Calcutta High Court
Srei Infrastructure Finance Ltd vs M/S. Ravi Udyog Pvt. Ltd. & Anr on 17 November, 2008
Author: Indira Banerjee
Bench: Indira Banerjee
AP No. 522 of 2008
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
SREI INFRASTRUCTURE FINANCE LTD. Plaintiff/Petitioner/Applicant
Versus
M/S. RAVI UDYOG PVT. LTD. & ANR. Defendant/Respondent
For Plaintiff/Petitioner : MR. SAKYA SEN, ADVOCATE For Defendant/Respondent : MR. SHIBAJI SEN, ADVOCATE BEFORE:
The Hon'ble JUSTICE INDIRA BANERJEE Date : 17th November, 2008.
The Court :- Mr. Sen, appearing on behalf of the respondent No.1 prays that the interim order passed by this Court on 30th September, 2008 be vacated. No formal application for vacating of the interim order has, however, been made.
Mr. Sen submitted that the petition discloses no cause of action. Mr. Sen further argued that the pleadings are vague and in any case is contradictory and inconsistent.
Mr. Sen emphasized the lacuna in the pleadings and argued that even the exact amount advanced had not been disclosed.
An application under section 9 of the Arbitration & Conciliation Act, 1996 for interim relief is not to be judged as per the standards of a plaint in a suit. If the relevant facts pleaded, read with the documents annexed to the petition, warrant the grant of interim relief, interim relief ought not to be refused by recourse to technicalities. In any case, it difficult to accept the submissions of Mr. Sen that the petition does not disclose any cause of action.
Admittedly, the respondent No.1 obtained finance from the petitioner. Repayments were to be made in instalments and defaults were made in payment of instalments. In terms of the agreement and in particular clause 4.1 the assets in question were hypothecated and/or charged to the petitioner by way of first charge. Moreover, clause 7.2 of the agreement provides as follows :-
7.2 Consequences of Default If one of more of the events specified as Events of Default occur(s), the Company shall have the right to terminate the Agreement, accelerate the payment, repayment or reimbursement, as the case may be, of the Secured Obligations, (and in the event of foreign currency Facility, to convert the outstanding amount of foreign currency.
Facility and all other outstanding amounts into Rupees at the exchange rate quoted by any authorised dealer or banker of the Company as sale quote on the date of such conversion) whereupon the Company may by a notice in writing to the Customer, declare all the outstanding Secured Obligations and all other monies due here under to be payable forthwith. Upon such acceleration, the Security Interest created in terms of the Agreement shall become enforceable and without prejudice to the other rights of the Company available in Law the Company shall have the following rights namely:
7.2.1. Takeover In the event of default by the Customer in repayment of the Secured Obligations in terms of the Agreement, or in the event of the Customer committing a breach of any of the terms and conditions under these presents, the Company and its authorised officers and agents at its discretion shall be entitled at any time, acting as absolute owners thereof and without any notice to the Customer, and entirely at the Customer's risk and expense, and if so required acting in its capacity as the attorney for and in the name of the Customer to:
(a) enter and remain in any place where the Asset or any of them shall be and to take possession thereof, recover and receive the same and/or appoint any officer or officers of the Company/(s) of the Asset and/or sell by public auction or private contract or otherwise dispose off or deal with all or any of them or any part of the Asset and enforce, realise, settle, compromise and deal with any of the rights aforesaid, without being bound to exercise any of these powers or being liable for any loss against the Customer and apply the net proceeds of such sale in or towards liquidation of the balance outstanding and the Customer hereunder agrees to accept such Company's account of realisations as final and binding. If the amount recovered or realised by the Company pursuant to exercise of its powers as aforesaid, is less than the amount due to it from the Customer, the Customer irrevocably and unconditionally undertakes to pay and make good any shortfall or deficiency claimed by the Company;"
Even assuming that the averment in paragraph 16, of the petitioner being the owner of the assets, is strictly not correct, the sentence should not be read out of context. The assets are secured to the petitioner. There is a clear right conferred under the agreement to take actual physical possession of the assets upon default. It is not in dispute that there has been a default. In the aforesaid circumstances, this Court is not inclined to vacate the interim order on the oral prayer of Mr. Sen. Affidavit-in-opposition, if any, be filed within one week. Affidavit-in-reply thereto, if any, be filed within three days thereafter. Let the matter be listed as adjourned motion two weeks hence.
It is submitted that in terms of the order dated 30th September, 2008 the learned Receiver has gone to Orissa and is due to return today. The report of the learned Receiver shall be filed within Monday next.
All parties and the learned Receiver to act on a xerox signed copy of this order on the usual undertakings.
(INDIRA BANERJEE, J.) sksr.