Kotak Mahindra Bank vs Shrishti Petroleum And 3 Ors
2023 Latest Caselaw 4403 Bom

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            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                  ORDINARY ORIGINAL CIVIL JURISDICTION

          INTERIM APPLICATION (L) NO. 34287 OF 2022
                            IN
      COMMERCIAL EXECUTION APPLICATION NO. 2165 OF 2022


Kotak Mahindra Bank                           .. Plaintiff/Claimant

Versus

Shrishti Petroleum & Ors.                               .. Respondents

Mr. Vishal Kanade a/w Bijal Gogri, J. Joshi & Shiny Roy i/ OM GUJAR LAW CHAMBERS for the Applicant/Claimant.

Mr. Ismail Nasikwala for Respondent Nos. 1 to 4.

                                   CORAM     : B. P. COLABAWALLA, J
                                   DATE: APRIL 27, 2023

P. C.

1. The above Interim Application is filed seeking the following

reliefs:

"a) That the Court Receiver, High Court Bombay be appointed as Receiver under order XL Rule (1) of Civil Procedure Code 1908, in respect of the mortgaged property viz. Flat No. 3002, 30th floor, B-Wing, Metropolis building, JP Road, four Bunglows, Andheri - West, Mumbai - 400 053, alongwith two car parking space MPB3LOB103 and MPB3UB104 with powers to take physical possession of the

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mortgage property from the Respondent/s/third party Respondent and or whomsoever found in possession, by using reasonable force and with police assistance from the concerned police station and break opening the mortgaged flat if found locked and powers to sell the mortgage property through private treaty or public auction.

b) in the alternative, this Hon'ble Court be pleased to direct the Court Receiver High Court Bombay, after taking the physical possession of the mortgage property viz. Flat No. 3002, 30th Floor, B-Wing, Metropolis building, JP Road, four Bunglows, Andheri - West, Mumbai - 400 053, alongwith two car parking space MPB3LOB103 and MPB3UB104 to handover the physical possession of the mortgaged property taken to the authorized officer of the applicant being a secured creditor under the SARFAESI Act, after which the Court Receiver to stand discharged and the Applicant original Decree Holder, be allowed to sell the same by private treaty or Public Auction under the SARFAESI Act and Rules, 2022 and adjust the outstanding dues from the sale proceeds to the outstanding dues of the Respondents.

c) That pending the Court Receiver taking physical possession of the mortgaged property, this Hon'ble Court be pleased to restrain the Respondents/third party Respondents from creating third party rights/ creating encumbrance on the mortgage properties viz Flat No. 3002, 30th Floor, B- Wing, Metropolis building, J. P. Road, four bunglows, Andheri (West) Mumbai 400 053 alongwith two car parking space MPB3LOB103 and MPB3UB104 & Shrishti Petrol Pump, Gut NO. 44, NH-17, Chinchgar, Pen Mahad - Panji Road, Raigad, Maharashtra - 402107 in any manner whatsoever to protect the security interest of the Applicant.

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d) That, the Respondents be ordered and directed to deposit with this Hon'ble Court and/or to furnish solvent security by way of bank guarantee to the tune of Rs. 7,55,28,226/- (Rupees Seven Crore Fifty-Five Lakhs Twenty Eight Thousand Two Hundred Twenty Six Only) to secure the claim of the Claimant under the present Execution Application.

e) That the Respondents be directed to disclose on oath, their various other unencumbered moveable and immovable properties and bank accounts/debtors to whom they are creditors and beneficiary, to enable the Applicant- Claimants to recover their dues.

f) That this Hon'ble Court be pleased to direct to the respondents to disclose on oath about the details of the income generated from the Shrishti Petrol Pump from the period of mortgage of the said secured asset 30th March, 2016 till date or in the alternative for the period as this Hon'ble Court, deems fit.

