hc mumbai

General Lien cannot be exercised by Banker, factors, Wharfingers, Attorneys and Broker: Bombay High Court

It is just and proper to direct defendants to release bills of lading immediately. In fact, it appears, that since the second consignment has not been released within a reasonable time, plaintiffs’ vendees have cancelled the orders. Therefore, the balance of convenience also tilts in favour of the plaintiffs. This judgment was pronounced by Hon’ble Justice Sandeep K. Shinde at Bombay High Court in the matter of Anax Industries Pvt. Ltd. v. Micro Logistics Pvt. Ltd. [AOST 93898 of 2020].

The appellant instituted the present suit for damages and pending suit, sought mandatory injunction seeking the release of bills of lading illegally withheld by the defendants-freight forwarding agents, so as to preserve the cargo before it loses utility. The matter then went to the District Court, the learned District Judge-2 declined the mandatory relief and aggrieved by the order, this appeal is preferred under Section13(1)(A) of the Commercial Courts Act, 2015 read with Order 43 Rule 1 of the Code of Civil Procedure, 1908. 

The Hon’ble High Court observed that “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 plaintiffs to the defendants were towards sea freight charges for three containers. Pleadings of either party do not suggest that bailee was empowered to exercise the general lien envisaged under Section 171 of the Indian Contract Act, 1872.”

While deciding upon the matter, the court held that “in consideration of the facts, evidence and circumstances emerging and flowed therefrom, I hold that Rs.4,35,000/- was paid by the plaintiffs on 30th May 2020 to the defendants towards sea freight charges for the second consignment; Circumstances prevailing were “indicative of the fact” that Rs.4,35,000/- were paid towards the second consignment and therefore, defendants were not justified in adjusting it against the dues; Defendants were not entitled to exercise general lien in terms of Section 171 of the Indian Contract Act, 1872. An appeal is allowed. The impugned order dated 10th August 2020 passed by the I/c District Judge-2, Pune is quashed and set aside. Prayer clause (b. of the Civil Application is granted and made absolute. As the appeal itself is disposed of, nothing survives in the civil application therein and the same is also disposed of.”

The Court placed its reliance upon the case of Board of Trustees of the Port of Bombay and others v. Sriyanesh Knitters (1999) 7 Supreme Court Cases 359 where the Court held 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 benefit under the said section. The first part gives a statutory right of lien to four categories only, namely, bankers, factors, wharfingers 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 the aforesaid five 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 effect. Whereas in respect of the first 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 have bailed the right of retaining them as securities can be exercised only if there is an express contract to that effect.”

Finally, the petition has been disposed of.  

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Judgement reviewed by-Sarita Kumari

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