Bombay High Court
Citibank N.A vs Manjeet Singh Bagga (Borrower) And Anr on 25 November, 2019
Author: G. S. Patel
Bench: G.S. Patel
6-ARBP1375-19.DOC
Ashwini
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 1375 OF 2019
CitiBank N.A. ...Petitioner
Versus
Manjeet Sigh Bagga (Borrower) And Anr ...Respondents
Mr Hafeez Patanwala, i/b Vivek Patil & Associates, for the Petitioner.
CORAM: G.S. PATEL, J.
DATED: 25th November 2019 PC:-
1. The respondents have been served both privately and through Court.
2. The petition is under Section 9 of the Arbitration and Conciliation Act, 1996. The learned Advocate seeks urgent ad interim relief.
3. The petitioner is a bank. The two respondents are borrowers. They took a loan to buy two commercial vehicles. The loan was for Rs.49.90 lakhs. This was disbursed under two separate loan-cum- hypothecation agreements. There is a loan and hypothecation agreement dated 30th June 2017 for the purchase of a commercial vehicle Registration No. CG-08-AG-0297. The second loan Page 1 of 6 25th November 2019 ::: Uploaded on - 26/11/2019 ::: Downloaded on - 26/11/2019 23:57:22 ::: 6-ARBP1375-19.DOC agreement is of the same date and is for the purchase of a second commercial vehicle Registration No. CG-08-AG-0296. Both vehicles stood hypothecated to the petitioner. The loan was to be repaid in 47 equated monthly instalments of Rs.62,168/- from 1st July 2017 to 1st May 2021. The respondents also executed other security documents. The loan agreements contained a guarantee. Clause 16 of both agreements contains the arbitration clause:
"16. Arbitration:
All disputes, diferences and/or claims arising out of these presents or as to the construction, meaning or efect hereof or as to the rights and liabilities to the parties hereunder shall be settled by arbitration to be held in Mumbai in accordance with the provisions pertaining to fast Track Arbitration of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof or any statute enacted for replacement thereof and shall be referred to the sole arbitration of a person to be nominated/appointed by the Bank. The Borrower and the Guarantor unequivocally authorize the Bank to appoint Arbitrator. In the event of death, refusal, neglect, inability or incapability of the persons so appointed to act as an arbitrator, the Bank may appoint a new arbitrator. The award including the interim award/s of the arbitrator shall be fnal and binding on all parties concerned. The Arbitrator shall follow the procedure pertaining to Fast Track Arbitration in conducting arbitration proceedings to Fast Track Arbitration in conducting arbitration proceedings and shall conduct arbitration proceedings in such manner as he considers appropriate. Any proceedings to be initiated in any court of law in pursuance of this arbitration shall be instituted and held in the court at Mumbai only."Page 2 of 6
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4. Under Clause 17 of the two agreements, parties agreed that the jurisdiction would be of Courts in Mumbai.
5. The petition recites that the respondents were irregular in making repayments. The petitioner issued demand letters of 6th August 2018, 4th October 2018 and 4th August 2018 in respect of the two agreements separately. There then followed two statutory loan recall notices dated 4th April 2019.
6. After they received these notices, the respondents made part- payment towards the loan amounts but were thereafter irregular again in making further payments. The petition states that under the frst loan agreement an amount of Rs.18,08,020.3//- is due jointly and severally from the respondents as of the date of the petition. Under the second agreement the amount due is Rs.17,34,739./0/-. The aggregate is Rs.3/,42,7/9.8//-.
7. The petition was fled on 22nd September 2019. On 30th October 2019 the petitioners invoked arbitration and, in terms of the Arbitration Clause set out above and nominated Ms Disha Karambar Mulgaonkar, a learned advocate of this Court, to act as a sole arbitrator.
8. Having regard to these circumstances, and having considered the correspondence annexed to the petition, I fnd that there is no reason given by the respondents for their irregularity in repayment. I believe this is an appropriate case for urgent ad-interim relief including the appointment of the Court Receiver. Clearly a prima Page 3 of 6 25th November 2019 ::: Uploaded on - 26/11/2019 ::: Downloaded on - 26/11/2019 23:57:22 ::: 6-ARBP1375-19.DOC facie case has been made out. The two vehicles are hypothecated to the petitioner. Unless these are taken into the custody of the Court, the petitioner will not have the means to recover its debt. That there is a debt cannot be disputed; the part-payment ends any argument in that behalf. There may be some dispute about the amount of the debt, but not that the respondents are indeed indebted to the petitioner. There will also have to be an injunction. The balance of convenience is clearly with the petitioner and irretrievable prejudice would be caused to the petitioner if reliefs as prayed are denied.
