TVS FINANCE AND SERVICES LTD Vs. DIVYA ENTERPRISES

JUDGEMENT

(1.) THESE two appeals challenge the common order of the learned Single Judge of this Court made in Application No,310 of 2005 and Application No.1446 of 2005 whereby the appellant has sought for furnishing security from the respondents herein and also for injunction pending disposal of the arbitral proceedings.

(2.) THE appellant herein aggrieved over the common order of dismissal of the above applications have sought the said reliefs before the learned Single Judge alleging that the appellant/applicant was carrying on business of Hire Purchase, Finance, Leasing and Bill Discounting. THE first respondent entered into lease agreement on 16.3.1994 where the second and third respondents stood as guarantors. THEre was default in payments, pursuant to which notices were issued invoking a clause in the Hire Purchase Agreement and part of the machineries were taken possession and the part of the machineries were also sold for a sum of Rs.1,71,560/- and it was also given credit to. THE first respondent also issued a cheque for Rs.3,16,000/- and the cheque was dishonoured, pursuant to which a private complaint was lodged before the Metropolitan Magistrate Court, Egmore, in C.C.No,4234 of 1998 and the same is also pending. THEre was due of Rs.34,35,979.29 from all the respondents. THE applicant came to know that the second and third respondents who are the guarantors were about to alienate the property. Under such circumstances, there arose a necessity for getting a direction from this Court to direct the second and third respondents to furnish the security and also for injunction restraining them from dealing with the property pending arbitral proceedings.

(3.) THE learned counsel for the appellant, after reiterating the submissions made before the learned Single Judge, inter alia would submit, a very reading of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 would indicate that it would be applicable only to the suit and not for arbitral proceedings. Thus, in the instant case, actually applications were taken out under Section 9 of the Arbitration and Conciliation Act and apart from that, the arbitration proceedings are yet to be commenced and one of the arbitrator was appointed by the appellant side but the respondent did not co-operate. Under such circumstances, the matter is pending before the Court for appointment of another arbitrator. Added further learned counsel, in the instant case the learned Single Judge has invoked the provision under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 which is not applicable to the present facts of the case since it is not a suit. A very reading of Section 9 of the Arbitration and Conciliation Act would clearly indicate that pending arbitral proceedings, in order to secure the amount due, which is actually the subject matter of arbitration, interim order could be granted. Under such circumstances, there cannot be any impediment in law in making an order directing the second and third respondents to furnish security.