1 IN THE COURT OF SHRI S. K. SARVARIA : DISTRICT JUDGE: VIII ROHINI COURTS: DELHI. ARBT No. 146/10 Tata Motors Finance Ltd., Having its office at and Branch Office at: 33, 1st Floor, Ajay Tower, Wazirpur Industrial Area, Delhi - 110052. Through its Authorised Representative/Signatory Sh. [ENTITY] Petitioner VERSUS [ENTITY] C/o [ENTITY] House No.2173, PEPSU Society, Sector50, Chandigarh - 160050. Respondent
EXPARTE O R D E R Present petition has been filed under [SECTION] of the [ACT] by the petitioner along with an application for appointment of the receiver to take the possession of the vehicle make SUMO GRANDE FE GX8, bearing registration no.CH04F4142. Vide order dated 10/05/2010, my Ld. Predecessor had granted interim relief to the petitioner and an exparte ad interim receiver viz. Sh.[ENTITY] was appointed with directions to take [ENTITY] Vs. [ENTITY] possession/interim custody of the vehicle make SUMO GRANDE FE GX8, bearing registration no.CH04F4142. The receiver was also directed to furnish security bond in the sum of Rs.5,69,265.52 in the court. Notice was issued to the respondent and he was deemed served under proviso to [SECTION] [ACT]. The respondent did not put in appearance before the court and was proceeded exparte vide order dated 26/10/2010.
Learned counsel for the petitioner has argued that respondent approached the petitioner bank and applied for a loan for purchase of vehicle of make SUMO GRANDE FE GX8, bearing registration no.CH04F4142. The respondent entered into loancum hypothecation agreement bearing contract no.5000257765 with the petitioner in respect of aforesaid vehicle. The loan amount was Rs. 5,00,000/ payable by the respondent to the petitioner company in 60 monthly instalments of Rs.10,900/. The respondent did not adhere to the repayment schedule and has defaulted in payment of 15 EMIs. The amount outstanding against the respondent as on date is Rs. 5,69,265.52 The respondent has failed to comply with the terms and conditions of the loan facility and had further failed to come forward to clear the outstanding amount despite the service of the notice posted on 19.02.2010. As per the information to the petitioner, there is an [ENTITY] Vs. [ENTITY] apprehension of respondent disposing off/selling/ transferring the said vehicle. As such, it is prayed that custody of the said vehicle is required and for the said purpose the order dated 10/05/2010, by which Sh.[ENTITY] was appointed interim Receiver, be made absolute. The petitioner is in the process of initiating the Arbitration proceedings.
I have heard learned counsel for the petitioner and have gone through the record.
As per the settled legal position, protection under [SECTION] of the [ACT], can be granted only when a prima facie case is made out and balance of convenience and possibility of irreparable loss and injury to the petitioner is made out.
As regards appointment of receiver, in [PRECEDENT] in [CASE NUMBER] and [CASE NUMBER]; Date of decision: October 3, 2008; [ENTITY], J. of the Hon'ble Delhi High Court observed as under:
"37. For appointment of a receiver, a person seeking appointment is to make out a case of waste or damage to the property. A receiver cannot be appointed merely because it is expedient or convenient to one of the parties to do so or because it will do no harm to do so. Though the appointment of receiver is discretionary, exercise of such a [ENTITY] Vs. [ENTITY] discretion is to be based on sound judicial principles. A receiver can be appointed in case no other adequate remedy or means of accomplishing the desired object of the judicial proceeding is available. It is to be based on a very good prima facie case of plaintiff succeeding in the legal proceeding. In order to have a receiver appointed plaintiff not only has to show a conflicting claim to the property but must also show some emergency or damage or loss demanding immediate action. It is also no more res integra that normally receiver is not to be appointed where it has an effect of depriving a defendant of a de facto possession which may cause irreparable loss to the defendant. The conduct of the parties is also very relevant. In [PRECEDENT] it was held that where the defense set up is bona fide and the proposition of law is arguable, it is not advisable for the Court to appoint a receiver to take possession of immovable property from the defendants unless and until the Court is of the opinion that there is well founded fear that the property in question will be dissipated or that other irreparable mischief may be done unless the Court gives a protection. It is only if more than a prima facie case is made out by the plaintiff of the likelihood of the suit being decreed and if there is no tangible defense raised by the defendants and if it will lead to manifest injustice, then in exceptional circumstances the Court would be justified in appointing a receiver and granting interim injunction.
[ENTITY] Vs. [ENTITY] The Court has enunciated five principles which can be described as the "panch sadachar of our Courts exercising equity jurisdiction in appointing receivers as:
"(1) The appointment of a receiver pending a suit is a matter resting in the discretion of the Court. The discretion is not arbitrary or absolute. It is a sound and judicial discretion, taking into account all the circumstances of the case, exercised for the purpose of permitting the ends of justice, and protecting the rights of all parties interested in the controversy and the subject matter and based upon the fact that there is no other adequate remedy or means of accomplishing the desired objects of the judicial proceeding. (2) The Court should not appoint a receiver except upon proof by the plaintiff that prima facie he has very excellent chance of succeeding in the suit.
