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TMI Blog2015 (9) TMI 1765X X X X Extracts X X X X X X X X Extracts X X X X ..... rores for the purpose of infusion of equity/quasi equity unsecured loan in GEI and to takeover the existing loan from HDFC bank. 3. On 27th September, 2012, the petitioner issued a sanctioned letter in favour of the respondents which was duly accepted by the respondents. The petitioner and respondent no. 1 executed facility agreement for the total amount of Rs. 18 crores. Under the said agreement, the respondents agreed to repay to the petitioner the said amount at an agreed rate of interest i.e. at the floating rate of 12.90% per annum linked to the petitioner's long term reference rate less margin of 3.10%. The respondents also agreed to pay penal interest in case of default in repayment of the facility on due dates to the petitioner. 4. Respondents also signed KYC forms, demand promissory note promising to pay the entire loan amount with agreed interest to the petitioner, executed letter of continuity for demand promissory note dated 28th September, 2012 confirming that the said promissory note shall be continuing security for any borrower by respondents at any time to the petitioner, executed a declaration cum confirmation deed thereby declaring and confirming the mortgag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d letter was also sent to the respondents. 10. By their letter dated 6th February, 2015, the respondents raised an objection to the appointment of the learned arbitrator and requested that the reference to the learned arbitrator be withdrawn. 11. The respondents appeared before the learned arbitrator in the first meeting through their advocates and filed Vakalatnama. The parties argued before the learned arbitrator on the point of jurisdiction in the first meeting. The learned arbitrator however held that the said issue could not be resolved by way of argument but requires evidence to be laid in that regard and that issue would be framed in that regard. 12. On 13th February, 2015, the learned arbitrator dealt with the issue of jurisdiction and took a prima facie view that the jurisdiction of the court and the arbitral tribunal was at Mumbai and therefore he shall proceed with the arbitration proceedings. The learned arbitrator also rejected the allegations of the respondents of bias against him. The learned arbitrator also rejected the contention raised by the respondents that the learned arbitrator could not have been appointed by the learned advocate representing the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtained by this court only. 17. It is submitted that the respondents have committed default in making repayment of the loan amount with interest. Various post-dated cheques issued by the respondents are dishonoured and are returned by the bankers on presentation on due dates by the petitioner with the remark 'exceed funds'. 18. Learned counsel for the petitioner invited my attention to clause 13 of the facility agreement which provides for the events of default. He submits that the respondents have committed various breaches in repayment of the loan amount as well as interest and thus have committed defaults set out in clause 13 of the said facility agreement. He placed reliance on clause 15.1 which provides for consequences of default. He submits that the immoveable property described in Ex.U is mortgaged in favour of the petitioner and was a security given to the petitioner to secure the loan amount with interest. He submits that under the said provision of clause 15.1, the petitioner can seek recovery of the mortgaged property. He submits that in the statement of claim filed before the learned arbitrator, the petitioner has simplicitor applied for recovery of the money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition against the petitioner and others before the High Court of Madhya Pradesh (11671 of 2015). She submits that the Madhya Pradesh High Court has already issued a notice to the petitioner and others. The said writ petition is pending. 21. Learned senior counsel placed reliance on the judgment of this court in case of India Spinning and Weaving Co.Ltd. vs. Climax Industrial Syndicate AIR 1926 Bombay page (1) and in particular paragraphs 6 to 8 and also judgment of this court in case of Hatimbhai Hassanally vs. Framroz Eduljee Dinshaw AIR 1927 Bombay 278 and in particular paragraphs 40 to 75 and would submit that since the mortgaged property is situated outside the territorial jurisdiction of this court and the suit being suit for land, the leave under clause 12 of the Letters Patent was mandatory and the petitioner not having obtained under clause 12, the present petition under section 9 is not maintainable. 22. Learned senior counsel for the respondents placed reliance on the judgment of Supreme Court in case of Excel Dealcomm Private Limited vs. Asset Reconstruction Company (India) Limited & Ors. 2015 SCC Online SC 295 in Civil Appeal No. 3272 of 2015 in support of the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only by the appropriate court at Bhopal, Madhya Pradesh. 28. Mr. Manek, learned counsel for the petitioner in rejoinder submits that the agreement was signed and executed by the petitioner through its Branch Officer, Mumbai. The loan was sanctioned through office of the petitioner located at Mumbai. The parties in the arbitration agreement have agreed that the court at Mumbai would have jurisdiction to entertain, try and dispose off the present proceedings. It is submitted that the venue of the arbitration proceedings should be at Mumbai. It is submitted that the respondents have not disputed these averments made by the petitioner. He placed reliance on the judgment of this court in case of Konkola Copper Mines (PLC) vs. Stewarts and Lloyds of India Limited, 2013(5) Bom.C.R.29 and in particular paragraphs 12, 13, 15 to 17 and submits that since the place of arbitration is admittedly at Mumbai, these proceedings filed under section 9 of the Arbitration and Conciliation Act, 1996 are maintainable in this court even on that ground. 