Delhi High Court
Vasan Health Care Pvt. Ltd. vs Ge Capital Services India on 24 May, 2016
Author: Pradeep Nandrajog
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : May 24, 2016
+ REV. PET. 241/2016 in FAO(OS) (COMM) 12/2016
VASAN HEALTH CARE PVT LTD
THR DIRECTORS ..... Appellant.
Represented by: Mr.Rahul Srivastava, Advocate
with Mr.Manudev Sharma,
Mr.Raghav Kapoor, Advocates
versus
GE CAPITAL SERVICES INDIA
THR AUTHORIED REPRESENTATIVE ..... Respondent
Represented by: Mr. Arun Kathpalia, Sr.Adv.
instructed by Ms.Deepika
V.Marwaha, Ms.Worthing
Kasar, Mr.Vaibhav Asthana,
Advs.
+ REV. PET. 247/2016 in FAO(OS) (COMM) 13/2016
VASAN HEALTH CARE PVT LTD ..... Appellant
Represented by: Mr.Rahul Srivastava, Advocate
with Mr.Manudev Sharma,
Mr.Raghav Kapoor, Advocates
versus
G E CAPITAL SERVICES INDIA ..... Respondent
Represented by: Mr. Arun Kathpalia, Sr.Adv.
instructed by Ms.Deepika
V.Marwaha, Ms.Worthing
Kasar, Mr.Vaibhav Asthana,
Advs.
+ REV.PET. 242/2016 in FAO(OS) (COMM) 14/2016
VASAN HEALTH CARE PVT LTD ..... Appellant
Represented by: Mr.Rahul Srivastava, Advocate
Rev.Pet.241/2016 & conn.matters Page 1 of 9
with Mr.Manudev Sharma,
Mr.Raghav Kapoor, Advocates
versus
G E CAPITAL SERVICES INDIA ..... Respondent
Represented by: Mr. Arun Kathpalia, Sr.Adv.
instructed by Ms.Deepika
V.Marwaha, Ms.Worthing
Kasar, Mr.Vaibhav Asthana,
Advs.
+ REV. PET. 245/2016 in FAO(OS) (COMM) 15/2016
VASAN HEALTH CARE PVT LTD ..... Appellant
Represented by: Mr.Rahul Srivastava, Advocate
with Mr.Manudev Sharma,
Mr.Raghav Kapoor, Advocates
versus
G E CAPITAL SERVICES INDIA ..... Respondent
Represented by: Mr. Arun Kathpalia, Sr.Adv.
instructed by Ms.Deepika
V.Marwaha, Ms.Worthing
Kasar, Mr.Vaibhav Asthana,
Advs.
+ REV.PET. 243/2016 in FAO(OS) (COMM) 16/2016
VASAN HEALTH CARE PVT LTD ..... Appellant
Represented by: Mr.Rahul Srivastava, Advocate
with Mr.Manudev Sharma,
Mr.Raghav Kapoor, Advocates
versus
G E CAPITAL SERVICES INDIA ..... Respondent
Represented by: Mr. Arun Kathpalia, Sr.Adv.
instructed by Ms.Deepika
V.Marwaha, Ms.Worthing
Kasar, Mr.Vaibhav Asthana,
Advs.
Rev.Pet.241/2016 & conn.matters Page 2 of 9
+ REV. PET. 240/2016 in FAO(OS) (COMM) 17/2016
VASAN HEALTH CARE PVT LTD ..... Appellant
Represented by: Mr.Rahul Srivastava, Advocate
with Mr.Manudev Sharma,
Mr.Raghav Kapoor, Advocates
versus
G E CAPITAL SERVICES INDIA ..... Respondent
Represented by: Mr. Arun Kathpalia, Sr.Adv.
instructed by Ms.Deepika
V.Marwaha, Ms.Worthing
Kasar, Mr.Vaibhav Asthana,
Advs.
+ REV. PET. 244/2016 in FAO(OS) (COMM) 18/2016
VASAN HEALTH CARE PVT LTD ..... Appellant
Represented by: Mr.Rahul Srivastava, Advocate
with Mr.Manudev Sharma,
Mr.Raghav Kapoor, Advocates
versus
G E CAPITAL SERVICES INDIA ..... Respondent
Represented by: Mr. Arun Kathpalia, Sr.Adv.
instructed by Ms.Deepika
V.Marwaha, Ms.Worthing
Kasar, Mr.Vaibhav Asthana,
Advs.
