2014 (7) TMI 1245 - HC - Indian Laws

Petitioner granted Court Receiver to safeguard interests due to respondent default

TATA Capital Financial Services Ltd. Versus Indu Projects Ltd & Ors

The Court granted the petitioner's request for the appointment of a Court Receiver under Section 9 of the Arbitration and Conciliation Act 1996 for the ... Arbitration and Conciliation proceedings - seeks appointment of the Court Receiver in respect of the mortgaged property described in Exh. I to the petition - interim injunction in respect of the said property and for other reliefs - Held that:- The case is made out for appointment of the Court Receiver in respect of the property described in Page Nos. 101 to 106 of the petition. It is made clear that the Court Receiver shall not dispossess respondent No. 1 or any third party found in possession but shall take formal possession until further orders. Till the Court Receiver takes symbolic possession of the property, there shall be ad-interim injunction as prayed in prayer clause (d) excluding the word 'dealing with'. The respondents are directed to file affidavit-in-reply within four weeks from today and the copy thereof shall be served on the learned Advocate for the petitioner simultaneously. In the said affidavit, respondent Nos. 1 and 2 shall disclose on oath all the details of their movable and immovable properties whether encumbered or unencumbered. Issues:1. Appointment of Court Receiver under Section 9 of the Arbitration and Conciliation Act 1996 for mortgaged property.2. Default in repayment by respondent No. 1 and potential security risk to the petitioner.3. Request for interim injunction and other reliefs.Analysis:Issue 1: Appointment of Court ReceiverThe petitioner sought appointment of a Court Receiver under Section 9 of the Arbitration and Conciliation Act 1996 for the mortgaged property described in the petition. The petitioner provided credit facilities to the first respondent, who had executed various documents and created an Equitable Mortgage of immovable properties. The petitioner accepted a request to reschedule repayment installments, but the respondent defaulted on payments. The Court found a prima facie case for appointing a Court Receiver for the specified property to safeguard the petitioner's interests. The Court directed the respondents to file an affidavit-in-reply and scheduled the matter for final hearing.Issue 2: Default in Repayment and Security RiskThe petitioner highlighted that the mortgaged property was part of land sold by a corporation to the respondent for specific purposes. Due to defaults by the respondent, the corporation was considering revoking the sale and reclaiming the land, which would jeopardize the petitioner's security interest. The petitioner claimed outstanding amounts totaling a significant sum and further interest. The Court noted the default by the respondent and the lack of response to the demand notice, indicating a need for protective measures to secure the petitioner's position.Issue 3: Interim Injunction and Other ReliefsThe Court granted ad-interim relief by appointing a Court Receiver for the specified property, with instructions not to dispossess the respondent or any third party currently in possession. An interim injunction was ordered until the Court Receiver took symbolic possession, excluding the term 'dealing with.' The respondents were directed to file an affidavit disclosing details of their assets within a specified timeline, and the matter was scheduled for final hearing in August 2014.In conclusion, the judgment addressed the petitioner's concerns regarding default in repayment, potential security risks, and the need for protective measures through the appointment of a Court Receiver and interim injunction. The Court's decision aimed to secure the petitioner's interests pending the final resolution of the dispute, emphasizing the importance of legal procedures and adherence to the Arbitration and Conciliation Act 1996.