CAPITAL LTD Vs. RANI PROPRIERIX

JUDGEMENT

(1.) THE applicant in Application No.1798 of 2009 is a Finance Company which has extended financial facilities to the respondents 1 to 3 for the purchase of batching plant with other accessories. A loan agreement was entered into between the applicant and the respondents 1 to 3 on 25.11.2007, under which the total agreement amount arrived at was Rs.73,85,820/- payable by the respondents 1 to 3 in 34 monthly instalments commencing from 3.2.2008 and ending with 3.11.2010 at the rate of Rs.2,17,230/- each as monthly instalments.

(2.) AS per the clauses in the agreement, in the event of default in payment of monthly instalments, the respondents 1 to 3 have to pay compensation charges at 36% p.a. for the belated payment. According to the applicant/financier, the respondents 1 to 3 have defaulted payment and paid only 2 instalments. Under the agreement, hypothecations were made. Since the default in payment continued, notice was issued on 26.3.2009. The respondents 1 to 3 are bound to return the assets by way of repossession. The loan agreement also provides for a clause of arbitration under Clause No. 23. The applicant intends to enforce the said arbitration clause.

(3.) THE respondents 1 to 3 in Application No.1798 of 2009 have filed A.No.2269 of 2009, to vacate the said prohibitory order dated 24.4.2009 and to dismiss the said Application No.1798 of 2009 contending inter alia that the first respondent in Application No.1798 of 2009 has entered into a hire purchase agreement with the applicant/financier on 25.11.2007 for raising a loan of Rs.58,41,731/- to purchase a new Batching Plant and the respondents 2 and 3 have stood as guarantors. An objection is raised that the 4th respondent not being a party to the agreement, against whom no arbitration proceedings can be initiated, cannot be prohibited from paying the amount due to the respondents 1 to 3. 5(a). Further, it is the case of the respondents 1 to 3 who have filed the vacate-application that as per Clauses 23 and 24 of hire purchase agreement, the parties agreed to confer jurisdiction in the competent Court at Mumbai and therefore, the Application filed under Section 9 of the Arbitration and Conciliation Act, 1996 before this Court is not maintainable, since this Court has no jurisdiction.5(b). It is further stated that as per the clause in the agreement, the machineries which were fixed on the earth alone stood as security and the financier would be entitled only to sell the asset and in the absence of any provision under the agreement permitting the financier to restrain the garnishee, the Application is not maintainable as per Clause 18(a) of the agreement. Even though it is stated by the respondents 1 to 3 that the loan Application was originally made for earth moving plant, the financier forced the respondents 1 to 3 to change it for batching plant, they have in fact purchased the said machines.5(c). It is the case of the respondents 1 to 3 that the financier instead of taking repossession of the plant under the agreement for repossession, has not only given a Criminal Complaint, but also filed the present Application No.1798 of 2009 to harass the respondents. It is also stated that due to the non-functioning of the machinery which has been installed for supply of materials to the 4th respondent, there was no amount due from the 4th respondent to the respondents 1 to 3.5(d). It is further stated that taking advantage of the fact that the third respondent, viz., Manjunatha, who stood as guarantor in the loan agreement, has entered into an independent agreement with the 4th respondent in respect of another similar plant exclusively owned by him, under which the 4th respondent had some obligation to pay amount to the third respondent, the present Application has been filed for prohibitory order preventing the 4th respondent from getting the amount which is due under a contract independent of the agreement in question. THErefore, it is stated that the Application for pro-order is liable to be dismissed on the point of jurisdiction, suppression of material facts, violation of terms of agreement and abuse of process of law.5(e). It is also stated that no part of cause of action in respect of grant of loan has arisen at Chennai since the agreement has been signed at Bangalore and the machinery which is the subject matter of security has been installed at No.9, Beratana Agrahara, Hosur Main Road, Electronic City Post Bangalore-560 100.