Court
Panel: Chaired by Mr. Judge Shihab Abdul Rahman Al-Hammadi, Chief Judge of the
Circuit, accompanied by Messrs. Judges: Al-Bashir bin Al-Hadi Zaytoun and
Abdullah Boubaker Al-Siri.
(2) Evaluating the gravity of the justifications for imposing judicial
receivership falls within the purview of the trial court, Conditions therefor.
Deviation from these conditions renders the ruling deficient in reasoning.
(3)
The appellant bank upheld in its plea to institute judicial receivership on real
estate owned by the second respondent, asserting a breach by both first and
second respondents of their obligations towards the bank regarding the repayment
of the granted banking facilities and associated interest. Despite a court
ruling obliging them to fulfill these obligations, implementation proved
impractical due to the absence of bank accounts for provisional seizure.
Meritorious defence. The contested ruling, however, rejected the imposition of
receivership, contending that the properties were not central to the dispute and
belonged to the second respondent without a thorough examination of the
meritorious defence presented. Such oversight renders the ruling deficient in
reasoning. The rationale for this lies in the fact that the imposition of
receivership falls within the domain of summary justice, serving as a
provisional measure to safeguard the appellant's proven right, without prejudice
to the underlying merit of the right.
Whereas
in the facts, as apparent pursuant to the perusal of the contested ruling and
accompanying documents, the appellant initiated lawsuit No. 4799 of 2020 -
Summary - against the two respondents. The primary request in this suit was the
imposition of receivership on properties owned by the second respondent. The
appellant sought the appointment of a judicial receiver responsible for managing
and exploiting these properties, including leasing the units to third parties.
The revenue generated from these activities was to be deposited into a bank
account. The basis for this request lay in the fact that the first respondent
company, owned by the second respondent, entered into a financial arrangement
with the appellant bank. This involved securing a loan amounting to 245,000,000
dirhams. The company committed to making monthly instalments as part of the
repayment plan, with the second respondent providing a guarantee for this
financial obligation. Additionally, a contractual agreement was reached between
the second respondent and the appellant. This contract outlined the transfer of
rental returns from four properties situated in the Emirate of [Name]. Due to
the failure of the debtor company and its owner (the second respondent) to
fulfil the agreed-upon monthly instalments, the outstanding amount reached
approximately 263,000,000 dirhams by 31/5/2020. In response to this non-payment,
the appellant initiated legal action by filing Suit No. 1178 of 2020 at the
Sharjah Commercial Plenary. The purpose of this legal action was to demand the
payment of the amounts owed by the respondents, and the court awarded the
amounts to the appellant. The rental returns from the properties served as one
of the guarantees provided by the second respondent to secure the repayment of
the loan. Given the importance of this issue, the lawsuit was processed under
summary justice. The court of first instance rejected the case, and upon the
appellant's appeal in Appeal No. 1605 of 2020, the Court of Appeal, in a session
dated 6/3/2021, confirmed the initial ruling. Dissatisfied with this outcome,
the appellant filed the current cassation. Upon presentation to this court, it
deemed the cassation valid for consideration and scheduled a session for its
hearing. Whereas the appellant objects to the contested ruling citing violation
of the law and the error in its application by rejecting the case due to the
absence of a dispute over the ownership of the real estate subject matter of the
dispute, which is owned by the second respondent. The appellant argues that the
contested ruling erroneously concludes that there is no serious dispute
warranting the imposition of receivership because it does not relate to the
ownership of the owner on whom the receivership is sought. The appellant asserts
that the imposition of receivership on the four properties is supported by
documents, serving as a necessary measure to temporarily protect the creditor's
money from loss when it remains in the hands of the debtor who refuses to pay.
The appellant emphasises that the lawsuit filed is based on these properties as
a guarantee, demonstrating the seriousness of the dispute and urgency, without
prejudicing the origin of the right in Commercial Case No. 1178 of 2020, where
the respondents were obligated to pay. This, according to the appellant, renders
the ruling flawed and necessitates its reversal.