Ravi Krishan Kapur DECISION
Ravi Krishan Kapur, J.
1. This is an application under Section 9 of the Arbitration and Conciliation Act, 1996. The petitioner seeks interim reliefs primarily restraining the respondent from interfering with its right to lift quantities of tea lying at the godown of the respondent. The respondent on the other hand claims godown charges which the petitioner alleges are exorbitant and not borne out from the agreement between the parties.
2. Admittedly, the petitioner and the respondent have had business dealings since 2008. The parties had entered into an agreement for storage of tea packages of various tea traders in the godown of the respondent on terms and conditions contained in the agreement dated 21 May, 2008. The agreement for storage was subsequently modified in 2017 and 2018. Thereafter, in view on the ongoing pandemic COVID-19 the parties also entered into a supplementary agreement dated 01.07.2020. On 5 May, 2021 the petitioner was served with a demand for Rs. 56,02,542/- on account of outstanding storage charges. The demand also stated that the petitioner would not be able to continue its business activities from the premises of the respondent.
3. It is alleged on behalf of the petitioner that save and except a sum of Rs. 2,18,417/- on account of storage expenses and Rs. 68,470/- on account of electricity no amount is due and payable by the petitioner to the respondent. In any event, the petitioner alleges that the respondent cannot have any right insofar as the tea belonging to the petitioner is concerned. The petitioner further alleges that the demand raised by the respondent is excessive and beyond the scope of the contract entered into by the between the parties. In support of its contentions reliance is placed by the petitioner on inter-alia Sections 160 and 170 of the Indian Contract Act 1872 and the decisions reported in (2008)3 ArbLR 356 and MANU/UP/0057/1990 : AIR 1990 Allahabad 214.
4. On behalf of the respondent it is contended that the petitioner had notice of the claim of the respondent since 5 May, 2021 but kept quiet and took no action. It is further alleged that the claim of the respondent is in terms of the agreement between the parties. Moreover, it is submitted that under Section 10 of the Warehousing (Development and Regulation) Act, 2007 the respondent has a lien on the goods of the petitioner. Hence, the petitioner is not entitled to any access to the goods until the entire dues of the respondent are paid. The respondent also relies on photographs appearing at pages 20-25 of a list of documents handed over by the petitioner of the packet tea lying at the godown of the respondent which would expire sometime in 2002. It is submitted that the quantities of the tea ought not to be treated as a perishable item and that no protective orders need be passed in respect thereof. The respondent also relies on copies of certificates, licenses and registration granted in its favour. However, it is categorically submitted on behalf of the respondent that the respondent is not a 'warehouseman' as defined under Section 2 (v) of the Warehousing (Development and Regulation) Act, 2007. It is also submitted on behalf of the respondent that the respondent does not treat the contract between the parties as one of bailment as defined under the Indian Contract Act, 1872. The respondent also takes the point of jurisdiction and relies on paragraph 56 of the petition to contend that the present dispute is not a 'commercial dispute' within the meaning of Commercial Courts Act, 2015.
5. I have heard the parties and considered the submissions made on their behalf.
6. It is an admitted position that there is an arbitration clause contained in the agreement entered into by and between the parties. The parties have had business dealing since 2008. In fact, from a statement of payments annexed to the petition and a ledger account it appears that the petitioner has paid in excess of Rs. 70 lacs approximately to the respondent for the financial year ending 1st April, 2020 to 31 March, 2021.
7. The primary contention of the respondent is that it is entitled to lien under Section 10 of the Warehousing (Development and Regulation) Act, 2007. I find that the said Act has been promulgated to make provisions for development and regulations of the warehouses, negotiability of warehouse receipts establishment of a warehousing development and regulatory authority and for matters connected therewith and incidental thereto. The definition of a 'warehouseman' is provided in Section 2(v) of the Act. It is fairly submitted on behalf of the respondent that the respondent does not have a certificate of registration as contemplated under the Act and hence the respondent does not fall within the definition of a warehouseman as defined under Section 2(v) of the Act. However, the respondent relies on the proviso to Section 3 of the said Act which contemplates that no registration is required for warehouses which do not propose to issue negotiable warehouse receipts. I am of the view that unless and until the respondent falls within the definition of a 'warehouseman' as defined under Section 2(v) of the Act there can be no lien which the respondent can exercise under Section 10 of the Act. In order for the trigger of Section 10 to apply the respondent must be a 'warehouseman' who has been granted a certificate of registration by the Competent Authority as contemplated under the Act. Admittedly, the respondent has not been granted any such certificate by the Competent Authority and accordingly the respondent is not entitled to exercise any lien which can only be exercised by a warehouseman as defined under the Act. Hence, I am of the view that the respondent has been unable to demonstrate any right contractual or otherwise to retain possession, custody or control of the tea belonging to the petitioner.
8. It was also submitted on behalf of the respondent that the respondent does not treat this transaction between the parties as one of bailment and is not claiming any right under inter-alia Section 170 of the Indian Contract Act, 1872. Accordingly, in view of the submissions made on behalf of the respondent there is no question of dealing with this aspect of the matter at this stage of the proceedings.