g) That pending the hearing and final disposal of the Execution proceedings, and the present Interim Application, the Hon'ble Court be pleased to direct the Respondents to divert the lease rentals of the petrol pump received till date of lease and lease rentals to be received during the pendency of the lease period/renewed thereafter if so, from Hindustan Petroleum Limited pertaining to the respondents from Shristhi Petrol Pump situated on the secured mortgage assets, to the Applicant to secure the debts/outstanding under the crystallised Award.

h) That pending the hearing and final disposal of the Securitization Application and the present Interim

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Application, the Honourable Court be pleased to appoint commissioner for taking accounts in respect of the Shristhi Petrol Pumb situated on the secured asset ALL THAT PIECE AND PARCEL OF land at Shristhi Petroleum, admeasuring about 0-4-73 HR bearing Gut No. 44, Hissa-0, laying, being and situated at Village Chinchghar, Taluka Pen, District Raigad within the limits of Group Grampanchayat Tarankhop, NH-17, Chinchgar, Mahad - Panaji Road, Pen, Raigad 402 107 along with structure standing thereon.

i)That pending the hearing and final disposal of the Execution proceedings and the present Interim Application, the Respondents, be directed by way of temporary injunction not to create third party rights in respect of secured immovable properties Flat No. 3002, 30th Floor, B- Wing, Metropolis building, JP Road, Four Bunglows, Andheri

- West, Mumbai - 400 053, alongwith two car parking space MPB3LOB103 and MPB3UB104 and Shristhti Petroleum ALL THAT PIECE AND PARCEL OF land at Shrishti Petroleum, admeasuring about 0-4-73 HR bearing Gut No. 44, Hissa-0, lying, being and situated at Village Chinchghar, Taluka Pen, District Raigad within the limits of Group Grampanchayat Tarankhop, NH-17, Chinchagar, Mahad - Panji Road, Pen, Raigad 402 107 along with structure standing thereon;

j) That this Hon'ble Court be pleased to direct the Execution department, to Issue a fresh Warrant of Sale for the mortgage Property as per order;

k) That this Hon'ble Court be pleased to extend the returnable date in the Warrant of Sale;

l) The Applicant be allowed to carry out amendment in cause

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title on the office copy of the Sale Warrant;

m) That the Respondents be arrested and detained in civil prison as per the provisions of the section 51 of the code of Civil procedure as the outstanding amounts of the applicant is not paid.;

n) The Respondents be arrested and detained in the civil prison after issuing show cause notice as per the provision of order XXI rule 37 as the decree for payment of money of plaintiff is not satisfied by the Respondents as the outstanding amounts of the applicant is not paid.;

o) The judgment Debtors Respondents be arrested by issuing a warrant for arrest as per the provision of Order XXI Rule 37 sub - rule 2 of Code of Civil Procedure;

p) The judgment debtor be arrested and shall be brought before the Hon'ble Court as per the order 21 rule 38 of the code of civil procedure;

q) The passport of the Judgment Debtors be directed to be produced and impounded and they may be restrained from moving out of the country till the dues of the Applicant is not paid, as there are chances, they will flee the country."

2. At this stage, Mr. Kanade, the learned Advocate appearing

for the Applicant/Claimant presses for reliefs in terms of prayer clauses

(a) and (c) reproduced above. Mr. Kanade submitted that in the facts of

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the present case, there is an Arbitral Award dated 30 th March 2018

passed against the Respondents. Under the said Award, the

Respondents are directed to pay to the Claimant a sum of

Rs.3,21,98,131/- together with interest calculated on the said amount @

36% p.a. from the date of the Award till payment by the Respondents.

Mr. Kanade submitted that the reliefs sought in the above Interim

Application are in aid of executing the said Award. He submitted that

the Award was passed by the learned Arbitrator after hearing the

Respondents and in fact a copy of the said Award is also furnished to the

Respondents as recorded in the letter dated 30 th March 2018 addressed

by the Arbitral Tribunal to the parties (page 36 of the paper book). Mr.

