1 acd IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CHAMBER SUMMONS NO. 1341 OF 2007 IN ARBITRATION PETITION NO. 277 OF 2005 Kotak Mahindra Bank Ltd. ...Petitioner. Vs. Mokashi Aroma Pvt. Ltd. & ...Respondent. And Dombivali Nagari Sahakari Bank Ltd. ...Applicant. ---- Mr. Ashish Kamat a/w Ms. Vidhi Parikh, Mr. Ahsish Pyasi i/b M/s Kartikeya Associates, for the Petitioners. Mr. Z. Andhyarjina i/b M/s Little & Co., for the Applicants. Mr. Farahan Dubash a/w Mr. Yatin R. Shah, for Respondent Nos.1 and 2. Mrs. R.S. Gulekar, Section Officer, Court Receiver’s Office. ---- CORAM: S.J. VAZIFDAR, J. DATED : 3RD NOVEMBER 2009 P.C.: 1. This Chamber Summons is taken out by the applicant Dombivali Nagari Sahakari Bank Ltd. 2. According to the applicant, respondent no.1 had applied for various facilities. Pursuant thereto, the applicant granted respondent no.1 facilities aggregating to Rs.1,66,00,000/- in or about the year 2000. Respondent Nos.2 and 3 guaranteed the repayment of the said amounts. According to the applicant the respondents had created in its favour security by way of a mortgage dated 21.12.2004 in respect of four immovable properties viz. factory premises, land and two flats of one of which is used as an office. 2 The mortgage deed is registered under the Companies Act, 1956 and under the Registration Act. According to the applicant, it was put in possession of the factory premises on 9.6.2004. It must be clarified immediately that the applicant is not a usufructuary mortgagee. Nor it is the applicant’s case that it is using the said factory premises for any purpose whatsoever. The only case is that the possession was granted to protect the premises. The petitioner filed Arbitration Petition bearing No.277 of 2005 (earlier given Lodging No.162 of 2002) under section-9 of the Arbitration & Conciliation Act, 1996. 3. By an order dated 11.6.2004 the Court Receiver was appointed in respect of the four properties. Pursuant thereto, the Court Receiver visited the premises between 22.7.2004 and 24.7.2004 and submitted his report dated 26.7.2004. The applicant contended that the report establishes that it was in possession of the factory premises. Mr. Kamat, the learned counsel for the petitioner contended that the report itself indicates that the applicant denied having taken possession of the said premises. However, prima facie at least no effective rights on the basis of the alleged possession have been stated to have been created. As stated above, the only purpose of the applicant allegedly having been put in possession of the said premises was to secure/protect the same. 4. The order dated 11.6.2004 was confirmed by an order dated 17.8.2004 passed by the Division Bench in Appeal No.472 of 2004. It was, 3 however, modified by permitting the respondents to occupy the premises as agents of the Court Receiver but without security and royalty in respect of the said properties except the movables. 5. By an order dated 6.12.2005, Arbitration Petition No.277 of 2005 was disposed of. Paragraph 2 of the said order reads as under: “By the ad-interim order a Receiver has been appointed. The learned counsel for the petitioner requests for confirmation of the order of Receiver. However, as admittedly, the property is neither mortgaged in favour of the Petitioner nor there is any charge registered in favour of the Petitioner, it will not be appropriate to appoint the Receiver on the property. In my opinion interest of the Petitioner can be safeguarded by granting attachment of the property. Petition is, therefore, granted in terms of prayer clause (c), excluding bracketed portion, with liberty to the Petitioner to apply for further interim reliefs before the arbitrator. Petition disposed of. Prayer clause (c) referred to in that order must be read with prayers (a) and (b). Prayers (a), (b) and (c) read as under: “(a)the Court Receiver, High Court, Bombay, to forthwith sell the immovable properties/assets of the Respondents, more particularly described in Exhibit- K’ to the Petition, by public auction or private treaty and after deducting his costs, charges and expenses hand over the proceeds thereto the Petitioner to enable the Petitioner to appropriate the same towards its dues. (b) the Court Receiver, High Court, Bombay, to forthwith take the repossession of the said immovable properties/assets from the Respondents, more particularly described in Exhibit- K’ to the Petition 4 with or without their consent and if necessary by breaking open the locks and with the help of police if required, and proceed to sell the said immovable properties/assets of the Respondents by public auction or private treaty and after deducting his costs charges and expenses hand over the proceeds thereto the Petitioner to enable the Petitioner to appropriate the same towards its dues. (c) ad-interim relief in terms of prayers I (a) and (b) above. 6. It appears that on 6.12.2005 the applicant had made an application for vacating the ad-interim order dated 11.6.2004. By an order dated 6.12.2005, the learned Judge disposed of the application as having become infructuous on the ground that the order dated 11.6.2004 had been vacated by the above order dated 6.12.2005. 