The Supreme Court has dismissed Deccan Chronicle Holdings’ (DCHL) appeals challenging the Bombay High Court order that directed the media house to furnish securities of over R101.71 crore in favour of Tata Capital Financial Services and of over R25 crore in favour of L&T Finance.
The HC had said that failure to furnish bank guarantees would result in appointment of a court receiver over the properties of the Hyderabad-based Deccan Chronicle.
A bench headed by Justice RM Lodha dismissed the media house’s appeals against both the lenders. However, it gave liberty to it to approach the arbitrator for modification of the impugned order in the case of Tata Capital. The arbitrator has also been directed to decide the issue uninfluenced by the HC order. In case of L&T, the arbitrator has already ruled against DCHL.
This means that the receiver appointed by the HC can take physical possession of several immovable properties and would dispossess DCHL.
In the Tata case, the properties that would be attached include Deccan Chronicle’s prime property forming part of Mathuradas Mills Compound, Lower Parel and other assets/properties of guarantor Venkatram Reddy.
In December, the Supreme Court had refused to entertain another DCHL petition against the Andhra Pradesh High Court that allowed Kotak Mahindra Bank to sell the printing press and its premises, if the former fails to clear its dues to the tune of more than R100 crore by February 28, 2014.
Most of the 28 key lenders to DCHL have already proceeded against it under securitisation laws for enforcing the security interest. The petitions filed by different lenders are at various stages in different fora, including debt recovery tribunals and high courts.
Shanti Bhushan, appearing for DCHL, argued that an arbitration agreement cannot be invoked for enforcement of mortgage. “The HC grossly erred in coming to the finding that creditors are justified in seeking to assert their money claims in arbitration and may choose not to seek enforcement of mortgage before making such a claim,” the petition stated.
It further added that if part of the claim cannot be referred to arbitration and such claim cannot be segregated with other claims, no part of dispute can be referred to arbitration and the same can be decided only by a competent court.
The HC order came on the arbitration petitions filed by Tata group company and L&T seeking to recover their loan dues. Tata Capital Financial had filed an arbitration petition under section 9 of the Arbitration Act against DCHL and its promoter for recovery of R101 crore.