Tata Capital Financial Services ... vs P.S.Enterprises And 5 Ors
2021 Latest Caselaw 17287 Bom

GANESH                                                                   15-CARBP-600-2021.doc
SUBHASH
LOKHANDE                         IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally signed by
GANESH SUBHASH
LOKHANDE                                ORDINARY ORIGINAL CIVIL JURISDICTION
Date: 2021.12.15
18:38:24 +0530
                                             IN ITS COMMERCIAL DIVISION

                               COMMERCIAL ARBITRATION PETITION NO. 600 OF 2021

                      Tata Capital Financial Services Limited                         .. Petitioner
                                Vs.
                      P. S. Enterprises and Ors.                                      .. Respondents


                      Mr.Ziyad Madon a/w. Ashrita A. Chindarkar & Lalit Kataria i/b.
                      Kataria & Associates for the Petitioner.


                                                   CORAM :- B.P.COLABAWALLA, J.

                                                   DATE      :- 13th DECEMBER, 2021.

                      P. C.:

1. The above Petition is filed under Section 9 of the

Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act")

seeking the following reliefs:

"(a) that pending hearing and final disposal of the Petition and arbitral proceedings, passing of the Arbitral Award and until final execution of the Award this Hon'ble Court be pleased to order and direct the Respondents jointly and/or severally to deposit the amount of Rs. 1,86,44,701. 38 (Rupees One Crore Eighty Six Lacs Forty Four Thousand Seven Hundred One and Paise Thirty Eight Only) due as on 30th March, 2021 as more particularly set out in Particulars of Claim Exhibit "CC" hereto along with agreed interest @ 12.25% per annum from 30 th March, 2021 and

Ganesh Lokhande 1/18 15-CARBP-600-2021.doc

additional interest @ 10% per annum till payment and/or realization and other expenses, costs, charges etc. in terms of the said Agreement or furnish Bank Guarantee of the Nationalized Bank of the said amount in favour of the Prothonotary & Senior Master, High Court, Bombay for an initial period of one year and to be renewed thereafter for such additional period as this Hon'ble Courdt deems fits;

(b) that pending the hearing and final disposal of the Petition, this Hon'ble Court be pleased to direct the Respondents to disclose on oath and / or on affidavit, the assets and properties, movable and / or immovable, owned by each of them given complete details and this Hon'ble Court be pleased to attach the movable and immovable properties, that may be disclosed by the respondents on oath and / or on affidavit.

(c) that pending the hearing and final disposal of the arbitration proceedings, the Hon'ble Court be pleased to order and direct the Respondents to surrender the Hypothecated Assets and permit the Petitioner to sell the same by public auction or private treaty and / or to receive and / or to realise the same and to pay over the net sale proceeds and / or net recoveries and / or the net realization thereof to the Petitioner in or towards the satisfaction of its dues.

(d) that pending the hearing and final disposal of the Petition, this Hon'ble Court be pleased to attach the movable and immovable properties owned and or possessed by the Respondents and more particularly described in the Schedules of Property at Exhibit "DD - 1" to "DD - 5" hereto.

(e) that pending the hearing and disposal of Arbitration proceedings, making of the Arbitral Award and until final execution of the Arbitral Award, the Respondents, by themselves, their employees, be restrained by an order and injunction form in any manner selling, transferring, disposing of, or alienating or hypothecating or charging or parting with possession of or transferring or creating any right, title or interest or license in favour of anyone else in respect of the (i) Hypothecated Assets (ii) the movable or immovable properties described in the Schedules of Property at Exhibit "DD-1" to "DD-5" hereto and [(iii) the other assets / properties, movable and immovable, that may be disclosed by the Respondents on oath and / or on affidavit.]

Ganesh Lokhande 2/18 15-CARBP-600-2021.doc

(f) that pending the hearing and disposal of Arbitration proceedings, making of the Arbitral Award and until final execution of the Arbitral Award, Court Receiver, High Court, Bombay or some fit and proper person including the Officer of the Petitioner be appointed Receiver with all powers under Order XL Rule 1 of the Code of Civil Procedure 1908, in respect of the (i) Hypothecated Assets (ii) the movable or immovable properties described in the Schedules of Property at Exhibit "DD-1" to "DD-5" hereto and

(iii) the other assets / properties, movable and immovable, that may be disclosed by the Respondents on oath and / or on affidavit and to take forcible physical possession of the same form any person in possession thereof, with the help of police, if required, and sell the same by public auction or private treaty and / or to receive and / or to realise the same and to pay over the net sale proceeds and / or net recoveries and / or the net realization thereof to the Petitioner in or towards the satisfaction of its dues."

