Bombay High Court
Anax Industries Private Limited Thr. ... vs Micro Logistices (I) Private Limited ... on 22 December, 2020
Author: Sandeep K. Shinde
Bench: Sandeep K. Shinde
18-AOST-93898-
2020.odt
Shambhavi
N. Shivgan IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
Digitally signed by
Shambhavi N.
Shivgan
Date: 2020.12.28
APPEAL FROM ORDER (ST) NO.93898 OF 2020
16:10:48 +0530 WITH
INTERIM APPLICATION (ST) NO.93899 OF 2020
Anax Industries Pvt. Ltd.
A company registered under the
provisions of Companies Act, 2013,
having its ofce at Plot No.8, Kamal
Kunj, 102, Shivaji Housing Society,
Senapati Bapat Road, Pune-411 016
Having its plant at:-
Gat No.1172-1178, At post Kodoli,
Tal: Panhala, District: Kolhapur
Through its Authorized Ofcer:
Mr. Sudhir Pendse
Age: 56 years, Occ: Service. ... Appellants
(Org. Plfs..
Vs
Micro Logistics (I., Pvt. Ltd.
A registered company under the
provisions of the Indian Companies
Act, having address at 610-611 Avior
Nirmal Galaxy, L.B.S. Marg, Mulund,
Mumbai 400 080
Through its director Mr. Rajan
Shah
Age about 50 years ... Respondents
(Org. Defts.
...
Shivgan 1/26
18-AOST-93898-
2020.odt
Mr. Jaydeep Deo for the Appellants.
Mr. Arjun Amanchi for respondents.
CORAM : SANDEEP K. SHINDE J.
RESERVED ON : 8th DECEMBER, 2020.
PRONOUNCED ON: 22nd DECEMBER, 2020.
JUDGMENT :
Heard. With consent of the learned counsel appearing for the parties, matter is taken up for fnal hearing forthwith.
2 Appellants/plaintifs instituted commercial suit No.12 of 2020 for damages and pending suit, sought mandatory injunction seeking release of bills of lading illegally withheld by the defendants-freight forwarding agents, so as to preserve the cargo, before it looses utility. The learned District Judge-2, Pune declined the mandatory relief vide order dated 10 th August, 2020 and thus, this appeal is preferred under Section 13(1-A. of the Commercial Courts Act, 2015 read with Order 43 Rule 1 (2. of the Code of Civil Shivgan 2/26 18-AOST-93898- 2020.odt Procedure, 1908.
3 Plaintifss case is;
. Plaintif is a private limited compay, engaged in the business of manufacturing core board and high strength paper conversion products. Defendant is one of the group companies of SJA group, a freight forwarding agents. That since incorporation, plaintifs have been exporting products to almost 36 countries and it exports consignments were handled by defendants. It is plaintifss case that freight forwarding agent is also responsible for arranging over-seas customs clearance and inland haulage of the containers as per the order.
FIRST CONSIGNMENT:
4 Plaintifs, claim that on 27th April, 2020, core board paper weighing 2,22,334 metric ton was shipped Shivgan 3/26 18-AOST-93898- 2020.odt in nine containers from factory of the plaintifs. Port of loading was Nha-sheva and port of discharge was Bunder Abbas in Iran. These nine containers reached at port of destination, on 3 rd May, 2020. Whereupon defendants raised two invoices nos. 17 and 18, towards ocean freight charges for Rs.11,66,874/- and Rs.5,900/-. However, defendants declined to release the bills of lading, on account of outstanding dues. Plaintifs, therefore, on 22nd May, 2020, paid Rs.8,65,000/- to the defendants. After receiving Rs.8,65,000/-, defendants released bill of lading and issued seaway bill dated 29th April, 2020, which enabled consignee, to release the goods from the port at Iran. Plaintifs would contend that since goods were not released within free period of 14 days, consignee was required to pay demurrage charges, US dollars 2340 i.e., Rs.1,80,297/-. Plaintifs would claim that its customers demanded the demurrage charges and accordingly, plaintifs raised credit note in favour of Shivgan 4/26 18-AOST-93898- 2020.odt them for Rs.1,80,297/-.
