Milind N. Jadhav, J
1. Heard Interim Application (L) No.14248 of 2022.
2. By the present Interim Application, the Applicant / Plaintiff has prayed for multiple reliefs which are at paragraph No. 28 of the Application. An
urgent application is made on the ground that the detained goods (hereinafter referred to as the ""present cargo"") are perishable and should be released
as their value is deteriorating on a daily basis.
3. The Plaintiff has filed the present Suit for seeking a declaration that detention of the present cargo (Ascorbic Acid - Vitamin C - 20 MT) by
Defendant No.2 is without authority of law; for release of the cargo or for maintenance of the cargo in the Defendant's possession until it is handed
over to the Plaintiff without payment of detention or demurrages charges / ground rent and / or penalty. The Plaintiff also seeks damages of
Rs.10,00,000/- suffered by the Plaintiff due to wrongful detention and also in the alternative seeks a money decree of Rs.1,23,89,909/- in the nature of
damages suffered by the Plaintiff arising out of wrongful detention.
4. The reason for hearing the Interim Application during the vacation arose because the cargo in question imported by the Plaintiff is Ascorbic Acid
(Vitamin C), whose strength is reducing with each passing day. The Plaintiff has argued that the Defendant No.2 is levying demurrages charges of
approx. Rs.10,000/- per day and despite the Plaintiff having paid the full freight charges of the detained goods, the same are withheld by the
Defendant Nos.1 and 2 on the ground of claiming a lien over the cargo. Hence the urgency.
5. It will be apposite to briefly state such of the relevant facts which are necessary to hear the Interim Application.
5.1. Plaintiff is a Private Limited Company in India; Defendant No.1 is a Danish Company and is one of the largest container shipping line and vessel
operator in the world. Defendant No.2 is a Private Limited Company in India and is a subsidiary of Defendant No.1. Defendant No.5 is a company
incorporated in China.
TRANSACTION NO: 1 : 2020
5.2. In October 2020, Plaintiff booked the Defendant No.2 as its shipping line for exporting certain chemicals to its customer based in Beirut, Lebanon.
On receiving the quotation from Defendant No.2, Plaintiff booked a shipment of two containers containing 264 drums (42.240 MT) of Acetone for
shipping the same to Beirut. Plaintiff paid the requisite freight charges; sanctions were obtained and Defendant No.2 issued a Bill of Lading dated
03.12.2020. The value of the cargo was Rs.38,92,572/- which was to be paid to the Plaintiff after confirmation of receipt of the cargo.
5.3. According to the Plaintiff after shipping the cargo, Defendant No.2 informed the Plaintiff that the shipment was scheduled for re-export and
returned back to India. Plaintiff had requested the Defendant No.2 to modify the details of the consignee in order to complete the delivery but
Defendant No.2 did not respond and returned the shipment to India. Thereafter Defendant No.2 re- exported the two containers separately for which
two Container Freight Stations (CFS) were assigned. Thereafter Defendant No.2 issued a fresh of Bill of Lading dated 16.02.2021 and Non
Negotiable Way-bill dated 10.02.2021 for the same shipment. Defendant No.2 did not inform the Plaintiff about return of the cargo due to which after
the free detention period was over, demurrages charges, detention charges and other charges became applicable on day to day basis.
5.4. In April 2021, Plaintiff came to know about the aforementioned cargo having returned back and unloaded and for which charges became
applicable on day to day basis. Plaintiff sought 100% waiver on detention and demurrages charges / ground rent etc. from Defendant No.2 whereas
Defendant No.2 proposed a 50% waiver.
5.5. In September 2021, Plaintiff learnt that the cargo was unilaterally auctioned to a third party without giving notice to the Plaintiff.
5.6. Thereafter Defendant No.2 by email dated 24.01.2022 issued a Dunning Notice to the Plaintiff to make payment of the outstanding dues under
the Bill of Lading dated 16.02.2021 and Non Negotiable Way-bill dated 10.02.2021. This demand remained outstanding.
