Bombay High Court
Axis Bank Ltd vs Navjyoti Commodity Services Ltd. And 12 ... on 6 November, 2019
Author: G. S. Patel
Bench: G.S. Patel
901-CARBPL1210-19.DOC
Atul
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO. 1210 OF 2019
Axis Bank Ltd ...Petitioner
Versus
Navjyoti Commodity Services Ltd & Ors ...Respondents
Mr Atul Damle, Senior Advocate, with MB Kale & Juhi Bhogale,
i/b OM Gujjar Law Chambers, for the Petitioner.
Mr Mustafa Doctor, with Cyrus Ardeshir, i/b Vishal S Shriyan, for
Respondents Nos. 1 to 8.
Mrs Usha K Srivastava, i/b Consulta Juris, for Respondent No. 12.
CORAM: G.S. PATEL, J.
DATED: 6th November 2019 PC:-
1. This is a commercial arbitration petition under Section 9 of the Arbitration and Conciliation Act 1996. The 1st respondent, Navjyoti Commodity Services Limited ('Navjyoti') was what is described as 'collateral manager'. The nature of the relationship and the transactions between the petitioner, Axis Bank, and Navjyoti are set out in the petition itself. At this stage, it may not be necessary to examine this in any great detail.
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2. There were nearly a hundred godowns in which goods of various descriptions pledged to Axis Bank were warehoused at different points in time. The warehouses were used not only for those collateralized goods but there were goods apparently of third parties unrelated to these proceedings at least in some of these godowns.
3. To add to all this, respondent No. 12, Karur Vysya Bank, which is a complete outsider to the transactions between Axis Bank and Navjyoti, claims that it has rights over some third party goods that are in some of these warehouses, access to which is somehow restricted or blocked because of the present disputes. It appears that Karur Vysya Bank has its own collateral manager in respect of its collateralized assets and these are in at least two or three of these godowns.
4. Moving quickly ahead, the controversy is now limited to 13 godowns. These are listed in a statement tendered by Mr Damle, learned Senior Advocate for the petitioner. This statement/list is taken on record and marked 'X' for identifcation with today's date.
5. This statement is in two parts. The frst part, with godowns from Sr Nos. 1 to 8, are ones the keys of which Navjyoti has already delivered the keys to Axis Bank, which, therefore, has juridical possession. Of these eight, the godowns at serial Nos. 1, 2 and 3 (the keys of which are with Axis Bank) are said by Mr Damle to be in the physical possession of some third parties. These third parties are respondents to the Section 9 petition. Mr Damle says that Axis Bank Page 2 of 5 6th November 2019 ::: Uploaded on - 07/11/2019 ::: Downloaded on - 08/11/2019 00:28:13 ::: 901-CARBPL1210-19.DOC petitioner does not know how these third party respondents obtained possession of these three godowns from Navjyoti. A little later in this order, I will set out some directions requiring a brief response from Navjyoti limited to these three godowns.
6. There is no controversy that the keys of the godowns at Sr Nos. 4 to 8 are with Axis Bank.
7. Mr Damle submits that the Navjyoti should join Axis Bank in making an inventory of the goods in these godowns at serial Nos. 1 to 8. Mr Doctor for Navjyoti says that since Navjyoti has delivered possession of all eight godowns, Navjyoti has no interest in joining in any such inventory. Axis Bank is at liberty to make that inventory on its own. This is noted and accepted.
8. Possession of the godowns at serial Nos. 9 to 13 is still with Navjyoti. However, within these godowns there are not only goods collateralized to Axis Bank but also goods that belong to or over which others unrelated to these arbitral proceedings have some rights. A joint inventory will, therefore, be required of the contents of the godowns at serial Nos. 9 to 13. Axis Bank and Navjyoti agreed that they will jointly conduct this inventory. Each side will bear its own costs. I need to say this because these godowns are scattered all over the country.
9. We come now to the directions and clarifcations required from Navjyoti in regard to the godowns at serial Nos. 1 to 3. These directions are necessary only because Mr Damle says that there are Page 3 of 5 6th November 2019 ::: Uploaded on - 07/11/2019 ::: Downloaded on - 08/11/2019 00:28:13 ::: 901-CARBPL1210-19.DOC third parties in possession and it is today unclear how those parties came into possession. Mr Doctor has nothing to say in response at this stage. Rather than spending more time requiring afdavits from Axis Bank and respondents, I will require Navjyoti to fle an afdavit limited to the godowns at serial Nos. 1, 2 and 3 and explaining, to the extent that it is able, how it comes to pass that a third party is in physical possession of these three godowns. It is entirely possible that Navjyoti may not have an explanation for this at all. However, if there are any legal proceedings that culminated in the delivery of possession of these three godowns, then that must be stated with full particulars, so that Axis Bank knows how to proceed. I require this because it is virtually impossible for Axis Bank to ascertain how these third parties came to be in possession of the godowns at serial Nos. 1, 2 and 3, the keys of all of which were returned by Navjyoti to the Axis Bank. That afdavit is to be fled within two weeks from today.
10. Although respondent No. 12, Karur Vysya Bank, is present before me I am quite unable to see how it has any role to play in these proceedings apart from the question of possession. Karur Vysya Bank has its own collateral manager. It has its own sets of collateralized goods and assets. It may be that some of these goods are lying in one or more of these very many godowns, but that does not mean, so far as I can tell, that any substantive order can be passed in favour of Karur Vysya Bank in these proceedings. It must adopt its own proceedings in regard to its own contracts. In the course of those proceedings, if it is obstructed in taking possession of the collateralized goods because some third party is in possession of the godown in which those goods are stored, then it is for the Page 4 of 5 6th November 2019 ::: Uploaded on - 07/11/2019 ::: Downloaded on - 08/11/2019 00:28:13 ::: 901-CARBPL1210-19.DOC Karur Vysya Bank to make the necessary interim application under Section 9 to which these third parties claiming godown possession may properly be joined as respondents. That cannot be done by Karur Vysya Bank as a respondent in Axis Bank's Section 9 petition.
11. List the matter on 27th November 2019 at 3.00 pm. (G. S. PATEL, J) Page 5 of 5 6th November 2019 ::: Uploaded on - 07/11/2019 ::: Downloaded on - 08/11/2019 00:28:13 :::