2020 (12) TMI 923 - HC - Customs

Mandatory injunction seeking release of bills of lading illegally withheld by the defendants - Section 13(1-A) of the Commercial Courts Act, 2015 read with Order 43 Rule 1 (2) of the Code of Civil Procedure, 1908 - Right to retain shipment - Defendant are freight services agents - HELD THAT - Upon reading the text messages of 1st, 2nd and 3rd June together, it is to be observed that after receiving ₹ 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 3rd June, 2020 show that the defendants had not exercised a particular liens but general liens. If read carefully, 3rd 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 flowing were indicative of the fact that ₹ 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. Whether defendants were entitled to exercise lien under Section 171 of the Indian Contract Act, 1872? - HELD THAT - It may be stated that defendants were not entitled to exercise general lien being not banker, factors, wharfingers, attorneys and also broker - In the case in hand, 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 - Goods cargo in the second shipment is a paper, a perishable product, which may loose its utility if kept for long period. Even otherwise, plaintiffs 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, plaintiffs vendees have cancelled the orders. Therefore, the balance of convenience also tilts in favour of the plaintiffs. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Right to retain shipment under Section 170 of the Indian Contract Act, 1872.
2. Appropriation of payment under Section 60 of the Indian Contract Act, 1872.
3. Indication of payment towards specific debt.
4. Prima facie case, balance of convenience, and irreparable loss in the context of injunction.

Issue-wise Detailed Analysis:

1. Right to Retain Shipment:
The plaintiffs, a private limited company engaged in manufacturing core board and high-strength paper conversion products, shipped consignments handled by the defendants, a freight forwarding agent. The dispute arose when the defendants withheld bills of lading for the second consignment, claiming the right to retain goods under Section 170 of the Indian Contract Act, 1872, due to outstanding dues. The court had to determine whether the defendants, as freight services agents, had the right to retain the shipment for not receiving ocean freight charges. It was concluded that the defendants could not exercise a general lien under Section 171 of the Indian Contract Act, 1872, as they were not bankers, factors, wharfingers, attorneys, or brokers.

2. Appropriation of Payment:
The plaintiffs paid ?4,35,000 on 30th May 2020, which the defendants appropriated against past dues. The court examined whether this appropriation was justified under Section 60 of the Indian Contract Act, 1872, which allows creditors to apply payments to any lawful debt if the debtor has not indicated which debt the payment is for. The court found that the prevailing circumstances and exchanged messages indicated that the payment was towards ocean freight charges for the second consignment. Therefore, the defendants were not justified in appropriating the payment against past dues.

3. Indication of Payment Towards Specific Debt:
The court analyzed whether there were "attendant circumstances" indicating that the payment of ?4,35,000 was meant for the freight charges of the second consignment. The evidence, including WhatsApp messages between representatives of both parties, suggested that the payment was intended for the second consignment's freight charges. The defendants' refusal to release the bills of lading despite this payment was found to be unjustified.

4. Prima Facie Case, Balance of Convenience, and Irreparable Loss:
The court considered whether the plaintiffs had made out a prima facie case, the balance of convenience, and the potential for irreparable loss if the injunction was refused. The plaintiffs argued that the core board paper was perishable and would lose its utility if not released promptly. The court found that the plaintiffs had indeed made a prima facie case, the balance of convenience tilted in their favor, and they would suffer irreparable loss if the injunction was not granted. The plaintiffs' vendees had already canceled orders due to the delay, further supporting the need for immediate release of the bills of lading.

Conclusion:
The court allowed the appeal, quashed the impugned order dated 10th August 2020, and granted the plaintiffs' prayer for mandatory injunction, directing the defendants to release the bills of lading for the second consignment immediately. The decision emphasized that the defendants were not entitled to exercise a general lien and that the payment of ?4,35,000 was specifically for the second consignment's freight charges.