TRANSACTION NO.: 2 : 2022
5.7. In a completely different transaction, in January 2022 Plaintiff approached Defendant No.5 (Chinese Company) and sought export of 20 MT of
Ascorbic Acid (Vitamin C). Sales Contract dated 21.01.2022 was executed; Defendant No.5 agreed to sell 20 MT cargo for USD 96,000 to be paid
by the Plaintiff within 90 days from the Bill of Lading; Defendant No.5 issued commercial invoice and packing list dated 10.03.2022; Plaintiff paid an
amount of Rs.20,47,509/- on 21.01.2022 towards Customs Duty and GST; Plaintiff approached its banker for obtaining Letter Of Credit (LOC) for
USD 96,000; after completing the banking formalities Defendant No.6 stood as guarantor for the Plaintiff, Defendant No.5 booked and shipped the
present cargo through Defendant No.2 Shipping Company from China to India.
5.8. On 12.03.2022, Defendant No.2 issued Bill of Lading for one container of 20 MT Ascorbic Acid (Vitamin C) wherein Defendant No. 5 (Chinese
Company) was mentioned as supplier, Defendant No.6 (Banker) was the consignee and Plaintiff was the notified party. The cargo was insured for
USD 105,600 on 11.03.2022.
5.9. Plaintiff paid the freight charges to Defendant No.2 for the present cargo as stated in the Bill of Lading; the cargo was loaded on 12.03.2022
from China and the shipment was received at Nhava Sheva Port in India on 03.04.2022.
5.10. Defendant No.2 refused to issue delivery order and deliver the cargo to the Plaintiff. On enquiry by the Plaintiff it was revealed that the present
cargo was detained since the account of the Plaintiff was suspended by the Defendant No.2 in lieu of the outstanding dues on the earlier transaction
i.e. Bill of Lading dated 16.02.2021 and Non Negotiable Way-bill dated 10.02.2021.
6. The aforementioned facts appear to be undisputed.
7. Mr. Purohit, learned counsel appearing for the Plaintiff submits that detention of the present cargo cannot be linked to the earlier transaction as it is
a completely separate cause of action; that there is no nexus between the two transactions; Defendant No.2's action of withholding the present cargo
despite the Plaintiff having completed all formalities of payment is illegal and arbitrary forcing the Plaintiff to bear demurrages / ground rent charges /
detention charges and other penalties; that dues under the earlier transaction cannot be recovered by detaining the present cargo especially when the
earlier transaction stood completed since the cargo involved in the earlier transaction was auctioned and sold to recover the dues in accordance with
law. He submits that there is no omission on the part of the Plaintiff to give rise to any liability in respect of the present cargo; that detention by
Defendant No.2 is illegal and unjustified in view of the fact that in respect of the earlier transaction Defendant No.2 had issued Dunning Notice and
blacklisted the Plaintiff on the one hand and on the other hand the same Defendant No.2 had accepted to deliver the present cargo to the Plaintiff. He
further submits that in the present case there clearly exist two different transactions based on separate Bills of Lading and separate cause of action
having no nexus with each other; that Defendant No.2 had not taken any steps for recovery of the outstanding dues, if any, under the earlier
transaction till date; that the conduct of Defendant No.2 amounts to waiver of its right to recover the earlier dues from the Plaintiff as it has accepted
the shipment from the Plaintiff for the present cargo; that there is no privity of contract of the Plaintiff with Defendant No.2 which would give rise to
exercise such power of detention of the present cargo and the facts and circumstances of the present case do not give rise to claim a right of lien on
the present cargo.
8. PER CONTRA, Mr. Khatri, learned counsel appearing for the Defendant Nos.1 and 2 submits that the ad-interim relief sought by the Plaintiff is in
the nature of final relief and cannot be granted at this stage; that the present cargo is in the possession of Defendant No.3 and unless the Defendant
No.3 is heard no relief can be passed; that Defendant Nos.1 and 2 have a contractual lien upon the present cargo for the outstanding amount due by
the Plaintiff in respect of the earlier transaction which is admitted by the Plaintiff; that the Plaintiff has sought a prayer for release of the present
cargo without payment of the detention / demurrages / ground rent charges at the interim stage; that the contractual lien over the present cargo is in
respect of debt owed by the Plaintiff; that only on the Plaintiff's declaration the earlier shipment was sent to a country facing sanctions imposed by the
United Nations and hence the cargo had to be reexported back to India as the consignee was a Syrian National; hence once the cargo reached back
the Indian Port it attracted demurrages and detention charges and therefore the contractual lien over the invoices (amount to Rs.1,06,67,200/-) raised
by the Defendant No.2 on the Plaintiff subsists and hence is exercised.
