Kanoi Tea Private Limited Vs. Octavius Tea and Industries Limited - (High Court of Calcutta) (01 Jun 2021)

Section 10 of Warehousing (Development And Regulation) Act, 2007 is applicable only if Respondent is a 'warehouseman'

MANU/WB/0380/2021

Arbitration

Present 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.

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.

Unless and until the Respondent falls within the definition of a 'warehouseman' as defined under Section 2(v) of the Warehousing (development And Regulation) Act, 2007, 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, 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.

The Respondent as mentioned in the cause title has a place of business within the jurisdiction of this Court and as such, present Court has jurisdiction to entertain, try and determine this application. On the aspect of the applicability of the Commercial Courts Act, 2015, 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.

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.

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. Accordingly, to sub-serve the ends of justice, it is fair and equitable that, the Petitioner be permitted to remove the tea packages.

Tags : AGREEMENT LIEN PERMISSION