vss IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.616 OF 2008 ARBITRATION PETITION NO.616 OF 2008 ARBITRATION PETITION NO.616 OF 2008 M/s.Kotak Mahindra Bank Ltd. ... Petitioners V/s. Abdul Awwal Chaudhary & Ors. ... Respondents Ms.Disha Karambar for Petitioners Mr.S.K. Chaurasia a/w Mr.A.M. Saraogi for Respondents CORAM: S.J. KATHAWALLA, J. S.J. KATHAWALLA, J. S.J. KATHAWALLA, J. DATED: FEBRUARY 2, 2009 FEBRUARY 2, 2009 FEBRUARY 2, 2009 P.C.: P.C.: P.C.: . This petition is taken out by the Petitioners u/s 9 of the Arbitration and Conciliation Act 1996 seeking appointment of Court Receiver and also an injunction against the respondents in respect of the movable and immovable properties hypothecated to the petitioners more particularly described in exhibits B and C to the petition read with the additional affidavit in support of the petition dated 30.11.2009. The petitioners are involved in the business of providing financial facilities such as personal loans, home loans, commercial vehicle loans, etc. The petitioners have stated that the Respondent No.1 alongwith Respondent No.2 had approached the petitioners to grant to them financial assistance to enable the Respondent No.1 to expand their business. The Petitioners state that the respondents had represented to them that they had sound : 2 : reputation in their field of business. The respondents had further represented that they had adequate facility to pay the desired loan and that they shall never commit any defaults in respect of the amounts that would be due and paybale to the Petitioners after obtaining the said loan from the petitioners. The petitioners based on such representations made by the respondents entered into a loan cum hypothecation cum guarantee agreement dated 31.7.2007 bearing No.SA 162966 between them and Respondent Nos.1 to 4 on terms and conditions more particularly contained in the said loan agreement. 2. The said loan provided by the petitioners for the Respondents was to the tune of Rs.20 lacs. The petitioners have submitted that the respondents in order to secure the due repayment of the said loan alongwith interest and other monies payable have agreed to and hypothecated in favour of the petitioners all current assets and movables of Respondent No.1 including machines and equipments, office equipments, spares alongwith 42 lorries (vehicles) which are described in part B and C of Schedule II of the said loan cum hypothecation agreement. The petitioners have further submitted that the respondents mortgaged to the petitioners two premises, which now according to the respondents were tenanted premises and unauthorised premises respectively. : 3 : 3. Pursuant to clause 1.6 of the loan agreement dated 31.7.2007, the respondents were liable to pay interest @3% per month on unpaid amounts in the event of defaults. The petitioners have submitted that the petitioners have committed defaults from the first installment itslef and thereafter they have regularly defaulted. The petitioner submits that the cheques issued by Respondent No.1 have also bounced. The petitioners have submitted that they were unaware of the whereabouts of the movables more particularly 42 lorries hypothecated by Respondent Nos.1, 2 and 3 to the petitioners. 4. Respondent No.1 has filed an affidavit wherein he has stated that all the said lorries except two lorries which are attached by the petitioner in respect of some other loan agreements, are with different financiers. The petitioners have submitted that it is now established beyond doubt that the respondents are not wanting to repay the said loan amount alongwith interest and that they are only interested in duping the petitioners. This court had directed the respondents to remain present in Court. Respondent Nos.1, 2 and 3 are present. Respondent No.4 is not present on the ground that he is not in Mumbai. However, the learned advocate appearing for the Respondents states that Respondent : 4 : Nos.1 to 4 do not have any assets of their own. Even the lorries which were hypothecated with the petitioners are not with them and the immovable properties which were mortgaged or agreed to be mortgaged to the petitioner were tenanted premises and one of the said immovable properties was in fact unauthorised structure which is demolished. 5. From the aforesaid facts, it is prima facie established that the respondents have taken the loan from the petitioners on terms and conditions set out in the loan agreement and that an amount of Rs.20,19,398.61 together with interest @ 3% per month is due and payable by the respondents to the petition. The relief sought in the petition in terms of prayer clauses (a), (b) and (c) cannot be granted in view of the statements made on behalf of the respondent that they do not have any of the movables/immovable assets described in exhibits B and C to the loan agreement. In view thereof, it would be in the interest of justice as an interim measure of protection to direct the Respondents to secure the amount in dispute in the arbitration. The court is empowered to do under section 9(ii) of the Arbitration and Concilliation Act 1996. The respondents are therefore ordered and directed to furnish solvent security to this Court within a period of eight weeks from today for a sum of Rs.20,19,398.61 which is prima : 5 : facie due and payable by the respondents to the petitioners on the date of filing of this petition, to secure the claim of the petitioner. 6. In view thereof, the petition stands disposed of. 7. Needless to add that the observations made herein are prima facie and the same will not prejudice any proceedings pending between the petitioners and the respondents in any other court. (S.J. KATHAWALLA, J.)