Kanade submitted that there is no challenge to this Award under Section

34 of the Arbitration and Conciliation Act, 1996 and therefore, the

Award has become final and executable. As on date, the amount owed to

the Claimant by the Respondent (as per the Award) is in excess of

Rs.8.00 crores. Mr. Kanade therefore, submitted that it is imperative

that in aid of executing the Award, the reliefs prayed for at this stage be

granted.

3. On the other hand, Mr. Nasikwala, the learned Advocate

appearing for the Respondents submitted that the interest awarded by

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the Arbitral Tribunal @ 36% p.a. is beyond the contractual rate of

interest and is excessive and usurious. In that regard, he brought to my

attention page 78 of the paper book which is part of the Facility

Agreement dated 10th February 2016. Relying upon the said Agreement,

Mr. Nasikwala submitted that the parties agreed to a fixed rate of

interest of 16.25% p.a. This being the case, Mr. Nasikwala submitted

that on the face of it, the interest awarded by the Arbitral Tribunal is

excessive and usurious and therefore the Award cannot be executed.

4. The next argument canvassed by Mr. Nasikwala is that for

the recovery of the monies due under the very same Facility Agreement,

and which forms the subject matter of the Award, the Claimant has

initiated proceedings under the provisions of the SARFAESI Act, 2002.

Mr. Nasikwala submitted that the Claimant has also obtained an order

under Section 14 of the said Act, and which order is under challenge

before DRT-II, Mumbai, by filing Securitization Application (L) No. 181

of 2023. Mr. Nasikwala submitted that once having taken recourse to

the provisions of the SARFAESI Act, 2002, the Claimant now cannot

execute the Award by invoking the jurisdiction of this Court. On this

ground also, Mr. Nasikwala submitted that no reliefs ought to be

granted to the Claimant.

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5. I have heard the parties at length. I have also perused the

papers and proceedings in the above Interim Application. It is not in

dispute that there is an Award passed in the above matter by the

Arbitral Tribunal directing the Respondents to pay to the Claimant a

sum of Rs.3,21,98,131/- together with interest @ 36% p.a. As on date,

this amount is in excess of Rs. 8 crores. This Award has not been

satisfied. Despite this, I asked Mr. Nasikwala to find out if his client is in

a position to make payment if the interest is calculated @ 16.25%, and

which figure would then come to approximately Rs. 5.13 crores. This is

apart from the fact that once the Award is passed and is not challenged,

it becomes final, and the Executing Court cannot go behind the Award.

Mr. Nasikwala, on instructions, fairly stated to the Court that the

Respondents are not in a position to even make payment of this amount.

I, therefore, find that merely because the Arbitral Tribunal has awarded

interest @ 36% p.a. cannot be a ground for opposing the execution of

the Award when the same has not been challenged and has become

final. In these circumstances, the first objection raised by Mr. Nasikwala

is to be without merit and the same is rejected.

6. The next argument canvassed by Mr. Nasikwala was that

the Claimant has already initiated proceedings under the SARFAESI

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Act, 2002 and therefore they cannot simultaneously execute the Award.

I find this argument also to be without merit. Proceedings under the

SARFAESI Act, 2002 are for realizing the security given by the

Respondents to the Claimant without the intervention of the Court. As

far as execution proceedings are concerned, they are for executing the

Award passed in favour of the Claimant. In other words, the scope of the

two proceedings is completely different. This being the case, there is no

question of the Claimant electing to either to proceed under the

provisions of SARFAESI Act, 2002 or put the Arbitral Award [passed in

their favour] in execution. In the present case, what the Claimant seeks

is to execute the Award passed in its favour. It is in aid of this execution

that the reliefs prayed for in terms of prayer clauses (a) and (c) are

pressed today. I am of the opinion that merely because the Claimant has

initiated proceedings under the provisions of the SARFAESI Act, 2002

would not mean that they are precluded from approaching this Court

under Order 21 of the CPC, 1908 to execute the Award passed in its

favour. This being the case, I find that even this argument canvassed by

Mr. Nasikwala is without any merit and is hereby rejected.