2. Mr. Madon, the learned counsel appearing on behalf of the

Petitioner, has tendered an Affidavit of Service dated 10 th December,

2021. In the said Affidavit, it is stated that when a copy of the Petition

along with a copy of the order dated 26 th November, 2021 was sought to

be served on the Respondents by hand delivery at the factory premises

of the 1st Respondent in Nashik, the security guard of the said factory,

refused to take the packet and also refused to give the whereabouts of

the Respondents. Thereafter, a copy of above Petition along with a copy

of the order was served on Mr.Nikhil Chauhan (Respondent No. 5) on

his mobile number via whatsapp that has been duly delivered to him

and in fact it has been read by him. Over and above this, the above

Petition as well as the copy of the order dated 26 th November, 2021 has

Ganesh Lokhande 3/18 15-CARBP-600-2021.doc

been served on the Respondents on their email ID as more particularly

mentioned in paragraph 3 & 4 of the Affidavit of Service. I am therefore

satisfied that the Respondents have been duly served. Despite service,

none have appeared on their behalf. I am therefore constrained to

proceed in their absence.

3. The brief facts of the matter are this. At the request of the 1 st

Respondent, the Petitioner, vide its Sanction Letter dated 19 th October,

2018, Sanctioned a Channel Finance / Inventory Funding Facility /

Trade Finance of Rs.2 Crores and subject to the terms and conditions

more particularly set out in the said sanction letter. The tenure of the

loan was to be period of 12 months. Pursuant to the sanction of the

aforesaid facility, Respondent No.1 executed a Channel Finance

Agreement dated 19th October, 2018 as well as a Power of Attorney

dated 20th October, 2018, authorising the Petitioner to inter-alia sell,

sanction and transfer to the Petitioner the unsold goods, goods in

Respondent No. 1 possession and Respondent No.1's receivables and

amounts payable by any person to Respondent No.1 and any security

which is or would be held by Respondent No.1. There were several other

documents also executed by the 1st Respondent such as a Letter of

Undertaking etc. To secure the aforesaid facility, Respondent Nos. 2 to 6

Ganesh Lokhande 4/18 15-CARBP-600-2021.doc

also executed a Letter of Guarantee dated 19th October, 2018.

4. It is the case of the Petitioner that Respondent No.1

thereafter, from time to time, placed online disbursement requests on

the Petitioner's website for the disbursement of the sanctioned amount

in favour of Respondent No. 1 for purchase products of ITC Limited

(and for whom Respondent No.1 was the agent). Pursuant to the request

of Respondent No.1, the Petitioner, from time to time, disbursed the

sanctioned amount. It is the case of the Petitioner that Respondent No.1

was obliged to repay the amounts disbursed within the due dates as per

the agreement between the parties. However, instead of making

payment, Respondent No. 1, by its email dated 3 rd April, 2020,

requested the Petitioner to waive the interest amount and defer the loan

by 3 months. Thereafter, a further extension was sought by its email

dated 1st June, 2020. In fact, Respondent No.1, by its emails dated 8 th

April, 2020 and 15th April, 2020, also provided a repayment plan in

accordance with which it would make payment. The Petitioner vide its

email dated 30th June, 2020 approved the request of Respondent No.1

for deferment of the principal amount as well as the interest.

5. It is the case of the Petitioner, that despite the deferment

granted, Respondent No.1 fail to regularize the default under the said

Ganesh Lokhande 5/18 15-CARBP-600-2021.doc

facility. In view of the fact that a default was committed, the Petitioner

was to constrained to appropriate the security deposit of Rs.60 Lakhs

towards the outstanding dues of the 1 st Respondent in terms of the said

Agreement. After appropriating the said security deposit amount, an

amount of Rs.1,65,90,173.23 was due and payable by the Respondent as

on 31st December, 2020. The Petitioners have been repeatedly calling

upon the Respondents to pay the aforesaid amount without any success.

It is in these circumstances that the present Petition is filed under

Section 9 of the Arbitration Act seeking the reliefs more particularly set

out earlier.

