Case Note & Summary
The case involves an appeal filed by Jai Hind Projects Ltd and others (appellants) against an order dated 19 November 2014 passed by a learned Single Judge of the Bombay High Court in an arbitration petition under Section 9 of the Arbitration and Conciliation Act, 1996. The respondent, Tata Capital Financial Services Limited, had sought interim measures to protect its interests due to the appellants' default in repaying a loan of Rs.1,79,47,125.49. The Single Judge appointed a Receiver over the hypothecated asset described in the petition, with directions to take forcible physical possession if necessary, and restrained the appellants from disposing of or encumbering the asset. The appellants were given an option to act as agents of the asset subject to security and royalty. The appeal was filed on 18 February 2015, but no steps were taken by the appellants to seek protective orders or injunctions. The Division Bench, consisting of Justices Anoop V. Mohta and G.S. Kulkarni, dismissed the appeal, finding no reason to interfere with the Single Judge's order, especially since arbitration proceedings were pending and the default was admitted.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Appointment of Receiver - The court upheld the appointment of a Receiver over hypothecated assets and protective orders pending arbitration, noting the admitted default of Rs.1,79,47,125.49 and the need to secure the loan repayment. The appeal under Section 37 was dismissed as no interference was warranted. (Paras 1-3)
Issue of Consideration
Whether the learned Single Judge's order appointing a Receiver and granting protective relief under Section 9 of the Arbitration and Conciliation Act, 1996 was justified in light of the admitted default and pending arbitration proceedings.
Final Decision
The appeal is dismissed. No order as to costs.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996 empowers court to appoint receiver and pass protective orders pending arbitration
- Section 37 of the Arbitration and Conciliation Act
- 1996 provides for appeal against orders under Section 9
Case Details
2016 LawText (BOM) (02) 55
Appeals (L) No. 204 of 2015 in Arbitration Petition No. 632 of 2014
Anoop V. Mohta, G.S. Kulkarni
Jai Hind Projects Ltd and Ors
Tata Capital Financial Services Limited
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Nature of Litigation
Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order under Section 9 of the same Act appointing a Receiver and granting protective relief.
Remedy Sought
The appellants sought to set aside the order dated 19 November 2014 passed by the learned Single Judge.
Filing Reason
The appellants defaulted in repaying a loan of Rs.1,79,47,125.49, leading the respondent to seek interim measures under Section 9 of the Arbitration and Conciliation Act, 1996.
Previous Decisions
The learned Single Judge on 19 November 2014 appointed a Receiver over the hypothecated asset, directed forcible possession if necessary, and restrained the appellants from alienating the asset.
Issues
Whether the learned Single Judge's order under Section 9 of the Arbitration and Conciliation Act, 1996 was justified given the admitted default and pending arbitration.
Submissions/Arguments
The appellants challenged the order but did not take any steps to seek protective orders or injunctions.
The respondent sought to secure the loan repayment and protect the hypothecated asset.
Ratio Decidendi
In an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order under Section 9, the court will not interfere if the order is justified by the admitted default and the need to secure the loan repayment pending arbitration, especially when the appellant has not taken any steps to seek protective orders.
Judgment Excerpts
The learned Judge considering the contract between the parties and admitted default in making payment of Rs.1,79,47,125.49, and as the averments are made to protect the property including to secure repayment of the loan, has passed the order, pending final disposal of the arbitration proceedings and execution of Award.
As the arbitration proceeding is pending, and considering the reasons so given, we see no reason to interfere with the said order.
Procedural History
The respondent filed Arbitration Petition No. 632 of 2014 under Section 9 of the Arbitration and Conciliation Act, 1996. The learned Single Judge passed an order on 19 November 2014 appointing a Receiver and granting protective relief. The appellants filed the present appeal under Section 37 on 18 February 2015. The appeal was heard and dismissed on 9 February 2016.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9, Section 37