SECOND CONSIGNMENT:
5 It is the plaintifss case that next consignment of 72,666 MT of core board paper in three containers left Nhava-sheva port on 29 th April, 2020 and reached the port of destination, i.e., Abbas bunder at Iran on 8th May, 2020. Towards ocean freight charges of three containers, defendants raised two invoices on 17th June, 2020, i.e, nearly after a month and half for Rs.4,35,000/-.
6 Subject dispute relates to second consignment, i.e., three containers which though reached port of delivery on 8 th May, 2020, bills of lading were not released and withheld illegally by the defendants, even after paying freight charges. Shivgan 5/26
18-AOST-93898- 2020.odt 7 It is plaintifss case that as per the prevailing practice, defendants were required to procure bills of lading from carrier and give it to shipper (plaintifs. to enable shipper to forward it to its customers over-seas to enable them to release the goods. However, the defendants refused to release the bills of lading under the pretext of past dues. Plaintifs, therefore, paid Rs.4,35,000/- to the defendants on 30 th May, 2020, but in spite of payment, defendants declined to release the the bills of lading. Defendants infact after receiving Rs. 4,35,000/- subjected release of consignment on two conditions :
(I. additional shipment business;
(ii. payment of Rs.20,00,000/- towards past dues
8 Plaintifs would assert that, in ordinary course of business, original bill of lading reaches consignee in time to avoid liability towards the Shivgan 6/26 18-AOST-93898- 2020.odt demurrage or detention charges. However, though the second consignment had reached the port of destination on 8th May, 2020 and though Rs.4,35,000/- were paid on 30th May, 2020, bills of lading were not released. Resultantly, till date, consignment is lying at the port of destination. It is thus, asserted that the defendants cannot take disadvantage of their own wrong and therefore are liable to release consignment and pay demurrage charges.
9 Plaintifs stated that core board paper is having limited life and if goods are not taken out from the containers, same are likely to loose its utility and, therefore, it is just necessary that goods are immediately released from the port of destination. That if the goods are allowed to remain inside the container during pendency of the suit, the purpose of fling suit and seeking relief would be frustrated. Plaintifs stated that defendants cannot take Shivgan 7/26 18-AOST-93898- 2020.odt disadvantage of its own wrong and, therefore, liable to make good loss caused to plaintifs and its customers in Iran towards demurrage and detention charges or any other charges, which the plaintifs and consignee may have to pay to get the containers released. Under these circumstances, plaintifs have fled suit seeking declaration that the defendants have committed breach of contract and thus, withholding bill of lading is illegal and void-ab-initio. That due to illegal and irresponsible act of withholding bill of lading from 8 th May, 2020 in respect of three containers, customers have lost confdence in the plaintifs, who have informed the plaintifs that they will not do any business with the plaintifs in future. Therefore, besides, seeking declaration that defendants have committed breach of contract by withholding bill of lading, plaintifs are also seeking declaration that defendants are liable to pay sum of Rs.1,80,297/- with interest @ 24% p.a. towards the demurrage and Shivgan 8/26 18-AOST-93898- 2020.odt detention charges (towards frst consignment. and damages of Rs.1,25,00,000/- per fnancial year including fnancial year 2020-21 and every fnancial year thereafter till disposal of the suit, towards damages for loss of business and loss of proft in relation to its customers in Iran. Pending suit Plaintifs are seeking directions to the defendants to release the bill of lading or sea-way bills vis-a-vis 72666 MT of core board papers now lying at Abbas bunder in Iran in three containers without payment of any detention/demurrage charges by the plaintifs or its customers.