8.1. Mr. Khatri submits that the Plaintiff is liable to pay an amount Rs.1,06,67,200/- in respect of the earlier transaction and in view of Clause 17 of the
Terms for Carriage"" the Defendant No.2 is exercising the said lien. He submits that Clause 17 stipulates that ""........the Carrier shall also have a lien
against the merchant on the goods and any document relating thereto for all sums due by the merchant to the Carrier under any other contract
whether or not related to this Carriage. The Carrier may exercise his lien at any time and any place in his sole discretion, whether the contractual
Carriage is completed or not........."" . Clause 17 further stipulates that ""the lien shall extend to cover the cost of recovering any sums due and for that
purpose the Carrier shall have the right to sell the Goods by public auction or private treaty without notice to the merchant"".
8.2. Mr. Khatri submits that because of the aforestated stipulation the Defendant No.2 is justified in detaining the present cargo.
8.3. At this stage, it is stated that the details of the auction of the earlier consignee and monies received by Defendant No.2 have not been placed on
record though substantive submissions are advanced across the bar and written submissions have also been given by the Defendant No.2.
8.4. Mr. Khatri has referred to and relied upon the provisions of the Indian Bills of Lading Act, 1856 to argue that it is settled principle of law
governing Bills of Lading that the consignee derives the right and obligations in respect of the goods covered by the bills of lading as the shipper.
8.5. Mr. Khatri has next argued that in respect of the present cargo and under the bill of lading dated 12.03.2022 covering the same, the parties have
agreed to an exclusive jurisdiction clause in the United Kingdom and hence this Court shall not have jurisdiction to decide the present application.
8.6. He has referred to and relied upon the decisions of the Apex Court in the following two cases in support of the aforesaid propositions:
(i) British India Steam Navigation Co. Ltd. Vs. Shanmughavilas Cashew Industries and Ors. (1990) 3 SCC 481;
(ii) M/s. Caravel Shipping Services Private Limited Vs. M/s. Premier Sea Foods Exim Pvt. Ltd..
9. I have heard learned counsel appearing for the respective parties and perused the material on record. Submissions made by the parties are on
pleaded lines. I have also perused the Affidavit-in-Reply dated 12.05.2022 filed by the authorized representative of Defendant Nos.1 and 2 to oppose
the Interim Application.
10. Admittedly there is no dispute about the dates and facts of the two transactions between the parties. Defendant Nos.1 and 2 have a claim of
Rs.1,06,67,200/- against the Plaintiff in respect of the earlier transaction. Though Mr. Khatri initially argued that the Defendant Nos.1 and 2 have a
general lien on the present cargo, he was fair to submit when his turn came that there was no general lien exercised but there was a contractual lien
exercised by the answering Defendants. In paragraph No.7 of the Affidavit-in-Reply the answering Defendants state that they have rightfully
exercised lien over the present cargo for recovery of their dues. If this be the case, then under the provisions of Section 171 of the Indian Contract
Act, 1872 the question of exercising the contractual lien cannot arise if there is no privity of contract between the parties. Further if the Defendant
Nos.1 and 2 contend that they have a contractual lien on the basis of ""Terms for Carriage"" a document which is produced at Exhibit 'A' to its reply,
then there needs to be an existence of a contractual document between the Plaintiff and Defendant Nos.1 and 2. According to the Defendant Nos.1
and 2 there is no privity of contract between the Plaintiff and Defendant Nos.1 and 2. At this stage without any contractual document been produced
before me, it is difficult for me to believe and accept the document ""Terms for Carriage"" relied upon by the answering Defendants and considering
that the Plaintiff is not a signatory to any contractual document the same may not bind the Plaintiff at all.
