Case Note & Summary
The petitioner, L & T Finance Limited, filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim measures against the respondents, Mr. Damodar Bandekar (borrower) and Mr. Barkelo Gaonkar (guarantor). The petitioner had sanctioned a loan of Rs.70,52,000/- to the first respondent on 5th October 2011, under a loan cum hypothecation agreement. The second respondent executed a deed of guarantee on the same date. The respondents defaulted in repayment, leading the petitioner to issue a demand cum termination notice on 21st January 2013, calling for payment of Rs.72,34,403/- with overdue compensation at 36% per annum. The respondents did not respond. The petitioner invoked the arbitration agreement and appointed an arbitrator. The court noted that the respondents did not file any affidavit in reply, and the loan agreement contained clauses allowing repossession and sale of assets upon default. The court allowed the petition, appointing a receiver to take possession of the hypothecated assets and granting an injunction restraining the respondents from alienating or encumbering the assets. The receiver was directed to take possession and sell the assets, with the proceeds to be deposited in court. The court also directed the respondents to pay costs of Rs.25,000/-.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Loan Default - The petitioner sought appointment of receiver and injunction to secure repayment of loan after default by borrower and guarantor. The court held that since the respondents did not file any reply and the loan agreement provided for repossession and sale of assets, the petitioner was entitled to interim relief to protect its interest pending arbitration. (Paras 1-14)
Issue of Consideration
Whether the petitioner is entitled to interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, including appointment of receiver and injunction, to secure the outstanding loan amount and prevent alienation of assets.
Final Decision
Petition allowed. Court appointed a receiver to take possession of the hypothecated assets and granted an injunction restraining respondents from alienating or encumbering the assets. Receiver directed to take possession and sell the assets, with proceeds deposited in court. Respondents directed to pay costs of Rs.25,000/-.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- Loan cum Hypothecation Agreement
- Default
- Interim Measures
- Appointment of Receiver
- Injunction
