Calcutta High Court
L & T Finance Ltd vs Vigles Security Private Limited& Ors on 21 May, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
ORDER OCD-9
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
AP-COM/332/2025
L & T FINANCE LTD.
VERSUS
VIGLES SECURITY PRIVATE LIMITED& ORS.
BEFORE :
The Hon'ble JUSTICE SHAMPA SARKAR
Date: 21st May, 2025.
Appearance:
Mr. Ritoban Sarkar, Adv.
Ms. Shrayashee Das, Adv.
Mr. Rohan Kumar Thakur, Adv.
Mr. TridibeshDasgupta, Adv.
for the petitioner.
Mr. Tanish Ganeriwala, Adv.
Ms. Shreya Goenka, Adv.
Ms. Jiya Bose, Adv.
Mr. Sagnik Mukherjee, Adv.
. . . for the respondents.
The Court :This is an application under Section 9 of the Arbitration
and Conciliation Act, 1996 seeking interim protection, to ensure that the
sum payable by the respondents to the petitioner is not siphoned off. A non-
banking institution wants to ensure that the money is notremoved from the
bank accounts.
The parties entered into an agreement on February 24, 2024. The
same was a SME Business Loan Agreement. The agreement contains an
arbitration clause. The respondents were granted credit facility of
Rs.20,24,387/- which was repayable in 36 monthly instalments. The same
carried an interest rate of 19% per annum. The petitioner submits that the
repayment schedule was not adhered to and alleges that only a few
instalments were paid. By a notice dated October 1, 2024, the petitioner
terminated the agreement and recalled the credit facility. A demand of
Rs.20,47,178.30was made. The respondents neglected to pay the money.
According to the petitioner, a claim of Rs.21,76,568.55 was due and
payable upto December, 2024.
Mr. Ganeriwala, learned Advocate for the respondents, submits that
the loan was an unsecured one. The interest component of 19% per annum
is not permissible and was unilaterally imposed. Such action was contrary to
the understanding between the parties. Had the financial institution
indicated that such high rate of interest would be levied, the respondents
would not have availed of such facility. Mr. Ganeriwala disputes the
calculation made by the petitioner. He relies on a decision of the Hon'ble
Supreme Court in the case of Raman Tech. & Process Engg. Co. Vs.
Solanki Traders reported in (2008) 2 SCC 302, in support of his
contention that, the prayers in the application are in the nature of
attachment before judgment and the respondents cannot be called
upon to furnish such security, against an unsecured loan.Until the
claim of the petitioner is quantified by a proper legal process, such
orders cannot be passed.
The petitioner had unilaterally appointed an Arbitrator. The learned
Arbitrator has recused. An interim award was passed in favour of the
petitioner which has lost its effect.
Considered the rival contentions of the parties.
The financial institution deals with public money. For ease of
business, the financial institutions permit credit facilities, which are at
times unsecured. Small time business men or people in sudden need of
money, avail of such credit facility. The financial institutions cannot
survive as viable enterprises, if the principal and interest are not repaid
as per the schedule. This has a direct bearing on the country's financial
health. Thus, it will not be out of context to observe that non-adherence
to the repayment schedule, is a breach. The agreement is a commercial
document, which has to be taken seriously in order to ensure
commercial efficacy. Stringent provisions of Order XXXVIII Rule 5 of the
Code of Civil Procedure are not applicable in such situations. The
equities have to be balanced. Advancement of credit facility and non-
payment thereof, are admitted facts. The dispute is with regard to the
quantum of interest and the calculation of the dues. The fact that the
principal amount was released in favour of the respondents, is not in
dispute. The fact that the respondents were required to pay the money, is
also not in dispute. Thus, the financial company requires some kind of
protection at this stage. The respondent cannot enjoy the money,
appropriate the same and not repay.
Under such circumstances, as Mr. Ganeriwala disputes the
quantum of interest, this Court ignores the calculation of the interest,
but only deems it proper to secure the portion of the principal which is
unpaid. The prayer for attachment of the entire bank account is refused.
However, the respondents shall be entitled to operate their bank account,
the details of which are mentioned hereinbelow :-
ACCOUNT NO. 920020004683208
BANK NAME - AXIS BANK LIMITED
BRANCH - Ground Floor And Basement Sco No 201, Sector 9,
Gurgaon, Haryana - 122001
IFSC CODE - UTIB0003208
upon maintaining a continuous balance of Rs.16 lakhs in the said
account. This order will continue for a period of 90 days within which
time the petitioner will take steps for appointment of a learned
Arbitrator.
The concerned bank authorities shall act on the basis of a server
copy of this order, to be supplied by the petitioner or the Advocate-on-
Record of the petitioner.
The application being AP-COM 332 of 2025, stands disposed of.
(SHAMPA SARKAR, J.)
pa/NM
