Case Note & Summary
The Petitioner, Karvy Financial Services Ltd., filed an Arbitration Petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking appointment of a Court Receiver over mortgaged properties and an order for disclosure of assets by the Respondents, Progressive Construction Ltd. and others. The Respondents had availed loan facilities of Rs. 26,42,50,000 from the Petitioner, sanctioned on 5th December 2012, and executed a Business Loan Agreement on 4th December 2012, creating a mortgage by deposit of title deeds over three immovable properties. The Respondents defaulted, leading to invocation of arbitration on 15th July 2013. During the arbitral proceedings, the Petitioner filed Arbitration Petition No. 887 of 2013 seeking interim reliefs, and an ad interim order dated 8th October 2013 appointed the Court Receiver over the mortgaged properties and directed the Respondents to disclose their assets. The Respondents approached for settlement, and the Petitioner did not enforce the order for nine months. When settlement failed, the Court directed the Receiver to take symbolic possession on 18th July 2014. Subsequently, a consent award was passed on 17th July 2014, but the cheques issued by the Respondents were dishonoured due to insufficient funds. The Petitioner then filed the present petition seeking appointment of a Receiver and disclosure of assets. The Court, considering the facts, allowed the petition, appointing the Court Receiver over the mortgaged properties and directing the Respondents to disclose their movable and immovable assets within four weeks.
Headnote
A) Arbitration - Interim Relief - Appointment of Receiver - Section 9 of the Arbitration and Conciliation Act, 1996 - Petitioner sought appointment of Court Receiver over mortgaged properties and disclosure of assets after respondents defaulted on loan and consent award cheques were dishonoured - Court held that since respondents failed to comply with consent award and cheques were dishonoured, appointment of receiver and disclosure of assets are necessary to protect petitioner's interests (Paras 1-4).
Issue of Consideration
Whether the Court can appoint a receiver and order disclosure of assets in an arbitration petition after a consent award is passed and cheques are dishonoured.
Final Decision
The Court allowed the Arbitration Petition, appointing the Court Receiver, High Court, Bombay, as Receiver in respect of the mortgaged properties, and directed the Respondents to file affidavits disclosing their movable and immovable assets within four weeks.
Law Points
- Appointment of receiver
- disclosure of assets
- interim relief under Arbitration Act
- enforcement of consent award
- default in payment
Case Details
2014 LawText (BOM) (12) 51
Arbitration Petition No. 1162 of 2014
Mr. Mayur Khandeparkar, along with Mr. Oomer Shaikh, instructed by M/s. Vikas Salvi & Associates, for the Petitioner. Mr. Zal Andhyarujina, along with Mr.Gandhi, instructed by M/s. Kanga & Co., for the Respondent.
Karvy Financial Services Ltd.
Progressive Construction Ltd. and others
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Nature of Litigation
Arbitration petition seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, for appointment of receiver and disclosure of assets.
Remedy Sought
Petitioner sought appointment of Court Receiver over mortgaged properties and an order directing Respondents to disclose their movable and immovable assets.
Filing Reason
Respondents defaulted on loan repayment and cheques issued under a consent award were dishonoured.
Previous Decisions
An ad interim order dated 8th October 2013 in Arbitration Petition No. 887 of 2013 appointed Court Receiver and directed disclosure of assets. A consent award dated 17th July 2014 was passed but cheques were dishonoured.
Issues
Whether the Court can appoint a receiver and order disclosure of assets in an arbitration petition after a consent award is passed and cheques are dishonoured.
Submissions/Arguments
Petitioner argued that Respondents defaulted on loan and failed to comply with consent award, necessitating appointment of receiver and disclosure of assets.
Respondents' submissions not detailed in the judgment.
Ratio Decidendi
Where a consent award is passed but cheques are dishonoured, the Court may appoint a receiver and order disclosure of assets to protect the petitioner's interests under Section 9 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
By this Arbitration Petition, the Petitioner is inter alia seeking appointment of Court Receiver, High Court, Bombay, in relation to the properties as more particularly described as 'mortgaged properties' in paragraph 6 of the Arbitration Petition.
The Respondents had approached the Petitioner for availing loan facilities for business purpose to the extent of Rs. 26,42,50,000 which were sanctioned by the Petitioner vide its sanction letter dated 5th December, 2012.
The Petitioner therefore filed the above Petition seeking the aforestated reliefs against the Respondent post passing of the Award, and mentioned the same before
Procedural History
The Petitioner filed Arbitration Petition No. 887 of 2013 seeking interim reliefs; an ad interim order dated 8th October 2013 appointed Court Receiver and directed disclosure of assets. The parties attempted settlement, leading to a consent award dated 17th July 2014, but cheques were dishonoured. The Petitioner then filed the present Arbitration Petition No. 1162 of 2014.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9
