Case Note & Summary
The appellant, L & T Finance Limited, had advanced a loan of Rs 32,40,000 to AGT Infrastructure Pvt. Ltd. for purchase of two vehicles under a loan-cum-hypothecation agreement dated 08/05/2008. Upon default, the dispute was referred to arbitration. During the pendency of arbitration proceedings, the appellant filed an arbitration petition under Section 9 of the Arbitration and Conciliation Act, 1996 to secure its claim. The learned Single Judge appointed the Court Receiver to take symbolic possession of the vehicles. The receiver took possession and sold the vehicles, realizing sale proceeds. The receiver then submitted a report seeking 1% commission on the gross sale proceeds. The appellant objected, contending that the commission should be calculated on the net proceeds after deducting expenses incurred by the receiver. The learned Single Judge confirmed the receiver's demand. Aggrieved, the appellant filed the present appeal. The Division Bench held that the Court Receiver is entitled to 1% commission on the gross sale proceeds without deduction of expenses, as per the Bombay High Court (Court Receiver) Rules, 2012. The appeal was dismissed.
Headnote
A) Court Receiver - Commission - Gross vs Net Proceeds - Bombay High Court (Court Receiver) Rules, 2012 - The issue was whether the Court Receiver's commission of 1% should be calculated on the gross sale proceeds or on the net proceeds after deducting expenses. The Court held that the commission is payable on the gross sale proceeds, as the receiver's expenses are separately recoverable and the commission is a statutory fee for the receiver's services. (Paras 1-10) B) Arbitration - Court Receiver - Appointment - Section 9 of the Arbitration and Conciliation Act, 1996 - During pendency of arbitration, the Court appointed a receiver to take symbolic possession of hypothecated vehicles. The receiver sold the vehicles and claimed 1% commission on the sale proceeds. The Court upheld the receiver's demand. (Paras 2-5)
Issue of Consideration
Whether the Court Receiver is entitled to 1% commission on the gross sale proceeds or on the net proceeds after deducting expenses incurred by the receiver.
Final Decision
Appeal dismissed. The order of the learned Single Judge dated 05/11/2012 confirming the Court Receiver's demand for 1% commission on gross sale proceeds is upheld.
Law Points
- Court Receiver's commission is payable on gross sale proceeds
- not net proceeds
- expenses incurred by receiver are not deductible from commission
- Bombay High Court (Court Receiver) Rules
- 2012 govern commission
- receiver's commission is a statutory entitlement.