(3) Not only must the plaintiff show a case of adverse and conflicting claims to property, but, he must show some emergency or danger or loss demanding immediate action and of his own right he must be reasonably clear and free from doubt. The element of danger is an important consideration. A Court will not act on possible danger only, the danger must be great and imminent demanding immediate relief. It has been truly said that a Court will never appoint a receiver merely on the ground [ENTITY] Vs. [ENTITY] that it will do no harm.
(4) An order appointing a receiver will not be made when it has the effect of depriving a defendant of a de facto possession since that might cause irreparable wrong. If the dispute is as to title only, the Court very reluctantly disturbs possession by receiver, but if the property is exposed to danger and loss and the person in possession has obtained it through fraud or force the Court will interpose by receiver for the security of the property. It would be different where the property is shown to be 'in medio' that is to say, in the enjoyment of no one, as the Court can hardly do wrong in taking possession: it will then be the common interest of all the parties that the Court should prevent a scramble as no one seems to be in actual lawful enjoyment of the property and no harm can be done to anyone by taking it and preserving it for the benefit of the legitimate who may prove successful. Therefore, even if there is no allegation of waste and mismanagement the fact that the property is more or less 'in medio' is sufficient to vest a Court with jurisdiction to appoint a receiver.
Otherwise a receiver should not be appointed in supersession of a bona fide possessor of property in controversy and bona fides have to be presumed until the contrary is established or can be indisputably inferred.
[ENTITY] Vs. [ENTITY] (5) The Court, on the application of a receiver, looks to the conduct of the party who makes the application and will usually refuse to interfere unless his conduct has been free from blame. He must come to the Court with clean hands and should not have disentitled himself to the equitable relief by laches, delay, acquiescence, etc."
"38. Regarding appointment of a receiver a Single Judge of the Bombay High Court in [PRECEDENT] had held that it must be determined not only on the facts of a particular case but also in the context of a social situation. A Division Bench of this Court in [PRECEDENT] had held that the discretion to appoint a receiver is not arbitrary or unregulated but has to be exercised cautiously, judicially and according to the legal principles after consideration of the whole of the circumstances of the case. A receiver cannot be appointed merely because it is expedient or convenient to one of the parties to do so or because it will do no harm. A bonafide possessor of property should not be dispossessed pending suit unless there is substantial reason such as, well founded fear that the property in question being dissipated or that some other irreparable mischief may occur unless the Court gives its protection. Before appointing a receiver the matter should be [ENTITY] Vs. [ENTITY] considered judicially in all aspects including prima facie case that is either a good title to the property or special equity in his favor requiring immediate dispossession of the defendant or that the property in the hands of the defendant is in the danger of being wasted."
Thus, it is manifest from the aforesaid that appointing a receiver is in the discretion of the Court and it would be exercised in favour of a person who has a strong prima facie case and when there was emergency or danger of loss requiring urgent action and there were adverse and conflicting claims and the conduct of the petitioner/applicant was free from blame.
As per the documents placed on record, an Arbitration agreement exists between the parties which were signed at Delhi. This agreement covers the dispute sought to be raised by the petitioner.
Prime facie, it is apparent that the respondent has failed to make the payment of 15 Instalments as per agreement and an amount outstanding against the respondent as on date is Rs.5,69,265.52. The bizarre conduct of the respondent is difficult to comprehend. It is also clear that even the service of the legal notice had no impact upon the respondent. Furthermore, service of summons as directed by this court did not evoke any response from the respondent. It is not difficult to cull [ENTITY] Vs. [ENTITY] out the intention of the respondent. The possibilities of his transferring the vehicle or selling or otherwise dealing with the vehicle in such a manner that it would not be found in the future cannot be ruled out.
Accordingly, a case for confirming the interim order dated 10.05.2010 in favour of the petitioner is made out. Sh.[ENTITY] has already been appointed the interim receiver in the present case. However, since interim orders are generally passed in the interest of justice till final adjudication of disputes between parties on merits, it is the duty of the petitioner to raise arbitral proceedings, if not raised till date by either of the parties. Therefore, interim order dated 10.05.2010 is confirmed with the conditions that the petitioner shall commence the arbitration proceedings within 15 days of this order (if not already pending/commenced) and present order shall have effect only till 30th th day of first appearance of the petitioner before the arbitrator (or till 30 day from today, if arbitral proceedings are already commenced). Therefore, present interim relief will cease to have effect from the 30th day of first appearance of the petitioner before the learned arbitrator or from today as the case may be. After the said 30 days, the present interim order shall come to an end as petitioner can very well invoke [SECTION] of [ACT]. The authority which has to adjudicate the disputes between parties on merit seems 'ordinarily' to be [ENTITY] Vs. [ENTITY] the best person to deal with interim relief claimed in the arbitral proceedings by taking recourse to [SECTION] of the [ACT].
The order be sent to the server (www delhidistrictcourts.nic.in). The file be consigned to the record room. Announced in the open court on this 8th day of November, 2010 ([ENTITY]) District JudgeVIII/ Rohini Courts/Delhi [ENTITY] Vs. [ENTITY] Tata Motors Finance Vs. [ENTITY] 08.11.2010 Present: None.
Typographical errors in ordersheet dated 26.10.2010 are corrected.
Vide separate order of even date, the petition is disposed of. The order be sent to the server (www delhidistrictcourts.nic.in).
File be consigned to the record room.
([ENTITY]) District JudgeVIII/Rohini Courts Delhi/ 08.11.2010 [ENTITY] Vs. [ENTITY]