+ REV.PET. 246/2016 in FAO(OS) (COMM) 19/2016
VASAN HEALTH CARE PVT LTD ..... Appellant
Represented by: Mr.Rahul Srivastava, Advocate
with Mr.Manudev Sharma,
Mr.Raghav Kapoor, Advocates
versus
G E CAPITAL SERVICES INDIA ..... Respondent
Represented by: Mr. Arun Kathpalia, Sr.Adv.
Rev.Pet.241/2016 & conn.matters Page 3 of 9
instructed by Ms.Deepika
V.Marwaha, Ms.Worthing
Kasar, Mr.Vaibhav Asthana,
Advs.
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE MUKTA GUPTA
PRADEEP NANDRAJOG, J.
1. The above captioned appeals were disposed of by an order dated April
08, 2016. It reads as under:-
"1. Above captioned appeals lay a challenge to the order
dated March 08, 2016 passed by the learned Single Judge in
a batch of petitions filed under Section 9 of the Arbitration
and Conciliation Act, 1996 by GE Capital Services India
(hereinafter referred to as GE). The appellant : Vasan
Health Care Pvt. Ltd. (hereinafter referred to as Vasan) is
the respondent in all the petitions.
2. Eight petitions field before the learned Single Judge
arose out of eleven loan agreements, tenure of nine of which
had expired.
3. In para 4 of the impugned order the learned Single
Judge has put in a tabular form, which loan agreement(s)
pertained to which petition filed under Section 9 of the
Arbitration and Conciliation Act, 1996.
4. The learned Single Judge has noted that there was a
cross-default clause in the agreement between the parties
with respect to all agreements and the intention was to
create cross-default and cross-security inter-se all
transactions. The effect was that a default under one
agreement would be deemed to be a default under all
agreements. The learned Single Judge has noted that
medical equipments got financed by Vasan from GE was a
collateral security under all loan agreements i.e. default to
honour any one agreement would result not only in default
of all but additionally entitling GE to take resort to remedy
concerning all equipment purchased from the loan taken
and offered as collateral security. The learned Single Judge
has noted that the statement of account relied upon by GE
was not disputed by Vasan. Learned Single Judge has noted
that loan advanced under different agreements was `100
crores, repayable along with interest. Payment returned
was `71,77,44,906/-. Balance outstanding was
`39,66,91,260/-. Pursuant to interim orders passed earlier,
as noted in the impugned order, valuation report was
obtained as per which report the value of the hypothecated
property as of January 06, 2016 would be `37,13,09,059/-.
It is apparent that depreciation and machinery being old has
resulted in its value falling. Learned Single Judge has noted
that Vasan is in arrears of rent of rent qua a property taken
on lease where one of the many health care centres were
established.
5. The learned Single Judge has noted that attempts
were made to resolve the issue because outstanding amount
was not in dispute. Learned Single Judge has noted that on
December 15, 2015, 3 post dated cheques were issued in
sum of `1 crore, `3 crores and `3 crores respectively. The
first cheque to be presented on January 20, 2016 was
dishonoured. The learned Single Judge has noted that
Vasan is facing huge financial problems. For non-payment
of ESI dues its account has been attached by the ESI
authorities. The learned Single Judge has accordingly
appointed a receiver to take charge of the property financed
with a direction that report shall be submitted by the
receiver to the arbitrator and if sold by the receiver first
option shall be given to the petitioner to buy the same,
failing which to a third party.
6. Core reasoning given by the learned Single Judge is
that there is every possibility of the machinery offered as
collateral security not being available, if attached by third
parties.
7. We have perused the grounds in appeals and have
heard learned counsel for the parties. Financial hardship
appears to be the signature tune of the appeals. Vasan
wants to project that its intention is honest and due to it not
being able to generate enough revenue, it is unable to pay
the dues under the agreement.
8. It is trite that an Appellate Court is concerned with
the legality of an order passed by the learned Single Judge.
Unless it was shown that the learned Single Judge has
misapplied the law or has ignored material facts or has
relied upon irrelevant facts, a discretionary order passed
would not be interdicted by a superior Court.
9. But in our view a commercial solution has to be found
while preserving the right of the respondent GE.
10. Concurring with the view taken by the learned Single
Judge that the right of GE has to be protected and lest
somebody else claims a lien over the hypothecated property,
it should be placed under the custody of a receiver.
