Ge Capital Transportation ... vs M/S Raj Tours Private Limited
2009 Latest Caselaw 1519 Del

             * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                       Date of Reserve: 9.4.2009
                                                     Date of Order: April 20, 2009

OMP No. 640/2008 & OMP No. 641/2008
%                                                                   20.4.2009

        GE Capital Transportation Financial
        Services Ltd.                              ... Petitioner
                       Through: Mr. Anupam Srivastava, Advocate
             Versus

        M/s Raj Tours Private Limited              ... Respondent
                        Through: Mr. Ravi Kumar Aggarwal, Advocate


JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the
judgment?                                                                   Yes.
2. To be referred to the reporter or not?                                   Yes.
3. Whether judgment should be reported in Digest?                           Yes.

JUDGMENT

By these two applications/petitions under Section 9 of the

Arbitration & Conciliation Act, 1996, the petitioner has prayed for appointment of

a receiver to take possession of the assets let on loan to the respondent with

liberty to the receiver to seek assistance of the local police in case any

obstruction is put by the respondent in seizing the assets. The petitioner also

prayed for restraining respondent and its employees etc. from wasting,

damaging, alienating, selling, removing and disposing of the assets in the

meantime and permitting the receiver to sell the vehicle.

2. The case of the petitioner is that the respondent approached the

petitioner with a request for acquisition of Volvo B7R vehicles (bus) on loan. This

request was considered by the petitioner. The respondent entered into loan

agreements on 2nd January 2006 with the petitioner and under these

agreements, the petitioner financed the Volvo B7R vehicles, which were

registered as KA-01B 7498 and KA-01B 7500. The cost of the each vehicle was

Rs.42,19,000/-. Under the agreements, the respondent was to pay 48 Equated

Monthly Installments (EMIs) to discharge his liability. The first installment was of

Rs.2,08,940/- and the subsequent installments were of around Rs.1,40,000/-.

The installments fell due for payment in terms of the agreement/contract on 15th

day of each calendar month starting from 15 th February, 2006 and the last

installment was to become due on 15th December, 2009. The respondent failed

to honour the commitment in terms of the agreement and did not pay the

installments. In view of failure of the respondent to pay the installments, the

respondent became liable to pay liquidated damages/compensation for all

overdue installments @ 36% p.a. till the payment thereof, in terms of clause

10(a) of the agreements. Amounts of Rs.22,80,818/- and Rs.22,79,314/-

became due for payment as on the date of filing this application. Under clause

13(g) of the agreement, all disputes and differences or claims arising out of the

agreement were to be referred to the arbitration in terms of the Arbitration &

Conciliation Act, 1996. It is submitted that under clause 10(b) of the contract, the

petitioner was entitled to exercise its right of removing and retaking the

possession of the assets itself or through its servants. The petitioner submitted

that the respondent was not paying installments; several cheques issued by the

respondent had got dishonored and the assets of the petitioner were in danger of

being damaged or alienated by the respondent, therefore, this application was

made seeking the above reliefs.

3. In reply, the respondent had stated that this Court had no territorial

jurisdiction to entertain this petition. The transaction between the parties took

place at Mumbai. The respondent was having its office in Mumbai. The

installments were payable at Mumbai, no part of cause of action had arisen in

Delhi so Delhi Court would have no jurisdiction. On merits, it was stated that the

petitioner has relied on contract dated 2.1.2006 but has concealed material part

of the contract viz. schedules and annexures and those have not been filed in the

Court and the petitioner has failed to make out a case for appointment of the

receiver.

4. Learned Counsel for the petitioner argued that as per contracts

between the parties the petitioner was entitled to repossess the vehicle in case of

default in payments of the installments. In the present case, there had been

continuous default by the respondent and the respondent, despite giving

opportunities, had not paid the installments. The learned Counsel pointed out to

the statement of accounts showing that not one but several cheques of the

respondent got dishonored and the respondent had not paid the amount in lieu of

the dishonored cheques. On the other hand, the learned Counsel for the

respondent submitted that this Court had passed status quo order and the

respondent undertakes to maintain status quo in respect of the assets i.e. Volvo

buses. The respondent shall not dispose of or transfer the assets to any third

party so as to secure the interest of the petitioner till the disposal of the

arbitration and respondent shall also take steps to see that the assets are not

wasted damaged or destroyed except normal wear and tear. He further argued

that the law regarding receiver is laid down under Order 40 Rule 1 CPC and

submitted that where a defendant gives undertaking to maintain status quo there

was no necessity of appointing receiver. He relied upon Hari Mohan Sharma and

Ors. v. CSR Poultry Research and Breeding Farm AIR 1993 (Delhi) 293 and

submitted that unless there was an apprehension that the property would be

wasted, damaged or destroyed, the court should not appoint receiver.

