1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. ARBITRATION PETITION (LODG.) NO.31 OF 2008 Kotak Mahindra Bank Limited ..Petitioner. Vs. Dinesh Kishanrao Auti and another ..Respondents. .... Mr. Nikhil Mehta with Mr. Rahul Mehta i/b Ms. Disha Karambar for the Petitioner. None for the Respondents. .... CORAM: DR. D.Y. CHANDRACHUD, J. 13th March, 2008. P.C. : 1. The Petitioner had provided a loan of Rs.14,68,000/- to the First Respondent under a loan cum Hypothecation Agreement entered into on 28th January, 2005. Pursuant to Clause 2.6 of the loan agreement, the First Respondent was liable to repay the loan and interest by installments on the due dates as set out in Schedule I to the loan agreement. The first of such payments was to be made on or before 10th March, 2005 and the subsequent payments thereafter upto 10th January, 2008. Under Clause 3.1 (a) and (b) the First Respondent has charged and hypothecated the vehicle in favour of the Petitioner. Under Clause 2.7 the First 2 Respondent was liable to pay late payment charges at the rate of 3 % per month on the outstandings. The Petitioner has averred that the depreciated value of the vehicle is Rs.4 lacs and that as on 15th January, 2008 the amount due is Rs.8,44,540/-. The Second Respondent has guaranteed the due repayment of the liability. There was a default on the part of the First Respondent in the payment of the loan installments and the amount of the loan has remained due and outstanding. 2. The Respondents have been served. Counsel appearing for the Petitioner undertakes to file an affidavit of service within one week. No reply has been filed to the arbitration petition. In these proceedings under Section 9 of the Arbitration and Conciliation Act, 1996, the Petitioner has sought the appointment of the Court Receiver as Receiver of the hypothecated vehicle, more particularly described in paragraph 2 of the petition. In the absence of any defence or contest by the Respondents, the averments contained in the petition would have to be accepted. There has been a default in the payment of the outstanding dues. It would, therefore, be necessary to safeguard the interest of the Petitioner by appointing the Court Receiver as receiver of the 3 hyothecated vehicle. The appointment of the Receiver is necessary in order to ensure that the vehicle is not wasted or alienated, thereby defeating the rights of the Petitioner. Hence, the following order : (1) Pending the hearing and final disposal of the arbitration proceeding, the Court Receiver is appointed as receiver in respect of the vehicle, more particularly described in paragraph 2 of the petition; (2) The Court Receiver as well as the Advocate for the Petitioner shall communicate a copy of this order to the Respondents forthwith; (3) Within a period of one week from the date of the communication of the order, the Respondents shall be at liberty to inform the Receiver that they are desirous of acting as agents of the Receiver. The Respondents shall then be appointed by the Court Receiver as agents subject to security and royalty. The Receiver shall determine the quantum of security and royalty having regard to the terms and conditions contained in the Loan 4 cum Hypothecation Agreement (Exhibit A to the Petition). The ad hoc royalty shall be fixed within two weeks of the communication; (4) In the event that the Respondents do not communicate their willingness to the Receiver to act as agents within the period stipulated, it would be open to the Receiver to take forcible possession of the hypothecated vehicle, more particularly described in paragraph 2 and apply thereupon to the Court for further orders by submitting a report; (5) Until the Receiver takes possession, there shall be an interim injunction, restraining the Respondents from alienating, parting with possession or encumbering or creating any third party rights in respect of the vehicle, more particularly described in paragraph 2 of the Petition. Counsel appearing for the Petitioner has drawn the attention of the Court to the averments contained in paragraphs 10 and 11 of the Arbitration Petition and submits that there is a serious apprehension that the Court Receiver would be obstructed in enforcing compliance of this order. It is clarified that in the event 5 that the representative of the Court Receiver is obstructed in enforcing the compliance of this order, it would be open to the Court Receiver and/or his representative to take police protection. The Arbitration Petition is accordingly disposed of. *****