1 pps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Arbitration Petition No.457 of 2009 L & T Finance Limited .. Petitioner v/s. Sahyadri Earthmovers & Others ..Respondents Ms.Shakuntala Joshi i/b.S.I.Joshi & Co. for the Petitioner Mr.Balasaheb Deshmukh for the Respondents CORAM : R.Y.GANOO, J. DATED : 21st April, 2010 P.C. : 1. The Petitioners advanced loan to Respondent No.1 in terms of loan agreement dated 7.6.2007 being partnership firm. The Respondent Nos.2 and 3 are the partners of the said firm. The Respondent No.4 is the guarantor. The Petitioners have filed this application under Section 9 of the Arbitration and Conciliation Act (hereinafter referred to as the said Act) for diverse reliefs as set out in the prayer clause. 2. To this Arbitration Petition the Respondents filed their affidavit in reply objecting to the jurisdiction as well as raising objection on 2 merits. Pleadings are complete. Since the question of jurisdiction was raised, I have heard learned Advocate on the question of jurisdiction as well as on merits. It was decided that if the Court comes to the conclusion that this Court has jurisdiction then the orders will be passed on merits of the case. 3. After perusing the documents, namely hypothecation cum loan agreement, it is clear that the loan agreement dated 7.6.2007 was executed at Pune, Deed of Guarantee was also executed at Pune. Clause 3.2 of the loan agreement indicates that the payment is to be made by the borrower at Corporate Office i.e. at Mumbai. With this important clauses with reference to the terms of the agreement the learned Advocate Mr.Balasaheb Deshmukh appearing for the Respondents had contended that the Court at Mumbai has no jurisdiction as according to him no part of cause of action has arisen in Mumbai. He further submitted that in order to decide the jurisdiction of the Court in Arbitration Petition one may refer to the provision of Section 20 of the Code of Civil Procedure and then decide on the basis of the facts appearing in the matter as to whether the Court has jurisdiction or not. He had relied upon the judgment in 3 case of Kotak Mahindra Finance Limited v. T. Thomas Educational Trust and Others reported in Mh.L.J. 1 (2004) 1112. Mr. Deshmukh submitted that since the documentation was done at Pune , property – excavator is at Pune, Pune Court will have jurisdiction and Bombay Court will not have jurisdiction. He had submitted that merely because the payment is to be made at Mumbai in accordance with clause 3.2 of the Loan Agreement, Mumbai Court will have no jurisdiction. He had submitted that part payments were made at Pune and the Petitioners have accepted the said payment and therefore clause 3.2 has been given up by the Petitioners. He therefore submitted that this Court has no jurisdiction as no cause of action has arisen within the jurisdiction of Mumbai. 4. Learned Advocate Mrs.Joshi submitted that the correspondence as regards sanction of the loan has proceeded from Mumbai, so far as the Petitioners are concerned and the loan was sanctioned at Bombay. According to her, grant of loan at Mumbai is sufficient to say that part of cause of action has arisen within Mumbai. She has drawn my attention to the correspondence and from the said correspondence it can be seen that loan was granted at Mumbai and letters were sent to 4 the Respondent No.1. She had also drawn my attention to clause 3.2 by which payments were agreed to be made at Mumbai. She had relied upon the judgment in the case of A.B.C. Laminart Pvt. Ltd. & Anr. vs. A.P. Agencies Sales reported in (1989) 2 SCC 163 and had drawn my attention to para 15 to contend that Mumbai Court will have jurisdiction since the payment was made at Mumbai and the contract was made at Mumbai. 5. I have verified the facts and it is clear that the loan agreement was signed at Pune. The other documents were also signed at Pune. However, clause 3.2 of the loan agreement clearly indicates that the payment was to be made at Corporate Office at Mumbai i.e. to say performance of the Agreement was to be made at Mumbai. This will mean that part of cause of action has arisen within the territorial limits of Mumbai. The Supreme Court in the case of ABC Laminart Private Ltd. and another has observed that the place of performance will be one of the place where the cause of action can be said to have arisen. Merely because some payments were made at Pune and they were accepted by the Petitioners at Pune does not mean that the Petitioners have give up clause 3.2 mentioned in the agreement. This 5 will mean that the part of cause of action did arise in Mumbai in as much as it was the duty of the Respondent to make payment in Mumbai. Hence I observe that this Court has jurisdiction to try and entertain this petition. 6. So far as the merits of the petition are concerned, it is noticed that since 17.2.2010 ad-interim injunction in terms of prayer clause (d) of the petition is running against the Respondents (actually it should be against the Respondent No.1 who is the borrower) and as a result of that injunction against Respondent No.1 who is in control of the equipment is prevented from parting with possession or creating third party rights etc. Learned Advocate Mrs. Joshi informed the Court that the Arbitrator has closed the Arbitration Proceeding and award is expected from the Arbitrator. She submitted that till the award is published and till further steps are taken, in the interest of justice, this Court should direct that the equipment should be seized and it should be kept in the hands of third person for safe custody so that the Petitioners would be able to recover the monies by sale of it at appropriate time. This submission was opposed by the Advocate for Respondents. 6 7. After having considered rival submissions, I am inclined to observe that now that the Arbitration proceeding is closed and the award is expected to be published, it would not be proper for this Court to pass an order to seize the equipment. It is possible that the Petitioners may not succeed in the award in the Arbitration Proceeding and before the award is published if the equipment is seized and taken away from the Respondent No.1 that would cause prejudice to the Respondents. It is the case of the Petitioners that the Respondents have not paid the monies and the equipment continues to be in the hands of the respondent No.1 for a substantially long time and definitely till the closure of the Arbitration proceeding. In my view, when the award is about to be published, it would not be proper to alter the status quo and create new situation. Surely, if the Petitioners succeed in the Arbitration proceeding it would be open for them to take appropriate steps to protect their interest in accordance with the provisions of law . In my view, as of today till the award is published and till the Petitioners take further steps in the matter, the interim order in terms of prayer clause (d) adequately protects the interest of the Petitioners. 7 8. It is also to be noted that the loan agreement provided the clause for taking possession if the instalments are not paid. For the reasons best known to the petitioners they have not exercised the powers conferred upon them under the loan agreement to take charge of the equipment. If that has not been done for last so many days certainly now the equipment cannot be seized from the Respondent No1. 9. For the aforesaid reasons, I am of the view that as of today when the award is to be published the interim relief which is running against the Respondent No.1 in terms of prayer clause (d) adequately protects the interest of the Petitioner and to that extent the Order can be confirmed and the petition can be disposed of. 10.For the reasons mentioned above, I pass the following order: ORDER i) Pending the hearing and final disposal of the Arbitration Proceedings, there shall be an order of injunction in terms of prayer clause (d) so far as the respondent Nos.1, 2 and 3. No Order against 8 respondent No.4 who is a guarantor. ii) After the award is published, the petitioners are free to adopt appropriate proceeding to protect their interest. Iii) Respondent to pay to Petitioners quantified cost of Rs.2000/- (Rupees Two Thousand Only). Cost to be paid within fifteen days from today. iv) Arbitration petition disposed of in above terms. [R.Y.GANOO, J.]