Case Note & Summary
The petitioner, Aditya Birla Finance Limited, a non-banking finance company, filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief pending arbitration. The respondents, Mr. Carnet Elias Fernandes and Mrs. Everlyn C. Fernandes, had approached the petitioner in September 2012 for a loan of Rs.18 crores for infusion of equity in GEI and takeover of an existing loan from HDFC bank. On 27 September 2012, the petitioner issued a sanction letter, and a facility agreement was executed. The respondents agreed to repay the loan at a floating interest rate of 12.90% per annum, with penal interest for default. They also executed a demand promissory note, a declaration cum confirmation deed creating a mortgage by deposit of title deeds over immovable property described in Exhibit 'U', and other documents. The petitioner disbursed the loan in two parts: Rs.5,49,84,000 on 9 October 2012 and the balance later. The respondents defaulted in repayment. The petitioner sought appointment of the Court Receiver of the mortgaged property, handover of possession, liberty to sell the property, and an injunction restraining the respondents from alienating or creating third-party rights. The court noted that the respondents admitted the loan and default. Considering the strong prima facie case, balance of convenience in favor of the petitioner, and risk of the property being alienated, the court allowed the petition. It appointed the Court Receiver of the property, directed the respondents to hand over possession, and granted the petitioner liberty to sell the property after taking possession. The respondents were restrained from dealing with the property. The court also directed the petitioner to file an undertaking to pay the difference if the sale proceeds exceeded the dues and to bear the receiver's fees.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Appointment of Receiver and Injunction - The petitioner sought appointment of Court Receiver of mortgaged property and injunction against respondents from alienating the property due to default in loan repayment of Rs.18 crores - Court held that since the respondents admitted the loan and default, and the property was mortgaged, the petitioner made out a strong prima facie case for interim protection - Court appointed Court Receiver of the property with directions to take possession and hand over to petitioner for sale, and restrained respondents from dealing with the property (Paras 2-5).
Issue of Consideration
Whether the petitioner is entitled to interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, including appointment of a receiver and injunction against the respondents from dealing with the mortgaged property, pending arbitration.
Final Decision
Petition allowed. Court Receiver appointed over the property described in Exhibit 'U'. Respondents directed to hand over physical and vacant possession to the Receiver. Petitioner granted liberty to sell the property after taking possession. Respondents restrained from dealing with the property. Petitioner to file an undertaking to pay any surplus to respondents and bear receiver's fees.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- interim measures
- appointment of receiver
- injunction against alienation
- mortgage by deposit of title deeds
- loan default