11. The appellants have handed over a banker's draft in
favour of GE to learned counsel for GE. The banker's draft
is in sum of `2.5 crores and is received by learned counsel
for GE without prejudice.
12. Sale of the equipment in question would take time.
The learned Single Judge has given first right of purchase to
Vasan.
13. Learned senior counsel for Vasan states that Vasan
would try and raise necessary resources to clear the dues of
GE. As regards the hypothecated machinery, we are of the
opinion that permitting the receiver appointed by the
learned Single Judge who is an employee of GE to take
charge of the property, which are machines and equipments
used for diagnostic purposes, would mean that warehouse
charges would have to be incurred by GE and the machinery
would lie idle till it is sold. It would be better if the
hypothecated machinery is put under custody of joint
receivers, one nominee of Vasan and the other of GE with
the obligation on the nominee receiver of Vasan responsible
for its safe custody, meaning thereby that the hypothecated
equipment and machinery could continue to lie at the place
where it is but under receivership; with physical possession
being with the receiver nominee of Vasan, who would be
personally accountable for the machinery if it is lost.
14. Thereafter the two receivers could jointly sell the
hypothecated property, with the sale supervised by the
Arbitrator, which as per the impugned order has to be
nominated by GE within 30 days from the date of the
impugned order dated March 08, 2016. Meaning thereby
the Arbitrator needs to be appointed forthwith.
15. We dispose of the appeals directing that upon Vasan
paying to GE a sum of `5,00,000/- per week commencing
from the week commencing April 10, 2016 and ending on
April 16, 2016 and so on, the direction in the impugned
order would be superseded with the direction that the
hypothecated property would be in the deemed possession of
joint receivership of Sh.Gaurav Tyagi the nominee receiver
of GE and Dr.Radha Krishnan Salai the Managing Director
of Vasan, with the hypothecated property remaining where it
is, but under the possession of Dr.Radha Krishnan Salai
who would be accountable not only to this Court but even to
the learned Arbitrator if hypothecated machinery is found
missing. The remainder directions issued by the learned
Single Judge concerning sale of the hypothecated property
are maintained with the modification that the sale shall take
place before the learned Arbitrator appointed by GE.
16. The joint receivers shall file a report before the
Arbitrator within a period of three weeks from today.
17. The appeals are disposed of without any orders as to
costs."
2. We had concurred with the view taken by the learned Single Judge
that it was a fit case where the medical equipments got financed by the
appellant from the respondent and in respect of which the respondent had a
lien, were liable to be repossessed under the agreement(s) between the
parties. But, had attempted to find a commercial solution to the problem
because sale of the hypothecated machinery over which the respondent had a
lien would have taken time and if the machinery was kept in a warehouse
and made to idle, nobody would have gained and possibly its price may
have diminished. Thus, upon the condition that the appellant paid `5 lacs
per week we had permitted the machinery to be retained by the appellant
but under a joint receivership of the Managing Director of the appellant
and the receiver appointed by the learned Single Judge till it was sold.
3. The respondent has filed the above captioned review petitions
pointing non-cooperation from the Managing Director of the appellant with
further grievance that a lot of hypothecated machinery is not to be found at
the places it was installed, and the agreement(s) between the parties prohibit
the appellant from removing the machinery without the prior consent of
the respondent.
4. The appellant does not dispute that a lot of hypothecated machinery is
not in the premises where it had to be kept, but justifies the same as
appellant's compulsion because the landlords of the buildings taken on rent
to run diagnostic centres have regained possession.
5. Learned counsel for the respondent has produced an e-mail sent by
the appellant which purportedly informs the respondent the current
whereabouts of the hypothecated machinery. The same has been seen by us.
Regretfully, the communication does not record the nature, the number or
the make of the machinery.
6. The fact of the matter remains that till date the respondent is clueless
to the whereabouts of the hypothecated machinery and the commercial
solution which we had found being frustrated by the appellant, in our
opinion the ends of justice warrants the review petitions to be allowed.
7. Order dated April 08, 2016 is recalled and the appeals are dismissed.
8. The result would be that the receiver appointed by the learned Single
Judge would now act as the Sole Receiver and would take charge of the
hypothecated machinery.
9. No costs.
(PRADEEP NANDRAJOG)
JUDGE
(MUKTA GUPTA)
JUDGE
MAY 24, 2016
skb