10 Pending suit, plaintifs sought relief of mandatory injunction seeking directions against the defendants to release three containers lying at freight container station, bunder-Abbas, Iran. Trial court declined the relief and therefore this Appeal. Shivgan 9/26
18-AOST-93898- 2020.odt 11 Submission of the plaintifs, is therefore, two fold; that second consignment reached the port of destination on 8th May, 2020. Thereafter, plaintifs paid Rs.4,35,000/- to the defendants on 30th May, 2020 with a clear understanding that this amount would be appropriated towards freight charges for three containers. In spite of receiving Rs.4,35,000/-, defendants refused to release bills of lading. Counsel would submit, this payment was made in view of the clear understanding arrived at between the parties as is evident from whatss app messages exchanged between Mr. S.M.Nagar (representative of the plaintifs. and Mr. Rajan Shah (representative of the defendant.. 12 Defendants refuted plaintifss claim on the following grounds:
(a. Though invoices for ocean freight charges for three containers were raised on 17 th June, Shivgan 10/26 18-AOST-93898- 2020.odt 2020 for Rs. 4,35,000/-, plaintifs have not paid the charges till date;
(b. That Rs.4,35,000/- paid on 30th May, 2020 were adjusted against dues in running account as per the practice;
(c. In absence of such "other circumstances"
"and or of intimation of appropriation" from the plaintifs, while paying Rs.4,35,000/-, it was appropriated towards subsisting lawful dues;
(d. That defendants being bailee has had right to retain the three containers / shipments until due remuneration for the services rendered is received.
13 Thus, it appears defendants have exercised "right to retain goods" in terms of section 170 of the Indian Contract Act, 1872; and "right to appropriate"
Rs.4,35,000/- against debt, in absence of specifc intimation envisaged under Section 60 of the Indian Contract Act, 1872.
Shivgan 11/26 18-AOST-93898- 2020.odt
14 Before appreciating rival contentions let me reproduce the provisions of Sections 60, 170 and 171 of the Indian Contract Act, 1872;
"60. Application of payment where debt to be discharged is not indicated.- Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debt r, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits."
"170. Bailee's particular lien.- Where the bailee has, in accordance with the purpose of the bailment, rendered any service involving the exercise of labour or skill in respect of the goods bailed, he has, in the absence of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them."
"171. General lien of bankers, factors, wharfingers, attorneys and police-brokers. - Bankers, factors, wharfngers, attorneys of a High Court and police-brokers may, in the absence of a contract to the contrary, retain, as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that efect."
15 Thus, questions, I am called upon to answer Shivgan 12/26 18-AOST-93898- 2020.odt are;
(i. Whether defendants being freight services agents, have right to retain shipment i.e. goods bailed, for not receiving the ocean freight charges in terms of Section 170 of the Indian Contract Act, 1872?
(ii. Whether defendants were justifed in appropriating Rs. 4,35,000/- made on 30th May, 2020 against past dues?
(iii. Whether, while making payment of Rs.4,35,000/- on 30th May, 2020, "attendant circumstances", were indicating that this payment was towards ocean freight charges for three containers, which reached port of delivery on 8th May, 2020?
(iv. Whether plaintifs have made out prima facie case and in whose favour balance of convenience tilts and whether plaintifs would sufer irreparable loss if the injunction is refused?
Shivgan 13/26 18-AOST-93898- 2020.odt 16 In this case, it is undisputed fact that since plaintifss incorporation, its export consignments have been handled by the defendants as a freight forwarding agents. Plaintifss ledger account (1.7.2019 to 2.7.2020. shows, it is running account, i.e., payments were made to the defendants towards services rendered at convenient intervals subject to fnal settlement of accounts.
17 Here frst consignment of nine containers reached the port of load on 27 th April, 2020 and reached the port of destination on 26th April, 2020. On the next day, defendants raised invoices towards ocean freight for nine containers, i.e., on 27 th and 28th April, 2020, in all for Rs.11,72,774/-. 18 Though the three containers (second consignment. reached the port of destination on 8 th Shivgan 14/26 18-AOST-93898- 2020.odt May, 2020, defendants have not released bills of lading till date and therefore, M/s Good Rich Maritime Pvt. Ltd. shipper liner called upon the plaintifs to clear the shipment and further inform that till 10 th October, 2020, shipment has accrued demurrage and detention charges Rs.9,09,000/-.
19 Evidence on record shows following payments were made by the plaintifs to the defendants from March 2020 till June, 2020;
.