11. Further on perusal of the correspondence between the parties which is placed on record it is clear that though the Dunning Notice has been issued
on 24.01.2022, no steps have been taken to recover the alleged liability from the Plaintiff. The earlier transaction has abruptly halted on 06.04.2022
after the email is issued in respect of the earlier transaction. In this correspondence, there is no reference to the transaction pertaining to the present
cargo. It is seen that after the sale / auction of the earlier cargo the answering Defendants have not disclosed details about the same in its Affidavit-
in-Reply. Under the provisions of Section 150 of the Customs Act, 1962, there is a procedure established for sale of goods and application of the sale
proceeds. After the earlier goods were sold, the sale price, the auction price, the amount received and application of the same has not been disclosed.
It is not clear whether the answering Defendants have already received their outstanding amount from the above application of the sale proceeds.
Therefore the question of exercising the lien, much less the contractual lien without the Plaintiff being a party to the contract in respect of the present
cargo cannot arise in the present case.
12. The Plaintiff has filed the Suit and the present Interim Application on 29.04.2022. On 02.05.2022 and 05.05.2022, the Plaintiff filed a praecipe,
inter alia, stating that the present cargo is perishable in nature and its value is decreasing and quality is degrading day by day.
13. On 13.05.2022, the Plaintiff filed a further praecipe stating that the present cargo is perishable in nature and its value is decreasing and quality is
degrading day by day. It was also stated that the matter was listed on board on 05.05.2022 before the regular Court for urgent reliefs on which date
Defendant No.2 was granted one week time to file its reply. The Defendant No.2 moved the vacation Court on 17.05.2022 seeking permission of the
Court to file its reply on 17.05.2022. On this day the Plaintiff once again renewed its application for release of detained goods on the ground that the
strength of the present cargo is reducing by each passing day.
14. I have perused the Interim Application filed by the Plaintiff as also the Suit plaint carefully. In so far the issue of urgency is concerned the fact
that the present cargo is Ascorbic Acid (Vitamin C) and that it can degrade on a day to day basis and/or after detention it is deteriorating on a day to
day basis is not mentioned or stated in the application. All that the Interim Applications seek are interim reliefs which are more or less in terms of the
final reliefs prayed for in the Suit plaint. Without there been any pleading in the Interim Application with respect to the perishable nature of the
detained goods, the shelf life of the detained goods and/or the user of the detained goods after its release, I am completely handicapped in passing any
specific orders. There is not a single averment in the Interim Application or the Suit plaint, inter alia, pertaining to the perishable nature of the present
cargo, the value, quality and strength getting reduced on a day to day basis so that any interim order can be passed at this stage to deal with the
detained goods i.e. the present cargo. The answering Defendants in their reply are also completely silent on the aspect of urgency pleaded by the
Plaintiff; even in the oral submissions made before me, none of the counsel have put forth submissions on the aspect of pershability and the shelf life
of the present cargo, save and except by the learned counsel for the Plaintiff. The Defendants have not opposed this ground put forth by the Plaintiff.
15. In this view of the matter, if the Plaintiff's case is to be accepted that the present cargo is perishable in nature, I direct release of the said cargo to
the Plaintiff subject to the Plaintiff securing the claim of the Defendants. This is only to ensure that the detained goods are not wasted and do not
perish. The Defendant Nos.1 and 2's claim as seen from its Affidavit-in-Reply, without prejudice to the Plaintiff's rights and contentions is to the tune
of Rs.1,06,67,200/-. The Defendant No.2 had offered waiver of 50% of the said charges to the Plaintiff. Hence I direct the Plaintiff to deposit 50% of
the aforesaid amount of Rs.1,06,67,200/- or furnish a bank guarantee in the like amount within a period of two weeks or earlier to the satisfaction of
the Prothonotary and Senior Master of this Court. The bank guarantee shall carry interest @ 6% per annum and shall be kept alive till the final
disposal of the Suit or as ordered by this Court. On deposit of the above amount / bank guarantee, the Defendant Nos.1 to 3 shall forthwith release the
present cargo to the Plaintiff without prejudice to their rights and contentions in the Suit proceedings but subject to payment of the demurrage charges
/ detention charges / ground rent by the Plaintiff till the date of release. For any other reliefs in the Interim Application, liberty is given to the parties to
apply before the regular Court.
16. All contentions of the parties are kept open.
17. Proceedings will be served upon all Defendants within two weeks by the Plaintiff. Pleadings in the Interim Application shall be completed within
four weeks by the parties.
18. Interim Application be listed for hearing on 24th June, 2022.