6. In this factual background, Mr. Madon, the learned counsel

appearing on behalf of the Petitioner, submitted that not only did the

Respondents ask for a deferment to pay the outstanding amounts, but

they also gave a schedule as to how the amounts, would be paid. He

submitted that no dispute has ever been raised by the 1st Respondent

about the dues payable by them to the Petitioner. Mr. Madon submitted

that the first time a dispute was raised by the 1st Respondent was vide its

letter dated 3rd February, 2021. This was only after the Respondents

were served with a legal notice calling upon them to pay the dues of the

Petitioner or face legal action. He submitted that even if one goes

through the aforesaid letter, it is clear that the so called dispute raised

Ganesh Lokhande 6/18 15-CARBP-600-2021.doc

by the Respondents is not only as vague as it can be, but the same is

wholly untenable and frivolous. He therefore submitted that the

Petitioner has made out a case for seeking an order of deposit against

the Respondents in terms of prayer Clause (a). Mr. Madon submitted

that in addition to that aforesaid prayer, the Petitioner is also entitled to

reliefs in terms of prayer Clause (b) relating to disclosure and in terms

of prayer Clause (e) relating to injunction.

7. I have heard Mr. Madon at some length, I have also perused

the papers and proceedings in the above Petition. As noted earlier,

despite service, none have appeared on behalf of Respondents and no

Affidavit-in-Reply is filed controverting what is stated in the Petition.

On perusing the record, I find that it is undisputed that a facility of Rs. 2

Crores was disbursed by the Petitioner to the 1 st Respondent. The

documents also reveal that Respondent Nos. 2 to 6 stood as guarantors

for the aforesaid transaction. Correspondence annexed to the Petition

would, atleast prima-facie, indicate that the Respondents sought time

to repay the dues of the Petitioner. Even if I were to assume that the

same may not amount to an admission of liability, at the very least,

there is no real dispute with reference to the amounts payable by the

Respondents to the Petitioner. The 1 st Respondent is liable as the

principle borrower and Respondent Nos. 2 to 6 as guarantors. Once

Ganesh Lokhande 7/18 15-CARBP-600-2021.doc

there is no real dispute about the amounts due and payable by

Respondents to the Petitioner, the prayer for the deposit is warranted.

This has been so held by this Court in a number of decisions. In the case

of Jagdish Ahuja and Anr. Vs. Cupino Limited [2020 SCC OnLine Bom

849] a Division Bench of this Court held as under:-

"6. As far as Section 9 of the Act is concerned, it cannot be said that this court, while considering a relief thereunder, is strictly bound by the provisions of Order 38 Rule 5. As held by our Courts, the scope of Section 9 of the Act is very broad; the court has a discretion to grant thereunder a wide range of interim measures of protection "as may appear to the court to be just and convenient", though such discretion has to be exercised judiciously and not arbitrarily. The court is, no doubt, guided by the principles which civil courts ordinarily employ for considering interim relief, particularly, Order 39 Rules 1 and 2 and Order 38 Rule 5; the court, however, is not unduly bound by their texts. As this court held in Nimbus Communications Limited v. Board of Control for Cricket in India [decided on 27 February 2012] (Per D.Y. Chandrachud J, as the learned Judge then was), the court, whilst exercising power under Section 9, "must have due regard to the underlying purpose of the conferment of the power under the court which is to promote the efficacy of arbitration as a form of dispute resolution." The learned Judge further observed as follows:

"Just as on the one hand the exercise of the power under Section 9 cannot be carried out in an uncharted territory ignoring the basic principles of procedural law contained in the Code of Civil Procedure 1908, the rigors of every procedural provision in the Code of Civil Procedure 1908 cannot be put into place to defeat the grant of relief which would subserve the paramount interests of justice. A balance has to be drawn between the two considerations in the facts of each case."

7. In an appropriate case, where the court is of the view that there is practically no defence to the payability of the amount and where it is in the interest of justice to secure the amount, which forms part of the subject matter of the proposed arbitration reference, even if no case strictly within the letter of Order 38 Rule 1 or 2 is made out, though there are serious allegations concerning such case, it is certainly within the power of the court to order a suitable interim measure of protection. As we have noted above, the amount is either to be deposited into the treasury in accordance with the agreement between the parties or if, for any reason, it is not payable to the revenue towards the Respondent's tax liability, as is the case

Ganesh Lokhande 8/18 15-CARBP-600-2021.doc

of the Appellants here, it is to be paid to the Respondent itself as part of the price of debentures. In fact, when these two options were posed by the learned Single Judge to the Appellants' counsel, in fairness both conceded that there was no third option."