. Submission of the plaintifs is that second consignment reached the port of destination on 8 th Shivgan 15/26 18-AOST-93898- 2020.odt May, 2020 and thereafter, plaintifs paid Rs. 4,35,000/- on 30th May, 2020 towards its freight charges whereupon defendants agreed to release the consignment. This, agreement-a circumstance is discernible from the messages exchanged between Mr. S.M. Nagar (representative of the plaintifs. and Mr. Rajan Shah (representative of the defendants.. Thus, submitted that messages exchanged establishes the fact that defendants had agreed to release bills of lading of second consignment soon after, receipt of Rs. 4,35,000/-. To appreciate the arguments messages exchanged between the plaintifs and the defendants are reproduced herein under;
As discussed, I would also request you to kindly plan to release the remaining 3 B/Ls tomorrow... I am trying to release the remaining Rs.4.35 Lakhs out of the committed Rs. 13 Lakhs Thanks once once again... My remittence of Rs. 4.36 Lakh will happen either 1 as te today or tomorrow,,, Kindly arrange for release as discussed.... Regards..... Nagar cc: Sh Sudhir Pendse [29/05/20, 7:20:02 PM] S N Nagar : Sir, awaiting your confirmation.... Regards [29/05/20, 7:56:25 PM] Rajan Micro 2 : You have not transfer any money [29/05/20, 8:31:32 PM] S N Nagar : Yes Please.... It will be done tomorrow.... The remaining Rs. 4.35 Lkh....kindly get the remaining 3 B/Ls.... Regards.... Shivgan 16/26 18-AOST-93898- 2020.odt Nagar [30/05/20, 2:18:35 PM] S N Nagar : image omitted [30/05/20, 2:19:47 PM] S N Nagar : Sir, Payment made ..... please see attached screen shot...kindly process the remaining 3 B/L please... Regards.... Nagar [01/06/20, 2:37:57 PM] S N Nagar : Good afternoon Sir.... Hope you are getting thereafter B/L released for 3 containers of Iran.... We had made the payment to you as [01/06/20, 2:41:46 PM] Rajan Micro 2 : Sorry sir payment not as per our agreement you have misunderstood kindly check with bharat. [01/06/20, 2:42:06 PM] Rajan Micro 2 : will cal u after one hour [01/06/20, 2:44:07 PM] S N Nagar : Please call [02/06/20, 11:08:52 AM] S N Nagar : Good morning... I was waiting for your call...
Hope you are releasing the 3 B/Ls today..... Regards [02/06/20, 11:14:53 AM] Rajan Micro 2 : Sorry sir we will not be able to do it unless we have some more payment and shipment in pipeline this our business policy from beginning. Sir I can not risk open credit with you hope you will understand. Send me your payment plan sir. Will be able to speak only after 2pm. [03/06/20, 11:03:50 AM] S N Nagar: Good morning Sir.... I await your call & update on the 3 B/L of Iran.... Kindly revert.... Regards..... Nagar [03/06/20, 11:08:44 AM] Rajan Micro 2 : Gud mrng kindly go through my yesterday msg it is very clear.
[03/06/20, 11:20:04 AM] S N Nagar: Sir, requesting to release the 3 B/L.... Rest all we can clear/ discuss....... Regards [03/06/20, 11:33:41 AM] Rajan Micro 2: Sir sorry every time we discuss. My stand is very very very clear I can not give you clean credit without having any shipment in my hand or other options you have to clear my entire out standing (which I know is not possible). Any way as you have only mentioned few days back your export shipments are starting in this week so let's wait till than. I am assuring you once new chtrs are stuff and reached the port for export we will release this B1 ALONG WITH MINIMUM PAYMENT OF 20 LACS. This are my two requirements sir. I have always supported your company and trusted & respect your commitment but we are business not exchanging services/ money on personal relationships. Hope sir you understand. You should understand despite all this we release 9cntrs B1 just to help you out(from the beginning I was not in favour and against our business policy) request you not to take too much advantage of relationship. Shivgan 17/26 18-AOST-93898- 2020.odt 20 What could be gathered from these messages is that; Mr. S.M. Nagar (representative of the plaintifs. on 28th May, 2020 requested Mr. Rajan (representative of the defendants. to release three bills of lading and assured payment of Rs. 4,35,000/-, out of committed Rs. 13,000,00/-. On 29th May, 2020, Mr. S.M. Nagar again requested to release bills of lading. Defendants in reply just enquired about the payment, since not received by them on 29 th May, 2020 and said nothing more. On 30th May, 2020, Rs. 4,35,000/- were credited in the books of defendants. However, bills were not released. Thus, on 1 st June, 2020, Mr. Nagar once again, requested Mr. Rajan Shah to release bills of lading, however, he declined to release the bills. Defendantss message of 3rd June, 2020 suggests that for the frst time release of consignment, was made subject to two conditions. The frst condition was that plaintifs would get more business of shipment to the Shivgan 18/26 18-AOST-93898- 2020.odt defendants and second that plaintifs would pay Rs. 20,000,00/- on account towards outstanding dues. 21 Thus, in consideration of, the facts of the case, messages exchanged, its reasonable construction, coupled with the fact that parties were following and maintaining "on account payment"
practice, since long, in my view, Rs.4,35,000 paid by the plaintifs to the defendants were towards sea freight charges for three containers. One more circumstance emerged on record, is that invoices for second consignment were raised nearly after a month and half, i.e., on 17th June, 2020. This is unusual departure from the prevailing practice. No reasons are coming forth for such a departure or delay in raising the invoices. In fact, defendants in the prevailing circumstances were expected to raise invoices soon after the second consignment reached port of delivery.
