JUDGMENT :

1. This civil misc. appeal has been preferred by the appellant challenging the order dated 25.2.2022 passed by the Commercial Court No.1, Jodhpur (for short ‘the trial court) whereby, the application under Section 9 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act of 1996’) filed by the appellant has been dismissed.

2. The facts of the case, not in dispute, are that the respondent–finance company has advanced loan facility to the appellant for purchasing three transport vehicles bearing registration numbers (A) RJ-19-GF-2376, (B) RJ-19-GF-3229 and (C) RJ-19-GF-4629 (for short ‘Vehicle-A, Vehicle-B and Vehicle C’) respectively in the year 2017.

3. As per the case of the appellant, he has not defaulted in making payment of monthly installments in respect of Vehicle-A, however, committed default in payment of monthly installments qua Vehicle-B and Vehicle-C. The Vehicle-A was seized by the recovery agent of the respondent-finance company on 11.8.2021 for the reason that the appellant committed default in making payment of monthly installments of Vehicle-B and Vehicle-C.

4. As per the loan agreement executed between the appellant and the respondent-finance company, there is an arbitration clause, however, before appointment of arbitrator, the appellant preferred application under Section 9 of the Act of 1996 before the trial court with a prayer that as an interim measure, the respondent-finance company may be directed to release the Vehicle-A seized by its recovery agent on 11.8.2021 and to issue further directions not to seize the same in future.

5. The respondent-finance company has contested the application claiming that as per Articles 10 and 11 of the loan agreement, it is well within its jurisdiction in seizing Vehicle-A though there is no default in making monthly installments in relation to that vehicle. It is claimed that as per Article 10 (v) & (w) and Article 11 (a) & (c) of the loan agreement, in the event of default under any other agreements with the Company, the rights of the borrower of the assets shall stand terminated void ipso facto and the borrower is bound to deliver the assets to the Company forthwith.

6. Learned trial court after taking into consideration the Article 10 (v) & (w) and Article 11 (a) & (c) of the loan agreement has come to the conclusion that the respondent-finance company is very well within its jurisdiction in seizing the Vehicle-A as the appellant has committed default under the other agreements with the company.

7. Assailing the order impugned, learned counsel for the appellant has submitted that the trial court has grossly erred in rejecting the application under Section 9 of the Act of 1996 preferred by the appellant without taking into consideration the fact that when there is no default on the part of the appellant in paying monthly installments in relation to the Vehicle-A, the action of the respondent-finance company of seizing the said vehicle is illegal.

8. Learned counsel for the appellant, therefore, has prayed that the impugned order may be set aside and the application filed by the appellant under Section 9 of the Act of 1996 before the trial court be allowed.

9. Heard learned counsel for the appellant; perused the material available on record as well as the loan agreement (copy whereof is supplied by learned counsel for the appellant), executed between the appellant and the respondent-finance company while availing loan facility for the purpose of purchasing Vehicles -A, B and C respectively.

10. It is not in dispute that the appellant has executed agreements with the respondent-finance company while availing loan facilities for the purpose of purchasing Vehicles -A, B and C respectively. It is also not in dispute that the appellant has defaulted in paying monthly installments in relation to the Vehicle-B and Vehicle-C.

11. It would be appropriate to quote the relevant conditions of the loan agreement.

“10. EVENTS OF DEFAULT :

The following events shall constitu