7. It is not in dispute that the property described in prayer

clause (a) of the application [reproduced above] is mortgaged with the

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Claimant. The Claimant seeks the appointment of the Court Receiver in

relation to the said property and to take physical possession of the same,

and thereafter, to sell it through private treaty or by public auction.

Prayer clause (c) seeks an injunction of the properties mentioned

therein pending, the Receiver taking physical possession of the

mortgaged property. As far as the Petrol Pump property is concerned,

and which is more particularly described in prayer clause (c) of the

Interim Application, there is a dispute whether the same is mortgaged to

the Claimant. According to the Claimant, the said Petrol Pump property

is mortgaged, whereas it is the case of the Respondents that there is no

mortgage created with reference to the said Petrol Pump property. Be

that as it may, it makes little difference in execution, whether the said

Petrol Pump has been mortgaged with the Claimant or otherwise. In

execution of the Award passed in its favour, the Claimant is entitled to

go after not only against the properties which are mortgaged to it but

also any other property belonging to the Respondents to realize the dues

under the Award. This being the case, it is really irrelevant at this stage

whether the Petrol Pump property is mortgaged with the Claimant, or

otherwise.

8. In view of the foregoing discussion, the following order is

passed at this stage:

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(a) The Court Receiver, High Court, Bombay is appointed forthwith with all powers under Order 40 Rule 1 of the Code of Civil Procedure, 1908 including the power to take physical possession of Flat No. 3002, 30th floor, B-Wing, Metropolis building, J.P. Road, four Bunglows, Andheri - West, Mumbai - 400 053, alongwith two car parking spaces MPB3LOB103 and MPB3UB104, from Respondents and/or any other person found in occupation thereof. The Court Receiver shall take physical possession of the above suit property on 25th May 2023 at 12.00 p.m. On taking physical possession, he shall put up his board signifying to the public that the said flat/property is in custody of the Court Receiver.

(b) If the Respondents, for any reason whatsoever, refuse to hand over physical possession of the said Flat No.3002, 30th floor, B-Wing, Metropolis building, J.P. Road, four Bunglows, Andheri - West, Mumbai - 400 053, alongwith two car parking spaces MPB3LOB103 and MPB3UB104, to the Court Receiver on 25th May, 2023 at 12.00 p.m., the Court Receiver shall have the power to break upon the locks if necessary, to take physical possession of the above mentioned property and vacate whoever is found therein. The Senior Police Inspector of the

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local Police Station shall give all necessary assistance (including providing adequate number of police personnel) to the Court Receiver to ensure compliance of this order, failing which the said Senior Police Inspector shall be held liable for contempt.

(c) Once the Court Receiver takes physical possession of the said Flat No. 3002, 30th floor, B-Wing, Metropolis building, J.P. Road, four Bunglows, Andheri - West, Mumbai - 400 053, alongwith two car parking spaces MPB3LOB103 and MPB3UB104, he shall hand over whatever articles are found therein to the Respondents.

(d) For the time being, the Court Receiver shall not proceed to sell the said Flat No. 3002, 30th floor, B- Wing, Metropolis building, J.P. Road, four Bunglows, Andheri - West, Mumbai - 400 053, along with two car parking spaces MPB3LOB103 and MPB3UB104, until further orders of this Court.

(e) Apart from the appointment of the Court Receiver, there shall also be ad-interim relief in terms of prayer clause (c) reproduced above. It is clarified that the injunction against the properties mentioned in prayer clause (c) shall continue to operate even after

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the Court Receiver takes physical possession of Flat No. 3002, 30th floor, B-wing, Metropolis Building, J.P. Road, Four Bungalows, Andheri (West), Mumbai 400053, along with two car parking spaces MPB3LOB103 and MPB3UB104.

9. Place the above matter for further reliefs and directions on

12th June 2023.

10. This order will be digitally signed by the Private Secretary/

Personal Assistant of this Court. All concerned will act on production by

fax or email of a digitally signed copy of this order.

[ B. P. COLABAWALLA, J ].

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