• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Our Legal Correspondent

CHENNAI, April 16

THE Madras High Court has held that Section 9 of the Arbitration and Conciliation Act could be invoked even without referring the dispute to the arbitrators.

Hence, there was no substance in the contention that if there was a dispute regarding the appointment of the arbitrators, no application for appointing an advocate commissioner to re-possess and sell equipment could be filed under the section.

Mr Justice K. Govindarajan, while holding that the application filed by the Chennai-based Harita Finance Ltd seeking for a direction to appoint an advocate commissioner to seize with Police protection and sell the equipment supplied under a lease agreement dated September 8, 1993 entered into with the Mumbai-based ATV Projects India Ltd was maintainable, said that wide powers had been given to the court under Section 9(2)(e) of the Act to pass interim measure of protection, which according to the court, was just and convenient.

Though the machinery could not be the subject matter of any dispute before the arbitrator as the applicant was the owner of the property, the appointment of the advocate commissioner for the purpose of repossessing and sale of the machinery, etc., could be made to secure the amount in dispute in the arbitration proceedings.

If for any reason such a course namely appointment of a commissioner to repossess the machinery, etc., and selling the same was not adopted, the value of those machinery, etc., went down in course of time and subsequently, if it was sold, it fetched only low price and thereby the hirer/lessor also would be prejudiced.

The applicant-company (Harita Finance) had entered into a lease agreement with the respondent-company (ATV Projects India Ltd). The said lease agreement was assigned under the deed of assignment dated July 30, 1998 to TVS Lakshmi Credit Ltd. To the said agreement, the respondent was also a signatory, and thereby it agreed that the original agreement dated September 9, 1993 would hold good and continue to be in the hands of the assignee, TVS Lakshmi Credit Ltd. By an order dated July 31, 1999, in a petition before the High Court, TVS Lakshmi Credit was amalgamated with the applicant-company.

As per the lease agreement, the dispute regarding default in payments to the applicant by the respondent was referred to the arbitrator. It was stated that the respondent company was declared as a sick company by the Board for Industrial and Financial Reconstruction (BIFR).

On the basis of these averments, the applicant had come forward with this application to appoint an advocate commissioner to seize with Police protection and sell the equipment and adjust the proceeds thereof to the outstanding of the respondent.

The applicant submitted that the business of the respondent company had come to a standstill, and the equipment owned by the applicant was being kept idle. Therefore, the equipment would fast deteriorate in value and the same would not fetch a reasonable price. The company prayed for the appointment of an advocate commissioner to seize and sell the equipment and adjust the proceeds thereof to the outstandings of the respondent.

On behalf of the respondent, it was contended that the appointment of an advocate commissioner under Section 9 was not maintainable under the law as the advocate commissioner could not sell the goods, which were not the subject matter of arbitration agreement particularly in the absence of proper and valid appointment of arbitrators.

The Judge held that Section 9 could be invoked even without referring the dispute to the arbitrators. It was not disputed that such a requirement was in existence in this case. So, in view of the above rejection of the defence taken by the respondent, the application filed for appointing the advocate commissioner to repossess and sell the equipment was maintainable.

The commissioner was directed to proceed with this work as directed by the Judge by orders dated August 19, 2002 and September 17, 2002, and file a report within 20 days.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Hero Honda unveils `CD-Dawn'

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line