(emphasis supplied)

8. The aforesaid decision was thereafter once again followed by

another Division Bench Judgment of this Court in the case of Valentine

Maritime Ltd. Vs. Kruez Subsea Pte Limited and Anr. [2021 SCC OnLine

Bom 75]. The relevant portion of this decision, reads thus:

"95. Insofar as judgment of this Court delivered by the Division Bench of this court in case of Nimbus Communications Limited v. Board of Control for Cricket in India (supra) relied upon by the learned senior counsel for the VML is concerned, this Court adverted to the judgment of Hon'ble Supreme Court in case of Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd., (2007) 7 SCC 125 and held that in view of the decision of the Supreme Court in case of Adhunik Steels Ltd., (supra) the view of the Division Bench in case of National Shipping Company of Saudi Arabia (supra) that the exercise of power under section 9(ii)(b) is not controlled by the provisions of the Code of Civil Procedure, 1908 cannot stand. This court in the said judgment of Nimbus Communications Limited (supra) held that the exercise of the power under section 9 of the Arbitration Act cannot be totally independent of the basic principles governing grant of interim injunction by the civil Court, at the same time, the Court when it decides the petition under section 9, must have due regard to the underlying purpose of the conferment of the power upon the Court which is to promote the efficacy of arbitration as a form of dispute resolution.

96. This court held that just as on the one hand the exercise of the power under Section 9 cannot be carried out in an uncharted territory ignoring the basic principles of procedural law contained in the Code of Civil Procedure,1908, the rigors of every procedural provision in the Code of Civil Procedure, 1908 cannot be put into place to defeat the grant of relief which would sub-serve the paramount interests of justice. A balance has to be drawn between

Ganesh Lokhande 9/18 15-CARBP-600-2021.doc

the two considerations in the facts of each case. The principles laid down in the Code of Civil Procedure, 1908 for the grant of interlocutory remedies must furnish a guide to the Court when it determines an application under Section 9 of the Arbitration and Conciliation Act, 1996. The underlying basis of Order 38 Rule 5 therefore has to be borne in mind while deciding an application under Section 9(ii)(b) of the Arbitration Act.

97. In the said Judgment, the Division bench of this court in the appeal arising out of the order passed by the learned Single Judge in the arbitration petition filed under section 9 of the Arbitration Act directing the appellant to furnish security in respect of the claim of the original petitioner in the amount of Rs. 305 Crores was modified by directing the appellant to furnish solvent security in the form of bank guarantee of the nationalized bank of the said amount to the satisfaction of the Prothonotary and Senior Master of this court. In our view, the said judgment of the Division Bench in case of Nimbus Communications Limited(supra) would assist the case of the KSS and not VML.

98. Insofar as judgment of Delhi High Court in case of Uppal Eng. Co. (P) Ltd. (supra) relied upon by the learned senior counsel for the VML is concerned, Delhi High Court held that the Court must act with utmost circumspection before issuing an order of attachment and unless it is clearly established that the defendant, with intent to obstruct or delay the execution of the decree that may be passed against him, is about to dispose of whole or any part of his property. In this case, we are of the prima facie view that the VML has no defence to the invoices issued by the KSS for the month of May 2020. The VML also has admitted in the affidavit in reply that there is no dispute about the said invoice however made an attempt to adjust the disputed claim against the undisputed invoice for the month of May 2020 issued by the KSS. In our prima facie view, the KSS has good chances of succeeding in the arbitral proceedings in respect of the said invoices for the month of May 2020 which are not disputed by the VML. The judgment of Delhi High Court in case of Uppal Eng. Co. (P) Ltd. (supra) would even otherwise is clearly distinguishable and would not advance the case of the VML.

99. Learned senior counsel for the VML could not distinguish the judgment of the Division Bench of this Court in case of Jagdish Ahuja (supra). The Division Bench of this Court in the said judgment has clearly held that in an appropriate case, where the

Ganesh Lokhande 10/18 15-CARBP-600-2021.doc

Court is of the view that there is practically no defence to the payability of the amount and where it is in the interest of justice to secure the amount, which forms part of the subject matter of the proposed arbitration reference, even if no case strictly within the letter of Order 38 Rule 1 or 2 is made out, though there are serious allegations concerning such case, it is certainly within the power of the Court to order a suitable interim measure of protection. The principles laid down by this Court in the said judgment applies to the fact of this case.