Therefore, this circumstance assumes signifcance, while appreciating the contentions of the plaintifs and Shivgan 19/26 18-AOST-93898- 2020.odt defence put up by the defendants. Factually, speaking messages reproduced above do not even suggest "that defendants had communicated plaintifs before hand that Rs.4,35,000/- would be adjusted against the dues."
On the contrary, messages in clear terms suggest that second consignment would be released on receipt of Rs.4,35,000/-.
. In fact, on assurance by the defendants that upon receiving Rs.4,35,000/-, consignment would be released, plaintifs made no mistake in believing the defendants in paying Rs.4,35,000/- on 30 th May, 2020. However, defendantss intention was otherwise, as is evident from the messages dated 1st and 3rd June, 2020, which I re-produce, again:
"[01/06/20, 2:37:57 PM] S N Nagar : Good afternoon Sir.... Hope you are getting thereafter B/L released for 3 containers of Iran.... We had made the payment to you as [01/06/20, 2:41:46 PM] Rajan Micro 2 : Sorry sir payment not as per our agreement you have misunderstood kindly check with bharat. [01/06/20, 2:42:06 PM] Rajan Micro 2 : will cal u after one hour [01/06/20, 2:44:07 PM] S N Nagar : Please call [02/06/20, 11:08:52 AM] S N Nagar : Good morning... I was waiting for your call...
Hope you are releasing the 3 B/Ls today..... Regards [02/06/20, 11:14:53 AM] Rajan Micro 2 : Sorry sir we will not be able to do it unless Shivgan 20/26 18-AOST-93898- 2020.odt we have some more payment and shipment in pipeline this our business policy from beginning. Sir I can not risk open credit with you hope you will understand. Send me your payment plan sir. Will be able to speak only after 2pm. [03/06/20, 11:03:50 AM] S N Nagar: Good morning Sir.... I await your call & update on the 3 B/L of Iran.... Kindly revert.... Regards..... Nagar [03/06/20, 11:08:44 AM] Rajan Micro 2 : Gud mrng kindly go through my yesterday msg it is very clear.
[03/06/20, 11:20:04 AM] S N Nagar: Sir, requesting to release the 3 B/L.... Rest all we can clear/ discuss....... Regards [03/06/20, 11:33:41 AM] Rajan Micro 2: Sir sorry every time we discuss. My stand is veryvery very clear I can not give you clean credit without having any shipment inmy hand or other options you have to clear my entire out standing (which I know isnot possible). Any way as you have only mentioned few days back your export shipments are starting in this week so let's wait till than. I am assuring you once new chtrs are stuff and reached the port for export we will release this B1 ALONG WITH MINIMUM PAYMENT OF 20 LACS. This are my two requirements sir. I have always supported your company and trusted & respect your commitment but we are business not exchanging services/ money on personal relationships. Hope sir you understand. You should understand despite all this we release 9cntrs B1 just to help you out(from the beginning I was not in favour and against our business policy) request you not to take too much advantage of relationship."