9. Hence, the following order.
10. There will be an ad-interim order in terms of prayer clauses
(a), (c), (d), (e), (f ) and (g) which read thus:
"(a) Pending the hearing and fnal disposal of the arbitration proceedings or at any time after the making of the Arbitral Award but before it is enforced in accordance with Section 36 of the Arbitration and Conciliation Act, 1996, Court Receiver, High Court, Bombay be appointed as a Receiver under Order XL of Code of Civil Procedure hereto forcibly seize and seal the said Hypothecated vehicles by taking forcible physical possession, as more particularly described in 'Exhibit-I' to the present petition, from the Respondents or any other third person, to break/open the premises or lock in the premises without giving notice of their visit to the Respondents or any third person and further to take Police Assistance at the time of execution and to hand over the physical possession of the said Hypothecated vehicles to the Petitioner and the Petitioner be allowed to sell the said Hypothecated vehicles by private treaty;Page 4 of 6
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(c) Pending and hearing and fnal disposal of the arbitration proceedings, the Respondents and their respective servants and agent be restrained by an order of injunction of this Hon'ble Court in any manner, parting with possession and/or creating third party rights and/or alienating and/or encumbering with the said Hypothecated vehicles described in 'Exhibit-I' to this present Petition;
(d) Pending the hearing and fnal disposal of the arbitration proceedings, the Respondents be directed to disclose location of the said Hypothecated vehicles mentioned in 'Exhibit-I' to this Petition.
(e) Pending hearing and fnal disposal of the arbitration proceedings, Respondents be directed to handover the possession of the said Hypothecated vehicles to the Petitioner and/or to the authorised representative of the Petitioner or to the Court Receiver duly appointed by this Hon'ble Court on as it where it basis;
(f ) Pending the hearing and fnal disposal of the arbitration proceedings or at any time after the marking of the Arbitral Award but before it is enforced in accordance with Section 36 of the Arbitration and Conciliation Act 1996, this Hon'ble Court be pleased to direct the Respondents to disclose by fling an Afdavit stating particulars of their properties and the Court Receiver, High Court, Bombay be appointed as a Receiver Court Receiver on the said disclosed properties under Order XL Rule 1 of C.P.C. of 1908 with al the powers including to sell by private treaty or public auction of the moveable and immoveable properties and also enable the Court Receiver to take forcible possession of the said moveable and immoveable properties of the Respondents;
(g) Pending the hearing and fnal disposal of the arbitration proceedings or at any time after the making of Page 5 of 6 25th November 2019 ::: Uploaded on - 26/11/2019 ::: Downloaded on - 26/11/2019 23:57:22 ::: 6-ARBP1375-19.DOC the Arbitral Award but before it is enforced in accordance with Section 36 of the Arbitration and Conciliation Act 1996, Respondents and their respective servants and agents be restrained by an Order of injunction of this Hon'ble Court in any manner dealing with and/or parting with possession and/or creating third party rights and/or alienating and/or encumbering moveable and immoveable properties as disclosed by the Respondents and the order of injunction be registered with the concerned Sub-Registrar Ofce under Section /2 of Transfer of Property Act."
11. The petitioner's advocate will communicate a copy of this order to the respondents.
12. As to prayer clause (d), the respondents must disclose the vehicles' location within 72 hours of service of a copy of this order on them. The respondents' failure to intimate to the Court Receiver the exact location of the vehicle will be construed as an act of contempt of Court.
13. Afdavit in Reply to be fled and served on or before 13th December 2019. Afdavit in Rejoinder, if any, is to be fled and served on or before 20th December 2019.
14. List the petition on 7th January 2020.
(G. S. PATEL, J) Page 6 of 6 25th November 2019 ::: Uploaded on - 26/11/2019 ::: Downloaded on - 26/11/2019 23:57:22 :::