100. Learned senior counsel for the VML made an attempt to distinguish the judgment delivered by the learned Single Judge of this court in case of Baker Hughes Singapore Pte. (supra) on the ground that the facts before the learned Single Judge in the said matter were totally different. This court in the said judgment after adverting to the judgment of the Supreme Court in case of Adhunik Steels Ltd. (supra), judgment of the Division Bench of this court in case of Nimbus Communications Limited (supra) and considered similar clause in the contract requiring the respondent to pay undisputed invoices within 60 days from the date of submission of such invoices to the contractor. Even in that matter, none of the invoices were disputed by the respondent in the correspondence exchanged between the parties. This Court in the said judgment held that even if the counter claim made by the respondent was higher than the claim made by the petitioner, the fact remains that the said counter claim was for damages whereas the claim made by the Petitioner therein was under undisputed invoices which claim was admitted and liability was acknowledged. This Court accordingly held that the arbitral tribunal could not have compared the claim made by the petitioner under undisputed invoices with the counter claim for damages.

101. This Court held that since the arbitral tribunal is also empowered to make an interim award and to grant money claim on the basis of the admitted claim and/or acknowledge liability, the arbitral tribunal has also power to grant interim measures so as to secure the claim which is the subject matter of the dispute before the arbitral tribunal if such case is made out by the applicant. The provisions under sections 9 and 17 of the Arbitration and Conciliation Act are meant for the purpose of protecting the subject matter of the dispute till the arbitration proceedings culminates into an award. This Court also held that the Court also considers whether a denial of such order would result in a grave injustice to the party seeking a protective order. The obstructive conduct of the party against whom such a direction is sought is

Ganesh Lokhande 11/18 15-CARBP-600-2021.doc

also regarded as a material consideration. In our view, the principles laid down by this court in the said judgment in case of Baker Hughes Singapore Pte. (supra) would apply to the facts of this case. We do not propose to take a different view than the view taken by the learned Single Judge of this court in the said judgment in case of Baker Hughes Singapore Pte. (supra)."

(emphasis supplied)

9. I must mention that the aforesaid decision of the Division

Bench in Valentine Maritime Ltd. Vs. Kreuz Subsea Pte Limited and

another [2021 SCC OnLine Bom 75] was challenged before the Hon'ble

Supreme Court without any success. The SLP No(s).5083-5084/2021

filed by Valentine Maritime Ltd. was dismissed on 26 th March, 2021. The

said order reads thus:-

" Heard learned counsel for the parties.

We find no grounds to interfere with the impugned order of the Division Bench affirming the order of the Single Bench by way of an interim measure of protection, under Section 9 of the Arbitration and Conciliation Act, 1996.

Section 9(1) (ii) (b) of the Arbitration and Conciliation Act, 1996 enables the Court to pass orders securing the amount in dispute in arbitration.

The Special Leave Petition is, accordingly, dismissed. Needless to say that the money shall lie in deposit with the Court, until the disputes actually get resolved.

Pending applications, if any, stand disposed of."

10. Thereafter, another decision of a Division Bench of this

Court, in Essar House Private Limited V/s. Arcellor Mittal Nippon Steel

India Limited [2021 SCC OnLine Bom 149], considered the Judgments

Ganesh Lokhande 12/18 15-CARBP-600-2021.doc

passed in Jagdish Ahuja (supra) and Valentine Maritime (supra) and

held as under:-

"34. This Court in case of Valentine Maritime Ltd. (supra) after adverting to the judgment of the Hon'ble Supreme Court in case of Raman Tech. & Process Engg. Co. v. Solanki Traders (2008) 2 SCC 302, a judgment of the Division Bench in case in case of National Shipping Company of Saudi Arabia v. Sentrans Industries Limited, Mumbai, (2004) 2 Mah LJ 696, a judgment of the Division Bench of this Court Nimbus Communications Ltd. v. Board of Control for Cricket in India (2013) 1 Mah LJ 39, a judgment of the Hon'ble Supreme Court in the case of Adhunik Steels Ltd. v. Orissa Manganese & Minerals (P) Ltd. (2007) 7 SCC 125, a judgment delivered by the learned single Judge of this Court in case of Baker Huge Singapore Pte v. Shiv Vani Oil and Gas Exploration, 2014 SCC OnLine Bom 1663 has held that under section 9(i)(ii)(b) of the Arbitration Act, the Court is empowered to pass interim measure to secure the amount in dispute in arbitration which may be in the form of bank guarantee or deposit of money in Court. Such powers of Court can be exercised not only in the hands of the parties to arbitration but also in the hands of third party who has to admittedly pay any amount to the party to the arbitration agreement by directing such third party to deposit the amount on behalf of a party to arbitration agreement in Court.

