HIGH COURT OF JUDICATURE FOR RAJASTHAN AT

JODHPUR

D.B. Civil Misc. Appeal No. 768/2022

Bhajanlal S/o Sh. Chutraram, Aged About 27 Years, R/o Pabu

Nagar, Chaudha, Tehsil, Pipad City, Distt. Jodhpur. Through Its

General Power Of Attorney Holder- Ashok S/o Sh. Pabu Ram Ji

Aged About 28 Years, R/o Pabu Nagar, Chaudha, Tehsil Pipad

City, Distt. Jodhpur.

----Appellant

Versus

Chola Mandalam Investment And Finance Co. Ltd., Through Its

Manager Plot No. 17, 1St Floor, K P Tower, Near Bombay Motor

Circle, Upper Chopasni Road, Jodhpur.

----Respondent

For Appellant(s)

:

Mr. Saurabh Maheshwari

HON'BLE MR. JUSTICE VIJAY BISHNOI

HON'BLE MR. JUSTICE ARUN BHANSALI

Judgment / Order

22/07/2022

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.

The facts of the case, not in dispute, are that the

respondent–finance company has advanced loan facility

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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.

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.

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.

The respondent-finance company has contested the

application claiming that as per Articles 10 and 11 of the

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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.

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.

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

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respondent–finance company of seizing the said vehicle is

illegal.

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

A