Case Note & Summary
The case involves two commercial appeals filed under Section 37 of the Arbitration and Conciliation (Amendment) Act, 2015, challenging a common order dated 13th December 2016 passed by a learned single Judge of the Bombay High Court in Commercial Arbitration Petition No. 18 of 2016 and Arbitration Petition No. 1305 of 2015. The appellant, Gupta Infrastructure (India) Private Limited, was the original respondent in the arbitration petitions filed by Tata Capital Financial Services Ltd. (respondent no.1) and others. The dispute arose out of a loan agreement where the appellant had mortgaged certain properties. Pending arbitral proceedings, the learned single Judge appointed a Court Receiver over the mortgaged properties, including a shop occupied by KD Entertainment, directing the Receiver to take physical possession. The appellant contended that the appointment was without proper application of mind and that the balance of convenience was not considered. The respondents argued that the appointment was necessary to protect the secured assets. The Division Bench, after hearing the parties, set aside the impugned order, holding that the learned single Judge had not properly considered the material on record and that the balance of convenience did not warrant the appointment of a receiver at that stage. The court emphasized that the power under Section 9 is discretionary and must be exercised judiciously. The appeals were allowed, and the impugned order was set aside.
Headnote
A) Arbitration - Interim Measures - Appointment of Receiver - Section 9 of the Arbitration and Conciliation Act, 1996 - The court has power to appoint a receiver pending arbitration if the applicant makes out a prima facie case, balance of convenience, and irreparable loss. However, the impugned order appointing receiver was set aside as the learned single Judge did not properly consider the material on record and the balance of convenience was not in favour of appointment. (Paras 1-9) B) Arbitration - Interim Measures - Section 9 - Scope - The power under Section 9 is discretionary and must be exercised judiciously, keeping in mind the object of arbitration. The court should not pass orders that would frustrate the arbitral process. (Paras 5-9)
Issue of Consideration
Whether the appointment of a Court Receiver over mortgaged properties pending arbitral proceedings was justified under Section 9 of the Arbitration and Conciliation Act, 1996.
Final Decision
The appeals are allowed. The impugned common order dated 13th December 2016 is set aside.
Law Points
- Appointment of receiver pending arbitration
- Section 9 of Arbitration and Conciliation Act
- 1996
- Balance of convenience
- Prima facie case
- Irreparable loss
