Case Note & Summary
The petitioner, Tata Capital Financial Services Ltd., a non-banking financial company with its registered office in Mumbai, filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim measures by way of injunction against properties of the respondents. The petitioner had sanctioned a channel finance facility of Rs. 20 crores to the first respondent, M/s. Garuda Vahan Pvt. Ltd., on 1st August 2009, and an agreement was executed on 2nd January 2010. The second, third, and fourth respondents executed personal guarantees on the same date, agreeing to be jointly and severally liable. The first respondent also executed a demand promissory note and a letter of lien and set-off. Upon default in repayment, the petitioner issued a notice on 27th December 2012 demanding Rs. 89,35,829.52 with interest, but received no response. The petitioner then sought an injunction against properties of respondents 1 to 3 described in Exhibit J. Respondent nos. 1 and 2 filed an affidavit in reply on 10th April 2013, and respondent no. 3 filed on 28th June 2013. Respondent no. 3 contended that the court lacked territorial jurisdiction and that the property listed against his name was not owned by him. Respondent nos. 1 and 2 also raised the objection of lack of territorial jurisdiction. The court considered the issue of jurisdiction and held that since the petitioner's registered office is in Mumbai and part of the cause of action arose there, the Bombay High Court has jurisdiction. The court granted an injunction restraining the respondents from alienating or encumbering the properties described in Exhibit J, subject to the petitioner furnishing an undertaking to indemnify the respondents if the petition is dismissed. The court also directed the petitioner to file an affidavit of undertaking within two weeks.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Territorial Jurisdiction - Court held that since the petitioner's registered office is in Mumbai and part of the cause of action arose there, the Bombay High Court has jurisdiction to entertain the petition for interim relief. (Paras 1-5) B) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Injunction Against Property - Court granted injunction restraining respondents from alienating or encumbering properties described in Exhibit J, subject to petitioner furnishing undertaking to indemnify respondents if petition is dismissed. (Paras 5-6)
Issue of Consideration
Whether the Bombay High Court has territorial jurisdiction to entertain a petition under Section 9 of the Arbitration and Conciliation Act, 1996, when the channel finance agreement was executed outside Mumbai but the petitioner's registered office is in Mumbai and part of the cause of action arose there.
Final Decision
The court held that it has territorial jurisdiction to entertain the petition. The court granted an injunction restraining the respondents from alienating, transferring, encumbering, or creating third party rights in respect of the properties described at Exhibit J to the petition, subject to the petitioner furnishing an undertaking to indemnify the respondents if the petition is dismissed. The petitioner is directed to file an affidavit of undertaking within two weeks.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- interim measures
- territorial jurisdiction
- cause of action
- channel finance facility
- personal guarantee
- default
- injunction against property
