A single bench of Justice Prathiba. M. Singh. On 9th November While hearing a petition(NEW MORNING STAR TRAVELS v. VOLKSWAGEN FINANCE PRIVATE LIMITED) filed under article 227 of the constitution of India said that,
“The power to pass ad-interim orders under Section 9 of the (Arbitration) Act is not in doubt. However, disposal of the petitions, without issuing notice and hearing the respondent as well as directing coercive orders of possession would be violative of the principles of natural justice.”
The said petitions have been disposed of on the very first day of the hearing, without issuing notice in the petitions to the Petitioner herein.
Further, coercive orders have also been passed, permitting the Respondent to take possession of the vehicles of the Petitioner.
The Petitioner is a company, which had purchased 16 vehicles under loan-cum-hypothecation agreements entered into on 28th November 2018 with the Respondents. The said agreement contained an arbitration clause. There was a default by the Petitioners in payment of certain installments of the loan. Thereafter, the Petitioner came to know that 16 petitions under Section 9 were filed by the Respondent, in which the impugned orders have been passed. All 16 orders have been placed on record.
The learned counsel appearing on behalf of the Petitioner submits that the total dues are only to the tune of Rs. 87 lakhs and the taking of possession of all the vehicles in the manner as has been done in this case, would bring the business of the Petitioner to a complete standstill. His grievance is that the Section 9 petitions have been disposed of without notice and coercive orders of possession have been passed, without even hearing the Petitioner.
After perusing the impugned orders, the Court stated that Section 9 petitions cannot be disposed of ex-parte, without giving notice to the other party, especially when coercive orders are being passed.
Considering that the vehicles involved in the present case were luxury buses and that the trial court could not have presumed that the petitioner would not be willing to make the payment, the Court held that the trial court ought to have issued notice to the petitioner, afforded a hearing, and then passed appropriate orders in accordance with the law. Hence, the impugned orders were thus set aside by the court.
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