- 1 - IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION jmi ARBITRATION PETITION NO.53 OF 2009. L.& T. Finance Ltd. ..Petitioner. vs. M/s. Kiz & Associates & Ors. ..Respondents. .... Ms.Shakuntala Joshi, i/b. S.I.Joshi & Co., for the Petitioner. None for the Respondents. .... CORAM CORAM CORAM: S.J.KATHAWALLA, J. S.J.KATHAWALLA, J. S.J.KATHAWALLA, J. DATE DATE DATE : 30TH JANUARY 2009 : 30TH JANUARY 2009 : 30TH JANUARY 2009. P.C.: P.C.: P.C.: . The order dated 30th January 2009 containing three paragraphs, in the above petition is recalled, since the contents of the same pertained to some other matter. 2. The petitioner had provided a loan of Rs.35,30,000/ to the first respondent under a Loan-cum-Hypothecation Agreement entered into on 12th February 2007. The loan was repayable with interest at the rate of 6.10% per annum in 35 monthly equated instalments of Rs.1,19,315/-. The third respondent is a guarantor. Clause 12 of the agreement provides for the events of default; Clause 13 of the consequences of default and clause 14 provides for the rights of the petitioner on default including repossession of the asset. Clause 17 provides for arbitration. There has been a default on the part of the respondents. The - 2 - respondents were liable to pay to the petitioner a sum of Rs.32,54,377.39. The petitioner has invoked the provision for arbitration. 3. Learned counsel for the petitioner states that the respondent has been served and filed affidavit of service which is taken on record and marked ‘X’ for identification. 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 Excavator,more particularly described in Exhibit-F to the petition. In 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 hypothecated Excavator. The appointment of the Receiver is necessary in order to ensure that the Excavator is not wasted or alienated, thereby defeating the rights of the petitioner. Section 9 empowers the Court to pass an interim measure of protection. Hence, the following order :- - 3 - (i) Pending the hearing and final disposal of the arbitration proceedings, the Court Receiver is appointed as Receiver in respect of the Excavator, more particularly described in Exh-F to the petition, with direction to take forcible possession of the said Excavator with police assistance, if required, & without any prior notice to the respondents; (ii) The Court Receiver shall within a period of two weeks after taking possession, give an option to the respondent in writing to act as agents of Receiver in respect of the said Excavator. The respondents shall be given two weeks time by the Court Receiver from the date of receipt of the Court Receiver’s Communication/letter to exercise such option. In the event of the respondent/s being desirous of acting as agents of the Receiver, they shall be appointed as agents of the Receiver, 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-cum-hypothecation agreement (Exh-A to the petition); (iii) In the event that the respondents do not - 4 - communicate their willingness to the Receiver to act as agents within a period of two weeks from the date of receipt of the communication from the Court Receiver, it would be open to the petitioner to apply to the Court for further orders including for sale of the Excavator by private treaty. (iv) 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 Excavator in Exhibit-F. 4. The arbitration petition is accordingly, disposed of. [S.J.KATHAWALLA, [S.J.KATHAWALLA, [S.J.KATHAWALLA, J.] J.] J.]