Receiver is not to take even symptbolic possession of that mptachinery. The Receiver is not to remptove any of the mptachinery (whether correlated to Exhibit 'X' or not) but will prepare a report as to whether that mptachinery is being used or not, whether the factory is been running or not and who are the persons in the factory.
17. The local police at Babhalgaon, Tulzapur are directed to render assistance to the Court Receiver if requested and they will act on production of the authenticated copy of this order.
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18. Liberty to the Respondents to include an Afdavit in Reply on mpterits if so advised.
19. The Petitioners will serve a copy of the amptended petition. Liberty to the Petitioner to serve the Petition by emptail in addition to service by courier and speed post. That notice mptust be accomptpanied with the authenticated copy of this order.
20. I ampt mptaking it clear if the Respondents continue stay away, I mptay be constrained to confrmpt this order and to mptake a further order appointing a Receiver to take physical possession of mptachinery and then to proceed to sell it.
21. Liberty is granted to fle Arbitration Application and have it listed on the next date.
22. List the Petition on 11th March 2020.
(G. S. PATEL, J) Page 10 of 10 13th February 2020 ::: Uploaded on - 17/02/2020 ::: Downloaded on - 09/06/2020 07:33:16 :::