29. Learned counsel for the petitioner distinguished the judgment relied upon by the learned senior counsel for the respondents on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned representative noticed that the seat of arbitration and jurisdiction of the Courts was being inadvertently inserted by the respondent no. 1 at Bhopal requested the respondent no. 1 to have corrected the same. The constituted attorney of the respondent no. 1 accordingly made corrections and then got inserted signatures at both the places where the said correction was made i.e. Bhopal to Mumbai. 33. Learned counsel for the petitioner submits that the claim of the petitioner is not denied by the respondents in the affidavit in reply. He submits that learned senior counsel has not addressed to this court on merits of the matter. The respondents have not even filed the written statement before the learned arbitrator though adjournments have been taken by the respondents for filing written statement. He submits that the respondents are delaying the outcome of the arbitral proceedings and thus interim measures as prayed by the petitioner be granted. 34. Learned counsel for the petitioner also invited my attention to the other two loan agreements entered into between the parties which were between the sister companies of the respondents and the petitioner which were also signed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be equated with a suit for land. In my view the arbitration petition under section 9 cannot be considered as a suit but is a proceedings inter alia praying for interim measures under section 9 of the Arbitration Act. The final reliefs are claimed by the petitioner before the learned arbitrator by filing statement of claim. The judgment relied upon by the learned senior counsel for the respondents in case of Hatimbhai Hassanally (supra), judgment of this court in case of Kotak Mahindra Finance Ltd.(supra), judgment of Calcutta High Court in case of Cityscape Developers (Pvt.) Ltd. (supra), judgment of Calcutta High Court in case of Zoom Developers Pvt. Ltd.(supra) and thus do not assist the case of the respondents. 38. This court in case of L & T Finance Limited vs. Saumya Mining Ltd.(supra) has already taken a view that if material part of cause of action had arisen at Mumbai no leave under section 12 of the Letters Patent is required to be obtained for filing a petition under section 9 of the Arbitration Act. I am respectfully bound by the said judgment. 39. Division Bench of this court in case of Konkola Copper Mines (PLC) (supra) has held that since the place of the arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled in a pending suit for referring the parties for arbitration under section 8 of the Arbitration Act. In my view, the principles laid down by this court in the said judgment can be extended in the present proceedings under section 9. The reliefs under section 9 for appointment of the Court Receiver in respect of the mortgage property through in respect of which no reliefs are claimed by the petitioner in the statement of claim, can still be granted in respect of the said properties to secure the claims of the petitioner under section 9(ii)(d) of the Arbitration Act. This court has held in the said judgment that the court can grant interim measures under section 9(ii)(b), (d) and (e) even if the property or things are not subject matter of the dispute in arbitration. This court has also held that even if the petitioner gives up its claim for enforcement of mortgaged properties, interim measures can still be granted under section 9, even if the petitioner has made claim for recovery of money claim simplicitor in the statement of claim. I am respectfully bound by the said judgment. 44. Insofar as submission of the learned senior counsel that the criminal complaint as well as writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te third party rights or alienate all its property including mortgaged properties so as to deprive the petitioner on its legitimate dues. It is the case of the petitioner that the petitioner has good chances of succeeding in the arbitral proceedings and if the interim measures are not granted, the petitioner would not be able to recover any amount from the respondents. 47. In my prima facie view, the respondents have committed default in making repayment of the loan under the facility agreement. The petitioner has good chances of succeeding in the arbitral proceedings. According to the petitioner, as on 31st March, 2015, the respondents are liable to pay to the petitioner a sum of Rs. 23,65,07,643/- with further interest thereon at the rate of 12.5% per annum from 1st April, 2015 till payment. In my view, the petitioner has thus made out a case of appointment of the Court Receiver so as to secure the substantial amount of claim of the petitioner. In my view, such relief for appointment of Court Receiver can be granted by this court under section 9(ii)(d) and (e). I, therefore, pass the following order :- (a) Court Receiver, High Court, Bombay is appointed as a Receiver in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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