5. A perusal of agreements between the parties would show that the

agreements between the parties were entered at Delhi, where the registered

office of the petitioner is located. The agreements also provide that the parties

agreed that the Courts at Delhi shall have sole and exclusive jurisdiction. The

subject matter in the petition in this case is only movable property and therefore

provision of Sections 16, 17 & 18 of CPC for determination of territorial

jurisdiction would not be applicable. Since, it is not a case of wrong done to a

person or to assets Section 19 CPC would also not apply. The present case is in

respect of breach of contract and therefore Section 20 CPC shall apply and the

suit can be filed either under Section 20(a) or 20(b) or under Section 20(c) CPC.

Since, the contract between the parties was entered at New Delhi and this

contract has been breached, part of cause of action arose within the jurisdiction

of this court. Since the petitioner had option to file the suit either in Delhi or at

the place where defendant resided, this Court would therefore have territorial

jurisdiction.

6. The agreements between the parties provided remedies on default

in payment of installments. One of the remedies provided under Clause 10(b) of

the contract is that the petitioner can take possession of the loan assets either

with or without the intervention of the Court from the debtor. In Orix Finance

(India) Ltd. v. Jagmandar Singh and Anr. (2006) 2 SCC 598 Supreme Court laid

down law regarding taking of possession by financer of the financed vehicle as

under:

"If agreements permit the financier to take possession of the financed vehicles, there is no legal impediment on such possession being taken. Of course, the hirer can avail such statutory remedy as may be available. But mere fact that possession has been taken cannot be a ground to contend that the hirer is prejudiced. Stand of learned counsel for the respondent that convenience of the hirer cannot be overlooked and improper seizure cannot be made. There cannot be any generalization in such matters. It would depend upon facts of each case. It would not be, therefore, proper for the High Courts to lay down any guideline which would in essence amount to variation of the agreed terms of the agreement."

7. The plea of the respondent that the petitioner should be satisfied

with the status quo order of this Court and this Court should not issue order for

appointment of receiver is not tenable. The judgment relied upon by the

respondent is of no help. In that case, the property involved was immovable

property. In case of immovable property, the value of the property rises day by

day while in the present case, the property involved are Volvo buses, in use and

possession of the respondent. By putting the buses to reckless use, the

respondent can bring down the value of the buses substantially and claim that it

was normal wear and tear of the buses. The respondent is not making payment

of the due installments and had paid only few installments in the beginning and

thereafter stopped making payments of the installments, neither surrendered the

buses. In case the respondent was not earning enough to pay the installments,

the buses should have been sold to discharge the liability. The respondent is

very much using the buses and plying the buses and simultaneously not paying

the installments. I consider under these circumstances, the plea of the

respondent that since a status quo order has been passed and there was no

necessity of appointment of receiver must fail.

8. The petitioner could have seized the buses of its own in view of the

above judgment of Supreme Court and the clause provided in the agreements.

The only precaution which the petitioner had to take was that he should not have

used excess force and should have seized the buses peacefully. Instead of

seizing the buses itself, the petitioner has approached this Court for appointment

of receiver. I consider that the prayer made by the petitioner is not unjustified.

The balance of convenience lies in favour of the petitioner. It is also admitted by

the respondent that respondent has failed to pay the installments. Prima facie

the petitioner has a good case.

9. I therefore allow these petitions and appoint petitioner's officer Mr.

Mahesh Rai as receiver to take possession of the Volvo buses no. KA-01B 7498

and. KA-01B 7500. Mr. Mahesh Rai, after taking possession of the buses shall

prepare a seizure report of the buses showing the condition of the buses. He

shall also take photographs from outside and inside the buses. A copy of the

seizure reports shall be filed in the Court. Buses shall be retained by the receiver

till further orders are obtained from the arbitrator appointed under the arbitration

clause or till passing of award. In case, any resistance is put by the respondent

in seizure of the buses, the receiver shall be at liberty to take help of the local

Police Station where buses are found stationed. The receiver shall take

possession of the buses, wherever the buses are found.

The petitions stand disposed of.

April 20, 2009                                     SHIV NARAYAN DHINGRA, J.
vn