22 Thus, upon reading the text messages of 1 st, 2nd and 3rd June together, it is to be observed that after receiving Rs.4,35,000/-, defendants made, the release of consignment, conditional and exercised "right to retain goods" under Section 171 of the Indian Contract Act, 1872. However, messages of 3 rd June, 2020 show that the defendants had not exercised a 'particular liens Shivgan 21/26 18-AOST-93898- 2020.odt but 'general liens. If read carefully, 3 rd June message, does not suggest, goods were retained for not making payment of sea freight for second consignment. In fact, evidence and the circumstances emerging and fowing were indicative of the fact that Rs.4,35,000/- were paid towards freight charges of second consignment and not against dues, however, in breach of assurance/promise, defendants, adjusted it against dues and declined to release bills. The question nos.15 (i., (ii. and (iii. are answered accordingly, in negative. 23 Now so far as the issue, whether defendants were entitled to exercise lien under Section 171 of the Indian Contract Act, 1872 is concerned, it may be stated that defendants were not entitled to exercise general lien being not banker, factors, wharfngers, attorneys and also broker.
Shivgan 22/26 18-AOST-93898- 2020.odt 24 The Honsble Apex Court in the case of Board of Trustees of the Port of Bombay and others v. Sriyanesh Knitters (1999) 7 Supreme Court Cases 359 has observed in paragraph 17 thus:
"17 Having come to the conclusion that the MPT Act does not oust the provisions of Section 171 of the Contract Act what we have now to see is whether the appellants can claim any relief or beneft under the said section. Section 171 of the Indian Contract Act, 1872, reads as follows:
171 General lien of bankers, factors, wharfngers, attorneys, and policy-brokers - Bankers, factors, wharfngers, attorneys of a High Court and policy-
brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that efect.
This section is in two parts. The frst part gives statutory right of lien to four categories only, namely, bankers, factors, wharfngers and attorneys of High Court and policy-brokers subject to their contracting out of Section 171. The second part of Section 171 applies to persons other than aforesaid fve categories and to them Section 171 does not give a statutory right of lien. It provides that they will have no right to retain as securities goods bailed to them unless there is an express contract to that efect. Whereas in respect of the frst category of persons mentioned in Section 171 section itself enables them to retain the goods as security in the absence of a contract to the contrary but in respect of any other person to whom goods are bailed the right of retaining them as securities can be exercised only if there is an express contract to that efect." Shivgan 23/26 18-AOST-93898- 2020.odt . In the case in hand, pleadings of either party donot suggest that bailee was empowered to exercise the general lien envisaged under Section 171 of the Indian Contract Act, 1872.
25 Thus, in consideration of the facts, evidence and circumstances emerging and fowed therefrom, I hold that (1. Rs.4,35,000/- were paid by the plaintifs on 30 th May, 2020 to the defendants towards sea freight charges for second consignment;
(2. Circumstances prevailing were "indicative of the fact" that Rs.4,35,000/- were paid towards second consignment and therefore, defendants were not justifed in adjusting it against the dues; (3. Defendants were not entitled to exercise general lien in terms of Section 171 of the Indian Contract Act, 1872.
26 Goods cargo in the second shipment is a Shivgan 24/26 18-AOST-93898- 2020.odt paper, a perishable product, which may loose its utility if kept for long period. Even otherwise, plaintifs have paid sea freight for second consignment. Therefore, it is just and proper to direct defendants to release bills of lading immediately. In fact, it appears, that since second consignment has not been released within reasonable time, plaintifss vendees have cancelled the orders. Therefore, the balance of convenience also tilts in favour of the plaintifs.
27 For the reasons stated above, I pass the following order:
(I. Appeal is allowed. (ii. Impugned order dated 10th August, 2020 passed
by the I/c District Judge-2, Pune is quashed and set aside.
(iii. Prayer clause (b. of the Civil Application is granted and made absolute.
Shivgan 25/26 18-AOST-93898- 2020.odt 28 As the appeal itself is disposed of, nothing survives in the civil application therein and the same is also disposed of.
(SANDEEP K. SHINDE, J.) Shivgan 26/26