7. Despite the same, it appears that the Court Receiver has been appointed in respect of the said two flats by subsequent orders dated 4.10.2007 and 7.12.2007. (A) I passed the order on 4.10.2007 on Court Receiver’s Report No.307 of 2004 recording the agreement between the petitioner and the respondents and accordingly ordering the Court Receiver to continue as the receiver in respect of flat No.401 and directing him to appoint an agent thereof on leave and licence basis in respect of the said flat. The parties were also granted liberty to bid for the agency of the Court Receiver. I had also recorded the statement on behalf of the respondents that the other flat being flat no.B-10 was to be taken possession of by the Court Receiver and 5 that upon possession being taken respondent no.3 was agreeable to a similar order being passed in respect of the said flat as had been passed in respect of flat no.401. (B) By the order dated 7.12.2007 on the same Court Receiver’s Report No.307 of 2007, S.A. Bobde, J. recorded the statement of the respondents that the possession of flat no.B-10 had not been obtained. It was further observed that as the licence was created contrary to the order appointing a Court Receiver, the Court Receiver ought to take possession of the flat and to appoint the occupant as an agent of the Court Receiver for the remainder of the term of the licence on the said terms and conditions and the licencee should pay licencee fees to the Receiver. 8. I am informed by the parties as well as the Court Receiver’s representative that flat No.B-10 is now also with the Court Receiver. 9. On 29.3.2006, the Deputy Registrar of Co-operative Societies, Kalyan passed a recovery certificate for the sum of Rs.1,93,47,00,528.54 together with interest at 17% p.a. in favour of the applicant. 10. By an order dated 24.8.2009, I had disposed of Notice of Motion No. 2700 of 2009 taken out by the petitioner in Arbitration Petition No.277 of 2005, By this Notice of Motion, the Petitioner sought an order discharging the Court Receiver in respect of the properties described in Exh.`B’ to the affidavit-in-support of this Petition and for an order directing the receiver to hand over the possession of the said properties to the private receiver 6 appointed by the D.R.T. After referring to the orders dated 11.6.2004 and 6.12.2005, I observed that the Court Receiver does not stand appointed in respect of the said properties and granted the formal order discharging the Court Receiver. However, I refused to grant the order directing the Court Receiver to hand over the possession to the private receiver appointed by the D.R.T. The Court Receiver, however, was directed not to act on this order till 31.10.2009, save and except, any order that may be passed by the D.R.T. 11. I am therefore unable to accept the statement of the applicant that there is no order appointing the receiver of the said properties as on date in view of the above orders dated 4.10.2007 and 7.12.2007. The orders dated 7.12.2009 and 24.8.2009 are in existence. Unless they are set aside either in the Court Receiver’s report or in any application, the Court Receiver would continue in respect of the said two flats. The order dated 24.8.2009 was clarified by an order dated 25.9.2009 by providing that the order dated 24.8.2009 was restricted to the property described in Exh.`B’ to the affidavit in support of the Notice of Motion. Thus as on date technically there is no order discharging the Court Receiver in respect of other properties viz. the properties other than the land. 12. Whether they bind a third party such as the applicant in another matter. Further, it is a moot question at this stage as to whether the applicant is entitled to have the Court Receiver discharged on the basis of 7 mortgage as admittedly no action has been instituted by the applicant for enforcement of its rights thereunder. In fact the applicant has chosen to remain satisfied with a mere recovery certificate for money. This question however, must be decided at the appropriate stage when the petitioner and the applicant seek to enforce their rights and execute the decree/recovery certificates obtained by them. The D.R.T. has issued the recovery certificate dated 5.11.2008 in favour of the petitioner in the sum of Rs.1,33,41,546/- together with interest at 12% p.a. 13. Further, it would not benefit either of the creditors viz. the petitioner or the applicant to have the Court Receiver discharged at least at this stage. Both creditors have to recover a large amount from the respondents. The interest of both the creditors can be adequately protected by clarifying that this order does not affect their rights either in respect of these properties or in respect of their contentions in appropriate proceedings. 14. In the circumstances, the Chamber Summons is disposed of by the following order: i) The Chamber Summons is dismissed. It is clarified that neither this order nor the continuance of the Court Receiver shall affect the rights and contentions of all the parties in respect of the said four immovable properties. The Petitioner shall not henceforth make any application either in this proceeding or in 8 any other proceedings in any court, tribunal or before any authorities or officer in respect of the said four properties without giving prior notice to the applicant’s advocate at least seven days in advance. ii) Parties are at liberty to adopt appropriate proceedings for the enforcement of their rights including executing the recovery certificates issued in their favour. All rights and contentions of the parties in such proceedings are kept open. iii) The Court Receiver shall not hand over possession of the land pursuant to the order dated 24.8.2009 and pursuant to the order of the recovery officer of the D.R.T. dated 7.5.2009 or any subsequent order up to and including 1.12.2009.