9. On the question of jurisdiction, I find that the respondent as mentioned in the cause title has a place of business within the jurisdiction of this Court and as such this Court has jurisdiction to entertain, try and determine this application. On the aspect of the applicability of the Commercial Courts Act, 2015 it was submitted on behalf of the petitioner that there is a typographical error at paragraph 56 of the petition and instead of Section 2(1)(xviii), there has been an inadvertent error which wrongly gone down as Section 2(viii) of the Commercial Courts Act, 2015. I am of the view that the agreement between the parties can be treated as a service provided by and between the parties and as such Section 2(1)(xviii) is applicable to the facts and circumstances of the case. Hence, both on the question of jurisdiction and the applicability of the Commercial Courts Act, 2015 I find no merit in the submission of the respondent.
10. I find that in view of the fact that the commodity in question i.e. tea is a perishable item and the price of which also fluctuates it is essential that protective orders need to be passed at this stage of the proceeding. The arbitral proceedings will naturally take some time before they attain finality. In the meantime if orders insofar as the tea is concerned are not passed it would in my view be commercially unviable and impracticable. The tea would end up lying in the godown for months if not years and would be subject to waste and attrition. Moreover, the petitioner would also be liable to contractual defaults to various third parties.
11. It is also submitted on behalf of the respondent that if the petitioner is able to take its goods, it would leave the respondent in the position of an unsecured creditor. The respondent also alleges that the petitioner is in an impecunious condition and is not financially solvent to pay any final award which may be passed in favour of the respondent. I am of the view that these submissions of financial insolvency and impecuniosity are based on surmises and conjectures and there is nothing to demonstrate that the petitioner is unable to pay any award which may be passed in favour of the respondent. Moreover, the respondent always has a remedy to initiate appropriate proceedings for protective orders if such a situation so arises.
12. It is also submitted on behalf of the petitioner that the tea packages lying in the godown of the petitioner are for third parties names whereof have been enumerated in Annexure H of the petition. The fact that the tea packages lying in the godown of the respondent are of third parties is also borne out from the photographs relied upon by the respondent. In my view this is an additional reason which demonstrates that the balance of convenience is overwhelmingly in favour of the petitioner and appropriate orders ought to be passed at this stage of the proceeding.
13. I am also of the view that the respondent cannot be permitted to use the fact that the tea of the petitioner is lying in its godown as a lever or to arm-twist the petitioner to pay any monetary claim which the respondent may have against the petitioner.
14. Accordingly, at this stage of the proceeding, I am of the view that the petitioner has a strong prima facie case in so far as the ownership and possession of the tea is concerned lying in the godown of the respondent. The balance of convenience and irreparable injury are also in favour of orders being passed as prayed for by the petitioner at this stage of the proceeding.
15. Accordingly, to sub-serve the ends of justice it is fair and equitable that the petitioner be permitted to remove the tea packages particulars whereof have been set out at Annexure H at page 49 of the petition. For the purposes of carrying out the aforesaid exercise, I appoint Mr. Prithiraj Sinha, Advocate Bar Library Club to supervise the removal of the above mentioned packages of tea belonging to the petitioner from the godown of the respondent.
16. Insofar as the monetary claim of the respondent is concerned I find prima facie that the petitioner has made payment of Rs. 78,85,002/- till 31 March, 2021 in respect of the bills raised by the respondent. Insofar as the demand of Rs. 58,95,142/- is concerned the petitioner challenges the same as being wrongful, illegal and contrary to the terms of the subsisting agreement between the parties. This final assessment would ultimately be done in the arbitration proceedings. However, in view of the fact that the petitioner has admitted a sum of Rs. 2,18,417/- and Rs. 68,470/- due and payable to the respondent the petitioner should forthwith pay the respondent the said aggregate sum of Rs. 2,86,887/- which should be forwarded by way of a cheque in the name of the respondent to the Advocate on Record of the respondent within a period of 7 days from date. The receipt of this money without prejudice to the rights and contentions of the respondent. In view of the submission made by Mr. Banerjee, Senior Advocate on behalf of the petitioner the petitioner is also directed to furnish a bank guarantee to the satisfaction of the Registrar, Original Side for Rs. 15 lacs on account of any award which may ultimately be passed in favour of the respondent.
17. The petitioner is also directed to pay the Receiver a consolidated remuneration of 2000 gms to carry out the aforesaid exercise.
18. It is made clear that the aforesaid findings are prima facie in nature and will not bind the Arbitrator who would decide the final claim and counterclaims of the parties at the appropriate stage without being influenced by this order.
19. Affidavit-in-opposition is to be filed by the respondent with two weeks from the date and affidavit-in-reply to be filed one week thereafter. The parties are at liberty to mention the matter for hearing after completion of affidavits before the Bench having determination.
20. After pronouncement of this order, Mr. Dhiren Sharma on behalf of the respondent prays for stay of operation of this order. The prayer for stay is considered and rejected.
21. Urgent certified photocopies of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
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