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2016 Supreme(Cal) 249
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
INDIRA BANERJEE, SAHIDULLAH MUNSHI, JJ.
Md. Ghufran - Appellant
Vs.
Varun Finance Corporation Limited & Anr. - Respondents
F.M.A.T. 1209 of 2014 With C.A.N. 10882 of 2014
Decided On : 09-03-2016
Advocate Appeared:
For the Appellant : Mr. Tapas Kumar Banerjee, Mr. Shamba Chakraborty, Mr. Arun Kr. Das, Mr. Jit Ray
For the Respondents: Mr. Amitesh Banerjee, Mr. Prabhat Srivastawa, Mr. Aritra Basu, Mr. Abhishek Shikdar
A third party, dispossessed of his property by an interim order in an application under Section 9 of the Arbitration and Conciliation Act, 1996, would have no other option but to make an application in the nature of a pro interesse suo application in the Court which passed the order.
Headnote:
ARBITRATION - SECTION 9 - ACT 1996 - INTERIM RELIEF - APPOINTMENT OF RECEIVER - PROPERTY OF THIRD PARTY - NO ARBITRATION AGREEMENT BETWEEN FINANCIER AND THIRD PARTY - NO FINANCE OBTAINED BY THIRD PARTY FROM FINANCIER - INTERIM ORDER OBTAINED BY FINANCIER FOR APPOINTMENT OF RECEIVER TO TAKE POSSESSION OF THIRD PARTY'S PROPERTY - HELD, INTERIM ORDER ILLEGAL AND LIABLE TO BE VACATED.
Fact of the Case:
Varun Finance Corporation Limited (financier) filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 (1996 Act) for interim relief against its borrower, Md. Tajuddin, with whom there was an arbitration agreement. The financier obtained an interim order for the appointment of a Receiver to take possession of an auto rickshaw registered in the name of Md. Ghufran (appellant), who was not a party to the arbitration agreement and had not obtained any finance from the financier.
Finding of the Court:
The court held that the interim order obtained by the financier for the appointment of a Receiver to take possession of the appellant's property was illegal and liable to be vacated. The court observed that a third party, dispossessed of his property by an interim order in an application under Section 9 of the 1996 Act, would have no other option but to make an application in the nature of a pro interesse suo application in the Court which passed the order.
Issues: Whether in an application under Section 9 of the 1996 Act for interim relief, orders can be obtained for the appointment of a Receiver to take possession of a property of a third party, who is not a party to the arbitration agreement and has admittedly not obtained finance from the respondent financier.
Ratio Decidendi: The court relied on the principle that whenever there is a wrong there is a remedy. A person aggrieved by an erroneous order cannot be without a remedy. The appellant not being a party to the arbitration agreement, there could be no question of his getting himself impleaded as party in the application under Section 9 of the 1996 Act. The interim orders relating to the auto rickshaw registered in the name of the appellant should have been vacated, upon consideration of the appellant's application.
Final Decision: The court allowed the appeal, set aside the impugned order, and vacated the interim orders relating to the auto rickshaw in question owned by the appellant. The Receiver was directed to stand discharged and make over possession of the auto rickshaw to the appellant within three working days.
1. This appeal is against Order No. 39 dated 13th February, 2014 passed by the learned Judge, VIIIth Bench, City Civil Court at Calcutta refusing to vacate the interim order passed earlier in Miscellaneous Case No. 905 of 2012 being an application under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “1996 Act”) filed by the respondent, Varun Finance Corporation Limited.
2. The case is indeed interesting. There can be no dispute at all that the auto rickshaw, of which possession has been taken in an application under Section 9 of the 1996 Act is registered in the name of the appellant, Md. Ghufran.
3. It is not in dispute that there is no arbitration agreement between the respondent Varun Finance Corporation Limited and the appellant, Md. Ghufran.
4. It appears that there is a hire purchase agreement between Varun Finance Corporation Limited and one Md. Tajuddin in terms whereof the respondent Varun Finance Corporation Limited allegedly financed the hire purchase of a motor vehicle.
5. The agreement between the respondent Varun Finance Corporation Limited, hereinafter referred to as the ‘financier’ and Md. Tajuddin, hereinafter referred to as the ‘borrower’ provided that the borrower would pay to the financier 47 monthly instalments, the first of Rs. 17,900/- and the rest of Rs. 14,100/- within the time stipulated in the said agreement, for hire purchase of the motor vehicle. A copy of the agreement was annexed to the application filed under Section 9 in the Court below.
6. It appears that the borrower Md. Tajuddin paid the initial monthly hire charges but on and from 6th February, 2012 started making defaults in payment.
7. We are not really concerned, in this appeal, with the disputes between the respondent financier and the borrower Md. Tajuddin. If Md. Tajuddin has obtained finance from Varun Finance Corporation Limited, Md. Tajuddin has the obligation to make repayments in terms of the agreement between Varun Finance Corporation Limited and its borrower and/or hirer Md. Tajuddin.
8. There is admittedly no hire purchase agreement between the respondent financier Varun Finance Corporation Limited and the appellant. Significantly, in the impugned order itself, the learned Court observed:
“.. It will not be out of the place to mention in this regard that though the hypothecation agreement was entered into by and between the petitioner and the OP, yet the certificate of registration of the vehicle all along stood and still now stands in favour of the applicant with the endorsement that the vehicle in question is really a hypothecated one.
In the above background, the applicant appears to have approached this court for the reliefs as made in his application intending to impress this court about the fact that he being the recorded lawful owner of the vehicle in question, the order for appointment of Receiver and seizure of the said vehicle has been obtained by misrepresenting this court as the said vehicle should never be the subject matter of the said hypothecation agreement.
From the factual scenario and the documents on record, though it may appear for a moment that the contention of the applicant may apparently sound merit”
9. The question in this appeal is, whether in an application under Section 9 of the 1996 Act for interim relief, orders can be obtained for appointment of a Receiver to take possession of a property of a third party, who is not a party to the arbitration agreement and has admittedly not obtained finance from the respondent financier, Varun Finance Corporation Limited.
10. The answer to the aforesaid question has to be in the negative. Merely because the number of a motor vehicle belonging to a stranger is inserted in a hire purchase agreement, possession thereof cannot be taken by making an application under Section 9 of the 1996 Act.
11. Even assuming, as argued by Mr. Amitesh Banerjee, there was some arrangement between the borrower and the appellant for transfer of
