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REV. PET. 241/2016 in FAO(OS) (COMM) 12/2016
VASAN HEALTH CARE PVT LTD THR DIRECTORS Appellant.
Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates
Represented by: Mr. Arun Kathpalia, Sr.Adv. instructed by Ms.Deepika
V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs.
VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates
G E CAPITAL SERVICES INDIA Represented by:
Rev.Pet.241/2016 & conn.matters
V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs.
Page 1 of4 2016:DHC:8575-DB
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VASAN HEALTH CARE PVTLTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates
Respondent Mr. Arun Kathpalia, Sr.Adv. instructed by Ms.Deepika
V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs.
VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates
V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs.
VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates
G E CAPITAL SERVICES INDIA Represented by:
Respondent Mr. Arun Kathpalia, Sr.Adv. instructed by Ms.Deepika
V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs.
VASAN HEALTH CARE PVT LTD Represented by:
G E CAPITAL SERVICES INDIA Represented by:
Appellant Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates
V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs.
VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates
Respondent Mr. Arun Kathpalia, Sr.Adv. instructed by Ms.Deepika
V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs.
Rev.Pet.241/2016 & conn.matters Page 3 of4 2016:DHC:8575-DB
VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates
Respondent Mr. Arun Kathpalia, Sr.Adv. instructed by Ms.Deepika
V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs.
HON'BLE MS. JUSTICE MUKTA GUPTA
24.05.2016
ORDER
1. Vide a separate order pronounced today the review petitions have been allowed.
2. A copy of the order be supplied Dasti to learned counsel for the parties under signature ofthe Court Master. MAY 24, 2016 'ga' -? 2) Rev.Pet.241/2016 & conn.matters P NANim^JOG, J. PRADEEP MUKTA GUPTA, J. 2016:DHC:8575-DB -1. * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date ofDecision: May 24. 2016 + REV. PET. 241/2016 in FAO(OS) (COMM) 12/2016 VASAN HEALTH CARE PVT LTD THR DIRECTORS Appellant. Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates versus GE CAPITAL SERVICES INDIA THR AUTHORIED REPRESENTATIVE Respondent Represented by: Mr. Arun Kathpalia, Sr.Adv. instructed by Ms.Deepika V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs. + REV. PET. 247/2016 in FAO(OS) (COMM) 13/2016 VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates versus G E CAPITAL SERVICES INDIA Respondent Advs. + REV.PET. 242/2016 in FAO(OS) (COMM) 14/2016 VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate Rev.Pet.241/2016 & conn.matters Page 1 of[9] + +
VERSUS
G E CAPITAL SERVICES INDIA Represented by: yk' with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates Respondent Mr. Arun Kathpalia, Sr.Adv. instructed by Ms.Deepika V.Marwalia, Ms.Worthing Kasar, Mr.Vaibhav Astliana, Advs. REV. PET. 245/2016 in FAO(OS) (COMM) 15/2016 VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates versus G E CAPITAL SERVICES INDIA Respondent Advs. REV.PET. 243/2016 in FAOIOS) (COMM) 16/2016 VASAN HEALTH CARE PVT LTD
VERSUS
G E CAPITAL SERVICES INDIA Appellant Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates Rev.Pet.241/2016 & conn.matters Respondent Mr. Arun Kathpalia, Sr.Adv. Advs. Page 2 of[9] 2016:DHC:8575-DB A + + + REV. PET. 240/2016 in FAOrOS) (COMIVn 17/2016 VASAN HEALTH CARE PVTLTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Mr.Raghav Kapoor, Advocates G E CAPITAL SERVICES INDIA Represented by:
VERSUS
Respondent Advs. REV. PET. 244/2016 in FAO(OS) rCOMM) 18/2016 VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Advs. REV.PET. 246/2016 in FAO(OS) (COMM) 19/2016 VASAN HEALTH CARE PVT LTD Appellant Represented by: Mr.Rahul Srivastava, Advocate with Mr.Manudev Sharma, Rev.Pet.241/2016 & conn.matters Page 3 of[9] 2016:DHC:8575-DB instructed by Ms.Deepika V.Marwaha, Ms.Worthing Kasar, Mr.Vaibhav Asthana, Advs. CORAM: HON'BLE MR.