35. This Court has distinguished the judgment of the Hon'ble Supreme Court Raman Tech. & Process Engg. Co. (supra) on the ground that the Supreme Court had dealt the powers of Court under Order 38 Rule 5 of the Code of Civil Procedure, 1908 in a suit and not in a petition filed under section 9 of the Arbitration Act.

36. This Court has already held in the aforesaid judgments that exercise of the power under section 9 of the Arbitration Act cannot be totally independent of the basic principles governing grant of interim injunction by the Civil Court, at the same time the Court that had decided the petition under section 9 must have due regard to the underlying purpose of the conferment of the power upon the Court which is to promote the efficacy of arbitration as a form of dispute resolution. The rigors of every procedural provision in the Code of Civil Procedure, 1908 cannot be put into place to defeat the grant of

Ganesh Lokhande 13/18 15-CARBP-600-2021.doc

relief which would sub-serve the paramount interests of justice. A balance has to be drawn between the two considerations in the facts of each case.

37. In our view since the Arbitral Tribunal is also empowered to make interim injunction and grant money claim on the basis of the admitted claim or in case there being no valid defence at all of the claim made by the claimant, the Court has to grant interim measure so as to secure the claim which would be subject matter of the dispute before the Arbitral Tribunal. The provisions under sections 9 and 17of the Arbitration Act are meant for the purpose of protecting the subject matter of the dispute till the arbitration proceedings culminates into an award. The obstructive conduct of the party against whom such a direction is sought is also regarded as a material consideration."

(emphasis supplied)

11. Lastly, a learned single Judge of this Court in the case of

Kotak Mahindra Bank Ltd. vs. Williamson Magor & Co. Ltd. & Anr.

[2021 SCC OnLine Bom 305] considered the entire law on the subject

and thereafter opined that where the defense is prima facie untenable

and the Petitioner has a good chance of succeeding in the arbitration, an

order of deposit to secure the claim can indeed and should be made

under Section 9. The relevant portion of this decision, reads as under:

"31. Lest it be argued either here or in any other forum that no case has been made out under Order 38 Rule 5 of the Code of Civil Procedure, 1908 ("CPC"), which seems to me more or less the habitual and automatic chanting of every respondent in a Section 9 Petition, this needs to be stated : that is not the law.

The recent decision of the Division Bench of this Court (RD Dhanuka and VG Bhisht JJ) in Essar House Private Limited v. Arcellor Mittal Nippon Steel India Ltd. [2021 SCC OnLine Bom 149] makes it clear that there is no requirement that for such relief an iron-clad case under Order 38 Rule 5 of the Code of Civil Procedure, 1908 ("CPC") must be made out

Ganesh Lokhande 14/18 15-CARBP-600-2021.doc

(or, if not argued, that the Court must hunt for it). The Division Bench reaffirmed the principle that has long been settled, and restated repeatedly, but which seem to be reagitated in the wrong way again and again. The Division Bench said in the clearest terms that the principles of the CPC, including especially Order 38 Rule 5, are guides to a Section 9 Court and the order it makes under that Section. They are not fetters upon the Section 9 Court's discretion. On my reading of the Division Bench order, the position in law is that in such a case an order of deposit not only can be made, but ought to be made. In Valentine Maritime Ltd. v. Kreuz Subsea Pte Ltd. [2021 SCC OnLine Bom 75], the Division Bench of this Court reiterated this position regarding Order 38 Rule 5 and also held that in appropriate case, where the defence is prima facie untenable, the Petitioner has a chance of success, and the defence is moonshine, an order of deposit to secure the claim can and indeed should be made under Section 9. This was also the view of another Division Bench of this Court in Jagdish Ahuja v. Cupino Ltd. [2020 SCC OnLine Bom 849]. All three decisions referenced and explained the previous Division Bench decision in Nimbus Communications Ltd. v. Board of Control for Cricket in India [2013 (1) Mah L.J. 39] and the Supreme Court decision in Adhunik Steels Ltd. v. Orissa Manganese & Minerals (P) Ltd.[(2007) 7 SCC 125]. I followed the Division Bench decisions (referencing this law) in Parle Agro Pvt. Ltd. v. Shree Aqua Purifier Pvt. Ltd. and IIFL Finance Ltd. v. Shrenik Dhirajmal Sirqya.

