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TMI Blog2013 (8) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents to the appeals. 3. The claim of Tata Capital Financial Services Limited ( Tata Capital ) is ₹ 100.86 crores on which interest would be liable to be paid. The dues of L T Finance Limited ( L T Finance ) are ₹ 25.02 crores together with interest. These dues arise out of the credit facilities extended to the Appellant. Tata Capital has invoked the arbitration agreement between the parties and has submitted a claim in the arbitration, which is pending adjudication. L T Finance has an award dated 15 March 2013 of a sole arbitrator allowing its claim in the amount of ₹ 25.02 crores together with interest at the rate of 15% p.a. Although the creditors have mortgages in their favour, the claim in the arbitral proceedings has been restricted to a money claim. No relief for the enforcement of the mortgaged security has been sought in arbitration. 4. On applications under Section 9 of the Arbitration and Conciliation Act, 1996, the learned Single Judge issued the following directions in the two petitions : Tata Capital : (i) A direction to the Appellant to furnish security in the amount of ₹ 101.71 crores together with further interest; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fic performance, will be arbitrable. On the other hand, a mortgage is a transfer of a right in rem. A mortgage suit for sale of the mortgaged property is an action in rem, for enforcement of a right in rem. A suit on mortgage is not a mere suit for money. A suit for enforcement of a mortgage being the enforcement of a right in rem, will have to be decided in courts of law and not by arbitral tribunals. 7. In both the cases in appeal, it is common ground that the claim in arbitration is not for the enforcement of a mortgage. In both cases, the two creditors have asserted a claim for the recovery of monies due and outstanding. Order XXXIV Rule 14 of the Code of Civil Procedure, 1908 provides as follows : O.34, R.14 : Suit for sale necessary for bringing mortgaged property to sale.- (1) Where a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage, and he may institute such suit notwithstanding anything contained in Order II, Rule 2. (2) Nothing in sub-rule (1) shall a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. As regards the applicability of Order XXXVIII Rule 5 of the Code, to an application under Section 9 of the Arbitration and Conciliation Act, 1996, it needs to be noted that Section 9(ii)(b) allows a party to apply to the Court before, during or after the arbitral proceedings for securing the amount in dispute in the arbitration. Moreover under sub-clause (d) of Clause (ii) of Section 9, the Court is empowered to appoint a Receiver whereas under sub-clause (e) of Clause (ii) of Section 9 the Court may order such interim measure as may appear just and convenient. In the judgment of a Division Bench of this Court in Nimbus Communications Ltd. and another Vs. Board of Control for Cricket in India and another , 2012(5)-Bom.C.R.-114 this Court after having due regard to the judgments of the Supreme Court on the subject including in Adhunik Steel Ltd. Vs. Orissa Manganese and Minerals (P) Ltd. , (2007)7-SCC-125 held as follows : 24. A close reading of the judgment of the Supreme Court in Adhunik Steels would indicate that while the Court held that the basic principles governing the grant of interim injunction would stand attracted to a petition under Section 9, the Court was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te cases to secure the ends of justice and to preserve the sanctity of the arbitral process. 11. Now it is in this background that it will be necessary to consider as to whether a case was made out for the grant of an order for furnishing of security. The dues of Tata Capital are in excess of ₹ 100 crores exclusive of interest. The learned Single Judge has relied upon the averments which are contained in paragraphs 9, 12, 13 and 16 to 19 of the arbitration petition. The Respondent has averred that the Appellant owes a large amounts to banks and financial institutions and apprehends that with a view to defeat the satisfaction of its claim, the Appellant was likely to alienate its properties. It has been urged that there is an intentional and willful failure to comply with the conditions of the term loan agreement and of the security documents. Reliance has been placed on a certificate of the Chartered Accountant of the Appellant stating that the net worth of the Second Respondent herein is ₹ 890 crores. Relying on this certificate it was asserted on behalf of the Appellant that even according to the creditor, the net worth is well in excess of the claim against the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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