JUSTICE PRADEEP NANDRAJOG HON'BLE MS.
JUSTICE MUKTA GUPTA PRADEEP NANDRAJOG. J.
1. The above captioned appeals were disposed ofby an order dated April 08,2016. It reads as under:-
r" Arbitration and Conciliation Act, 1996.
4. The learned Single Judge has noted that there was a cross-default clause in the agreement between the parties with respect to all agreements and the intention was to create cross-default and cross-security inter-se all transactions. The effect was that a default under one agreement would be deemed to be a default under all agreements. The learned Single Judge has noted that medical equipments gotfinanced by Vasan from GE was a collateral security under all loan agreements i.e. default to honour any one agreement wouldresult not only in default Rev.Pet.241/2016 & conn.matters 2016:DHC:8575-DB.) ^1 ofall but additionally entitling GE to take resort to remedy concerning all equipment purchased from the loan taken and offered as collateralsecurity. The learned Single Judge has noted that the statement ofaccount relied upon by GE was not disputed by Vasan. Learned Single Judge has noted that loan advanced under different agreements was ^'lOO crores, repayable along with interest. Payment returned was T71,77,44,906/-. Balance outstanding was ?39,66,91,260/-. Pursuant to interim orders passed earlier, as noted in the impugned order, valuation report was obtained as per which report the value of the hypothecated property as ofJanuary 06, 2016 would be ?37,13,09,059/-. It is apparent that depreciation and machinery being old has resulted in its valuefalling. Learned Single Judge has noted that Vasan is in arrears ofrent ofrent qua a property taken on lease where one of the many health care centres were established.
5. The learned Single Judge has noted that attempts were made to resolve the issue because outstanding amount was not in dispute. Learned Single Judge has noted that on December 15, 2015, 3 post dated cheques were issued in sum of fi crore, T3crores and & crores respectively. The first cheque to be presented on January 20, 2016 was dishonoured. The learned Single Judge has noted that Vasan isfacing huge financial problems. For non-payment of ESI dues its account has been attached by the ESI authorities. The learned Single Judge has accordingly appointed a receiver to take charge ofthe propertyfinanced with a direction that report shall be submitted by the receiver to the arbitrator and if sold by the receiver first option shall be given to the petitioner to buy the same, failing which to a thirdparty.
6. Core reasoning given by the learned Single Judge is that there is every possibility of the machinery offered as collateral security not being available, if attached by third parties.
7. We have perused the grounds in appeals and have heard learned counsel for the parties. Financial hardship Rev.Pet.241/2016 & conn.matters 2016:DHC:8575-DB I appears to be the signature tune of the appeals. Vasan wants to project that its intention is honest and due to it not being able to generate enough revenue, it is unable topay the dues under the agreement.
8. It is trite that an Appellate Court is concerned with the legality ofan order passedby the learned Single Judge. Unless it was shown that the learned Single Judge has misapplied the law or has ignored material facts or has relied upon irrelevant facts, a discretionary order passed wouldnot be interdicted bya superior Court.
9. But in our view a commercial solution has to befound whilepreserving the right ofthe respondent GE.
10. Concurring with the view taken by the learned Single Judge that the right of GE has to be protected and lest somebody else claims a lien over the hypothecatedproperty, it should beplaced under the custody ofa receiver.
11. The appellants have handed over a banker's draft in favour ofGE to learned counselfor GE. The banker's draft is in sum of ?2.[5] crores and is received by learned counsel for GE withoutprejudice.
12. Sale of the equipment in question would take time. The learned Single Judge has givenfirst right ofpurchase to Vasan.