32. Williamson Magor has no defence at all. Khaitan's defence is untenable and, in view of the settled law on the subject, is unstatable and probably the most complete moonshine. There is a contract with a clear and unequivocal obligation cast on the Respondents. The Petitioner has an excellent chance of success. Accordingly, the Respondents are required to deposit with the Prothonotary and Senior Master an amount of Rs. 14.88 crores by 31st March 2021. I have rounded off the amount of deposit."

(emphasis supplied)

12. What can be culled out from the ratio of all these decisions

is that when there is no real dispute with reference to the amounts

payable or the amounts payable are admitted, the Court always has the

Ganesh Lokhande 15/18 15-CARBP-600-2021.doc

power, in the interest of justice, to secure the amount by directing the

Respondents to deposit the said monies in Court. In these

circumstances, in the facts of the present case, I am satisfied that an

order of deposit is clearly warranted. Over and above this, it would also

be in the interest of justice, if the Respondents are directed to disclose

their assets as sought for in prayer clauses (b) as well as an injunction in

terms of clause (e), except the bracketed portion.

13. In these circumstances, the following order is passed:

(i) The Respondents shall jointly and/or severally deposit in this

Court an amount of Rs. 1,86,44,701/- within a period of eight

weeks from today.

(ii) There shall be interim relief in terms of prayer clause (e) except

the bracketed portion, which reads thus:

(e) that pending the hearing and disposal of Arbitration proceed-

ings, making of the Arbitral Award and until final execution of the Arbitral Award, the Respondents, by themselves, their employees, be restrained by an order and injunction form in any manner selling, transferring, disposing of, or alienating or hypothecating or charging or parting with possession of or transferring or creating any right, title or interest or license in favour of anyone else in respect of the (i) Hypothecated Assets (ii) the movable or immovable properties described in the Schedules of Property at Exhibit "DD-1" to "DD-5" hereto and [(iii) the other assets / properties, movable and immovable, that may be disclosed by the Re-

               spondents on oath and / or on affidavit.]



Ganesh Lokhande                              16/18
                                                           15-CARBP-600-2021.doc

(iii) In addition to the aforesaid reliefs, the Respondents shall make

the disclosure of their assets in the following terms:

(a) Immovable properties: The disclosure will be of all immovable

properties wherever situated, whether in India or overseas with complete

details sufficient to identify the properties. If any of these are in any way

encumbered, full particulars of such encumbrance/s and the amounts yet

due as secured by those properties will also be disclosed.

(b) Movable Assets:

(i) Non-financial: They will also disclose all non-

financial movable assets of the acquisition or replacement value of more than Rs.50,000/- including all particulars as described above.

(ii) Financial assets: They will also disclose all investments and demat accounts with full particulars, including all holdings and encumbrances.

(iii) Bank accounts: All bank accounts with account numbers, bank names, branches, account types and holding patterns are to be disclosed. Bank statements for the last one year are required for all accounts.

(iv) Bank Lockers: Contents of all safety deposit vaults and bank lockers will be disclosed.

(c) Tax and Financial Returns: Copies of all tax and financial returns for the last three years are to be disclosed.

(d) Disclosures to be on Affidavit :

(i) All disclosures must be on properly sworn affidavits.

(ii) Each Respondent will make a separate affidavit.

Ganesh Lokhande                                   17/18
                                                           15-CARBP-600-2021.doc

(iii) Every affidavit is to be affirmed before a court officer.

(iv) Affidavits to be serially paginated.

(iv) In the event the Respondents do not comply with the order of

deposit, the Petitioner shall be entitled to execute this order

under Section 36 of the Code of Civil Procedure, 1908 to ensure

that the amount is brought into the Court.

14. The above Section 9 Petition is disposed of in the aforesaid

terms. However, there shall be no order as to costs.

15. All parties to act on an authenticated copy of this order

digitally signed by the Personal Assistant /Private Secretary/Associate

of this Court.

                                                 (B. P. COLABAWALLA, J.)




Ganesh Lokhande                                   18/18