2013 (2) TMI 835 - HC - Indian Laws

Summary

Issues Involved:
1. Maintainability of the petitions u/s 9 of the Arbitration and Conciliation Act, 1996.
2. Jurisdiction of the court to grant interim measures.
3. Arbitrability of mortgage enforcement.
4. Fulfillment of conditions akin to Order 38 Rule 5 of CPC for attachment before judgment.

Issue-wise Summary:

1. Maintainability of the petitions u/s 9 of the Arbitration and Conciliation Act, 1996:
The petitioner sought appointment of a court receiver, injunction, and directions to secure claims with interest. The court held that the petitions are maintainable under Section 9 of the Act for interim measures, as the petitioner has not yet filed a statement of claim before the arbitral tribunal and can choose to claim either enforcement of mortgage or recovery of money based on other securities.

2. Jurisdiction of the court to grant interim measures:
The court has jurisdiction to entertain the petitions as the loan was advanced from Mumbai, payments were made at Mumbai, and the loan agreement was executed in Mumbai. The court rejected the respondents' contention that the court lacks jurisdiction due to the mortgaged properties being outside its territorial jurisdiction.

3. Arbitrability of mortgage enforcement:
The court referred to the Supreme Court's judgment in Booz Allen and held that enforcement of mortgage is a right in rem and not arbitrable. However, the petitioner can choose to file a money claim before the arbitral tribunal, which would be a right in personam and arbitrable. The court cannot reject the application under Section 9 on the presumption that the petitioner would apply for enforcement of mortgage in arbitration.

4. Fulfillment of conditions akin to Order 38 Rule 5 of CPC for attachment before judgment:
The court found that the petitioner has made out a case for attachment before judgment, satisfying the principles of Order 38 Rule 5 of CPC. The respondents' financial condition was in bad shape, and there was a risk of alienation of properties. Thus, the court granted interim measures to secure the petitioner's claims.

Orders:
Arbitration Petition No. 1321 of 2012:
(a) Respondent no. 1 to furnish security of `101,71,03,644 with interest within four weeks.
(b) Court Receiver appointed for properties described in Exhibit P and Q with injunction against respondents.
(c) Attachment of bank accounts and continuation of interim orders till arbitration disposal and four weeks thereafter.
(d) Respondents to disclose assets on oath within two weeks.
(e) Liberty to petitioner to apply for further reliefs after disclosure.
(f) No order as to costs.

Arbitration Petition No. 1095 of 2012:
(a) Respondents to furnish security of `25,02,61,350 with interest within two weeks.
(b) Court Receiver appointed for properties described in Exhibit G with injunction against respondents.
(c) Restraint on respondents from alienating properties till receiver takes possession.
(d) Respondents to disclose unencumbered property on oath within two weeks.
(e) Liberty to petitioner to apply for further reliefs after disclosure.
(f) No order as to costs.