Case Note & Summary
L&T Finance Limited, a company registered under the Companies Act, 1956, filed four petitions under Section 9 of the Arbitration and Conciliation Act, 1996 before the High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction. The petitions arose from four distinct loan agreements between the petitioner and the first respondent, M/s. Saumya Mining Ltd. (borrower), with the second respondent as guarantor (Mrs. Pradnya Jain in two petitions and Mr. Ashok Kumar Jain in the other two). Respondent Nos. 3 and 4, Northern Coalfields Limited and Eastern Coalfields Limited, were debtors of the borrower and guarantor and were impleaded to secure the petitioner's claim. Each loan agreement was accompanied by a promissory note, a deed of hypothecation over specified equipment, and a deed of guarantee. The loans were repayable in monthly installments ranging from 34 to 35 installments. The petitioner alleged that respondents committed defaults in repayment, leading to termination of the loan agreements vide advocate's notices dated 10 September 2013, which also invoked arbitration and appointed a sole arbitrator. The amounts claimed as on 28 August 2013 were Rs.24,20,542.28, Rs.80,85,435.55, Rs.1,32,95,695.42, and Rs.24,58,363.93 respectively, with further interest. The petitioner sought interim measures including protection, preservation, interim custody and sale of the hypothecated equipment, apprehending that respondents would create third-party rights to frustrate the eventual award. The respondents raised preliminary objections, including that the loan agreements were executed at Kolkata, West Bengal, where respondent No. 1's registered office is located. By consent, all four petitions were heard together and were to be disposed of by a common order. Oral judgment was reserved on 18 June 2014 and pronounced on 8 July 2014. The available text does not include the court's analysis or final decision.
Issue of Consideration
ARBITRATION PETITION NO. 290 OF 2014
Case Details
2014 LawText (BOM) (07) 63
ARBITRATION PETITION NO. 290 OF 2014 WITH ARBITRATION PETITION (L) NO. 269 OF 2014, ARBITRATION PETITION (L) NO. 271 OF 2014, ARBITRATION PETITION NO. 341 OF 2014
Mr. Anand Poojary, Ms. S.I. Joshi, Nikhita Pawar, Manish Gala for petitioners; Mr. Ayush Singhvi for respondent nos. 1 and 2
M/s. Saumya Mining Ltd., Mrs. Pradnya Jain, Mr. Ashok Kumar Jain, Northern Coalfields Limited, Eastern Coalfields Limited
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Nature of Litigation
Arbitration petition under Section 9 of the Arbitration and Conciliation Act, 1996 for interim measures.
Remedy Sought
The petitioner seeks interim measures for protection, preservation, interim custody and sale of hypothecated equipment, and to secure and protect the petitioner's dues from respondents.
Filing Reason
The respondents committed default in repayment of loans and the petitioner apprehends that they may create third party rights over hypothecated assets, frustrating potential arbitral award.
Submissions/Arguments
Petitioner argued that in view of default, it is entitled to terminate loan agreement, recover arrears, repossess and sell assets without court order; respondent no.1 and 2 have not made payment or responded; petitioner apprehends creation of third party rights on hypothecated equipments; hence interim measures necessary to prevent arbitral award from becoming infructuous.
Respondent no.1 and 2 argued that the loan agreement was executed at Kolkata, West Bengal, and the registered office of respondent no.1 is in Kolkata.
Judgment Excerpts
Petitioner has filed these four petitions under section 9 of Arbitration and Conciliation Act, 1996 for interim measures.
By consent of parties, all the four matters are heard together and are being disposed of by a common order.
Under the said deed of hypothecation two equipments described in Exh. G to the petition are hypothecated in favour of the petitioner by respondent no. 1.
Petitioner through their advocates notice dated 10th September, 2013 terminated the loan agreement and called upon the respondent to pay outstanding amount.
Procedural History
The four arbitration petitions were filed under Section 9 of the Arbitration and Conciliation Act, 1996. By consent of parties, all matters were heard together and disposed of by a common order. Judgment was reserved on 18th June 2014 and pronounced on 8th July 2014.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9
- Companies Act, 1956:
