Bombay High Court
L And T Finance Ltd vs Agt Infrastructure Pvt. Ltd on 6 October, 2015
Bench: V.M. Kanade
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APP/18/2013
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.18 OF 2013
IN
COURT RECEIVER'S REPORT NO.577 OF 2012
IN
ARBITRATION PETITION NO.1214 OF 2010
L & T Finance Limited, a Company )
incorporated under the provisions of )
The Companies Act, 1956, having its )
Registered Office at L & T House, )
Ballard Estate, Mumbai 400 001ig )
and Corporate Office at 8th Floor, )
Metropolitan, C-25/C-26, 'E' Block, )
Bandra Kurla (East), Mumbai - 400 051 ) .... Appellant.
(Original Petitioner)
V/s
1. AGT Infrastructure Pvt. Ltd., )
(Borrower), having his address at )
Block - 16, Haveli Complex, )
Opp Zilla Parishad Office, )
Chandrapur, Maharashtra ) ...Respondent
(Original Respondent)
And
2. The Court Receiver, High Court, )
Bombay ) Respondent.
----
Mrs. S.I. Joshi i/b S.I. Joshi & Co. for the Appellant
Mr. C.M. Korde, Senior Counsel i/b Mr. Sasikumar T.C for
Respondent No.2.
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APP/18/2013
CORAM: V. M. KANADE &
DR. SHALINI PHANSALKAR-JOSHI, JJ.
Judgment reserved on : 26/08/2015.
Judgment pronounced on : 06/10/2015.
ORAL JUDGMENT (Per V.M. Kanade, J.)
1. Appellant, being aggrieved by the Order passed by the
learned Single Judge dated 05/11/2012 confirming the
demand of the Court receiver seeking 1% commission, has
filed this appeal.
2. Brief facts are that the Appellant advanced a loan of Rs
32,40,000/- to AGT Infrastructure Pvt. Ltd., who is
Respondent No.1 herein, to purchase two TATA LPK 2518
vehicles on hypothecation of the said vehicles with the
Appellant. The Appellant and the Respondent - AGT
Infrastructure Pvt. Ltd. executed a Loan-cum-Hypothecation
Agreement dated 08/05/2008. By the said agreement, the
loan which was paid to the Respondent was repayable in 35
equated monthly installments with interest @ 6.35% per
annum. Dispute was referred to the Arbitrator and during
the pendency of the arbitration proceedings, Petition was
filed to secure the claim of the Appellant. The learned Single
Judge, while disposing of the Arbitration Petition, appointed
the Court Receiver who was directed to take symbolic
possession of the vehicles and appoint Respondent - AGT
APP/18/2013
Infrastructure Pvt. Ltd as agent of the Court Receiver.
3. Accordingly, representative of the Court Receiver along
with the staff of the Office of the Court Receiver went to the
suit site and took symbolic possession of the two vehicles
and appointed the Respondent - AGT Infrastructure Pvt. Ltd
as an agent of the Court Receiver. Respondent - AGT
Infrastructure Pvt. Ltd deposited a sum of Rs 3,30,630/-
towards royalty. The matter between the parties was settled
and the Court Receiver was discharged, subject to payment
of cost, charges and expenses, if any, incurred by the Court
Receiver.
4. Thereafter, the Court Receiver submitted his report and
demanded inter alia Rs 24,276/- towards 1% commission on
the value of the movable property mentioned in the
particulars of claim which was Rs 24,27,595/-. This report
was placed before the learned Single Judge. An objection
was raised by the Appellant before the learned Single Judge
that 1% commission on the particulars of claim could not
have been charged, firstly because possession of the
vehicles was not taken and the relevant rule under which 1%
commission was charged clearly mentioned that if
possession of the property is taken only then 1%
commission could be charged. Secondly, it was submitted
that the Court Receiver had erred in demanding 1%
APP/18/2013
commission on particulars of claim. It was submitted that
particulars of claim included not only value of the vehicles
but also the other claims including damages, compensation,
interest etc. A reply has been filed by the Court Receiver to
the affidavit in support filed in Notice of Motion taken out by
the Appellant.
5. The appeal was taken up for hearing and we have heard
both the parties at length.
6.
The learned Counsel appearing on behalf of the
Appellant invited our attention to Rule 591 of the High Court
(Original Side) Rules, 1980. She submitted that Court
Receiver had claimed charges under Rule 591(5) for the said
transaction. The relevant Rule 591(5) reads as under:-
"591(5) For taking charge of movable property
which is not sold on the estimated value."
7. It is an admitted position that a representation was
made by the Appellant through its advocate to the High
Court on the administrative side and a Committee was
appointed which looked into the matter and thereafter the
said Rule 591(5) has been amended sometime in 2013.
APP/18/2013
8. The learned Counsel appearing on behalf of the
Appellant submitted that physical possession of the property
was not taken. Reliance was placed upon the
correspondence between the Court Receiver and the
Appellant and the Minutes of the Meeting. It was submitted
that the Court Receiver Could not, by any stretch of
imagination, charge 1% commission, firstly because physical
possession of the said two vehicles was not taken and,
secondly, even otherwise, 1% commission could not have
been charged on the particulars of claim.
attention to the Court Receiver's Report which, according to
She invited our
her, clearly indicated that physical possession of the said two
vehicles was not taken. Thirdly, it was submitted that
valuation of the two vehicles as per the order dated
29/11/2012 was not done. She submitted that the Appellant
had requested the Court Receiver to appoint Mr. P.S. Rao
who was a Panel Valuer and the Appellant had also agreed
to bear cost, charges and expenses of the Valuer. It was also
pointed out that the said two vehicles were in possession of
the the Respondent - AGT Infrastructure Pvt. Ltd and they
were available with the said Respondent for the purpose of
valuation. It was then submitted that the Court Receiver had
not obtained market value of the said two vehicles and also
had not written any letter to the Respondent - AGT
Infrastructure Pvt. Ltd., calling upon them to point out the
location of the said vehicles to enable the valuer to get the
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valuation done. Grievance was made that the Court Receiver
had not taken any efforts to get the valuation done. It was
submitted that the Court Receiver, on the other hand,
informed the Appellant that it was a Finance Company and it
should be aware of the valuation of the hypothecated goods.
9. It is an admitted position that as per the Invoices, price
of the vehicles was Rs. 19,07,827/- each and the cost of two
vehicles was Rs 38,15,654/-. Reliance was also placed by
Receiver which
the Appellant on Rule 123 of the Manual of the Court
prescribed the manner in which the
commission could be charged. Our attention was drawn to
the said Manual and it was pointed out that nowhere in Rule
123 or in the Manual, it was provided or stated that the Court
Receiver was entitled to charge 1% commission on
particulars of claim of the suit or Petition. It was submitted
that the Appellant was ready and willing to pay all charges of
the Court Receiver which they were entitled to charge as per
Rule or Manual.
10. On the other hand, Mr. Korde, the learned Senior
Counsel appearing on behalf of the Court Receiver invited
our attention to the report submitted by the Court Receiver.
He submitted that pursuant to the order passed by the
learned Single Judge, the Court Receiver fixed an
appointment for taking possession of the vehicles on 26 th,
APP/18/2013
27th October, 2010 and the representative of the Court
Receiver proceeded at suit site at Chandrapur and took
formal possession of the vehicles/equipments by affixing two
possession boards indicating possession of the Court
Receiver. After the formal possession was taken, a meeting
was fixed in the office of the Court Receiver on 21/12/2010.
In the said meeting, Advocate for the Appellant submitted
that the Respondent - AGT Infrastructure Pvt. Ltd was liable
to pay royalty from October, 2010 as the possession of the
vehicles had been taken by the Court Receiver in October,
2010. The Appellant's Advocate suggested that royalty may
be fixed @ Rs 1,10,210/- and this was accepted by the
Respondent - AGT Infrastructure Pvt. Ltd., who agreed to
deposit three months' royalty. Thereafter, meetings were
held and again on 21/06/2011, representative of the Court
Receiver went to the suit site at Chandrapur on which date
the representative of the Respondent - AGT Infrastructure
Pvt. Ltd. agreed to pay Rs 30 lakhs to the Appellant. Again,
representative of the Court Receiver went to the suit site on
the next date i.e. on 22/06/2011. However, possession was
not handed over.
11. Mr. Korde, the learned Senior Counsel appearing on
behalf of the Court Receiver also invited our attention to the
Minutes of the Meeting and the other correspondence
between the parties. He submitted that as per Rule 591 of
APP/18/2013
the Bombay High Court (Original Side) Rules, the Court
Receiver was entitled to claim 1% commission for taking
charge of movable property. It was contended that even in
cases of tenanted property always formal possession is taken
by the Court Receiver and actual possession remains with
the tenant. It was contended that therefore the submission
of the Appellant that possession was not taken was incorrect.
He then submitted that the representative of the Court
Receiver had taken pains by going to site at Chandrapur and
had called for police help since there was a possibility of
resistance at the time of taking formal possession of the
property. He submitted that though 1% commission could
not be charged on the particulars of claim, if the value at
which the vehicles were purchased was taken into
consideration, the invoices indicated that the total value was
Rs 38,15,654/- and after deducting depreciation and other
expenses, the valuation of the property even otherwise was
correctly estimated to be Rs 24,27,595/- It was therefore
submitted that 1% of Rs 24,27,595/- was charged as
commission. It was submitted that instead of appreciating
the efforts taken by the Court Receiver in securing the
property and ensuring return of money to the Appellant, the
Appellant had made false and frivolous allegations and had
challenged the said Report. He submitted that now the said
Rule has been amended and this question has become
academic.
APP/18/2013
12. In our view, we do not see any reason to interfere with
the Order passed by the learned Single Judge. We are in
agreement with the submission made by the learned Senior
Counsel appearing for the Court Receiver. Perusal of the
entire report indicates that representative of the Court
Receiver had taken great efforts in securing the formal
possession of the two vehicles, as a result of which parties
have finally settled the dispute and the Appellant could
recover the entire amount. It must be noted that the Court
Receiver's Office in Mumbai is the only Office which sends its
representative to various places for the purpose of securing
the property and, as a result, Plaintiff's claim is secured. At
times, Court Receiver's representative has to face serious
situation as the Respondents have control over the location
where they are residing and may oppose the representative
of the Court Receiver. Many incidents have taken place
where representative of the Court Receiver has even been
attacked by the Respondents' hirelings. We are surprised at
the approach of the Appellant. Technically, it may be correct
that valuation of the property was not done. However, if the
valuation had been done, expenses of the valuer also would
have increased the cost. Even if rough and ready
calculation is made, the figure arrived at by the Court
Receiver namely Rs 24,27,595/- is not excessive. This can be
seen from the fact that initially the total price of the two
APP/18/2013
vehicles was Rs 38 lakhs approximately, after deducting
depreciation and other expenses, the valuation which was
made at Rs 24,27,595/- also cannot be said to be an
exorbitant amount showing the valuation of the property.
The Court Receiver, far from being benefited or taking undue
advantage, had taken great efforts to secure the property.
Rule 591 of the Bombay High Court (Original Side) Rules
clearly reveals the scale of fees which are to be charged by
the Court Receiver. Clause (5) of Rule 591 talks about taking
charge of movable property. By taking formal possession,
the Court Receiver therefore had taken charge of the
movable property. The submission of the Appellant that the
actual possession is not taken and therefore the Court
Receiver is not entitled to charge 1% commission therefore is
without any substance.
13. We must also note that order for appointment of Court
Receiver is passed only on the Original Side of the High
Court, Bombay and the Court Receiver promptly acts on the
said order and secures the property. We do not find such a
practice being followed anywhere in Maharashtra and for that
matter in other States. It is no doubt true that the Court
Receiver is entitled to charge his commission as per the
Rules and Regulations and as per the Bombay High Court
(Original Side) Rules. However, we are surprised that the
Appellant who is one of the leading Finance Companies
APP/18/2013
should make a grievance of this nature and that too after
availing the services of the Court Receiver.
14. We do not find any substance in the appeal. In our our
view, this is a fit case where exemplary costs should have
been awarded. However, taking into consideration the fact
that the litigants have right to challenge the order passed by
the Court, we refrain ourselves from imposing heavy costs.
Appeal is therefore dismissed. There shall be no order as to
costs.
(DR. SHALINI PHANSALKAR-JOSHI, J.) (V.M. KANADE, J.)
bdpps
APP/18/2013
CERTIFICATE
Certified to be true and correct copy of the original
signed judgment.