13. Learned senior counsel for Vasan states that Vasan would try and raise necessary resources to clear the dues of GE. As regards the hypothecated machinery, we are of the opinion that permitting the receiver appointed by the learned Single Judge who is an employee of GE to take charge ofthe property, which are machines and equipments used for diagnostic purposes, would mean that warehouse charges wouldhave to be incurred by GE and the machinery would lie idle till it is sold. It would be better if the hypothecated machinery is put under custody of joint receivers, one nominee of Vasan and the other of GE with the obligation on the nominee receiver of Vasan responsible Rev.Pet.241/2016 8cconn.matters Page 6 of[9] -4 / for its safe custody, meaning thereby that the hypothecated equipment and machinery could continue to lie at theplace where it is but under receivership; with physicalpossession being with the receiver nominee of Vasan, who would be personally accountablefor the machinery ifit is lost.
14. Thereafter the two receivers could jointly sell the hypothecated property, with the sale supervised by the Arbitrator, which as per the impugned order has to be nominated by GE within 30 days from the date of the impugned order dated March 08, 2016. Meaning thereby the Arbitrator needs to be appointedforthwith.
15. We dispose ofthe appeals directing that upon Vasan paying to GE a sum of ^5,00,000/- per week commencing from the week commencing April 10, 2016 and ending on April 16, 2016 and so on, the direction in the impugned order would be superseded with the direction that the hypothecatedproperty would be in the deemedpossession of joint receivership ofSh.Gaurav Tyagi the nominee receiver ofGE and Dr.Radha Krishnan Salai the Managing Director of Vasan, with the hypothecatedproperty remaining where it is, but under the possession of Dr.Radha Krishnan Salai who would be accountable not only to this Court but even to the learned Arbitrator if hypothecated machinery is found missing. The remainder directions issued by the learned Single Judge concerning sale of the hypothecated property are maintained with the modification that the sale shall take place before the learnedArbitrator appointed by GE.
16. The joint receivers shall file a report before the Arbitrator withina period ofthree weeksfrom today.
17. The appeals are disposed ofwithout any orders as to COStSi "
2. We had concurred with the view taken by the learned Single Judge that it was a fit case where the medical equipments got financed by the appellant from the respondent and in respect ofwhich the respondent had a Rev.Pet.241/2016 & conn.matters 2016:DHC:8575-DB 3V lien, were liable to be repossessed under the agreement(s) between the parties. But, had attempted to find a commercial solution to the problem because sale ofthe hypothecated machinery over which the respondent had a lien would have taken time and if the machinery was kept ina warehouse and made to idle, nobody would have gained and possibly its price may have diminished. Thus, upon the condition that the appellant paid lacs per week we had permitted the machinery to be retained by the appellant but under a joint receivership of the Managing Director of the appellant and the receiver appointed by the learned Single Judgetill it was sold.
3. The respondent has filed the above captioned review petitions pointing non-cooperation from the Managing Director of the appellant with further grievance that a lot ofhypothecated machinery is not to be found at the places it was installed, and the agreement(s) between the parties prohibit the appellant from removing the machinery without the prior consent of the respondent.
4. The appellant does not dispute that a lot ofhypothecated machinery is not in the premises where it had to be kept, but justifies the same as appellant's compulsion because the landlords of the buildings taken on rent to run diagnostic centres have regained possession.
5. Learned counsel for the respondent has produced an e-mail sent by the appellant which purportedly informs the respondent the current whereabouts ofthe hypothecated machinery. The same has been seen by us. Regretfully, the communication does not record the nature, the number or the make ofthe machinery.
6. The fact of the matter remains that till date the respondent is clueless to the whereabouts of the hypothecated machinery and the commercial solution which we had found being frustrated by the appellant, in our Rev.Pet.241/2016 & conn.matters Page 8 of[9] 2016:DHC:8575-DB opinion the ends ofjustice warrants the review petitions to be allowed.
7. Order dated April 08, 2016 is recalled and the appeals are dismissed.
8. The result^uld be that the receiver appointed by the learned Single Judge would nofr>act as the Sole Receiver and would take charge of the hypothecated machinery.
9. No costs. (PRADEEP NAM)RkjOG) JUDGE
JUDGE MAY 24,2016 skb Rev.Pet.241/2016 «& conn.matters Page 9 of[9]