REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION (CIVIL) NO.20100 OF 2011
SUCHETAN EXPORTS P. LTD. ... PETITIONER
Vs.
GUPTA COAL INDIA LIMITED & ORS. ... RESPONDENTS
O R D E R
ALTAMAS KABIR, J.
1. This order is being passed at the stage of notice on the
Special Leave Petition filed by Suchetan Exports P. Ltd.,
which was the Defendant No.1 in Special Civil Suit No.187 of
2011 filed by Gupta Coal India Limited, the Respondent No.1
herein.
2. Some of the facts disclosed in the Plaint and the
Written Statement are not disputed. It is not disputed that
on 12.4.2010, the Plaintiff and the Defendant No.1 entered
into an Agreement for sale and purchase of South African
Coal measuring 16,943 metric tonnes. The Plaintiff agreed
to sell the said quantity of coal to the Defendant No.1 at
US $111.75 per metric tonne. On 22.4.2010, the Plaintiff,
i.e., the Respondent No.1 herein, entered into another High
Seas Sale Agreement with the Defendant No.1/Petitioner
herein. Clause 2 of the said Agreement provides that the
Plaintiff/Respondent No.1 herein had imported 16,943 metric
tonnes of Steaming Non Coking Coal in bulk of South African
origin and had shipped the same on MV Novios Meridian
arriving at Dharamtar Port, under Bill of Lading Numbers 2,
3 and 4, all dated 8.4.2010. Clause 3 of the Agreement
provides that the Plaintiff had agreed to sell and the
Defendant No.1 had agreed to purchase the consignment of the
coal on High Seas Sale basis, subject to the terms and
conditions specified thereunder. Clause 3(b) of the
Agreement provides that the quality determined and certified
by an independent inspecting agency at Disport would be
final and binding on both the parties.
3. On 22.4.2010, the aforesaid vessel containing coal
imported through the Respondent No.3, Venkatesh Karriers
Limited, reached the Dharamtar Port at Mumbai and according
to the case made out in the plaint, the coal was delivered
to the Respondent No.2, M/s United Shippers Limited, as the
stevedore agent. On the same day, the Respondent
No.1/Plaintiff raised and delivered a High Seas Sales
Invoice for an amount of 8,25,46,296/- upon the
Petitioner herein for sale of the said coal. Consequent
thereupon, the Respondent No.2 handed over the total
quantity of 9,542.920 metric tonnes to the Petitioner till
the date of filing of the suit. The balance quantity of coal
amounting to 7400.082 metric tonnes was lying with the
Respondent no.2 out of the total quantity of 16,943 metric
tonnes received by it from the Petitioner.
4. Since the Petitioner failed to pay the balance sum of
5,82,58,560/-, the Respondent No.1 filed Special Civil Suit
No.187 of 2011, inter alia, for a declaration that the
Petitioner had committed breach of contract and that the
Agreements dated 12.4.2010 and 22.4.2010 stood cancelled and
terminated. The Respondent No.1 also claimed return of the
balance quantity of coal, amounting to 7400.082 metric
tonnes, lying with the Respondent No.2 and for a decree
for an amount of 1,22,04,349/- against the
Petitioner towards the balance payment of the 9,542.920
metric tonnes of coal delivered to it by the Respondent
No.2. Certain other claims were also made regarding
interest and payment of demurrage charges incurred after the
date of filing of the suit, as also the L/C discounting
charges of 7,19,483/-. The Respondent No.1 also claimed
permanent injunction to restrain the Respondent Nos.2 and 3
from handing over the balance amount of coal measuring
7400.082 metric tonnes lying with the Respondent No.2 at
Dharamtar Port, Mumbai, either to the Petitioner or to any
other person. By an application under Order 39 Rules 1 and
2 of the Code of Civil Procedure, the Plaintiff/Respondent
No.1 also prayed for an interim order in the same terms and
also sought a direction in the form of a mandatory
injunction to the Respondent No.2 to hand over the balance
coal to the Respondent No.1.
5. The claim of the Respondent No.1 was opposed by the
Petitioner by filing a Written Statement. On 9.2.2011, the
trial court passed an ex-parte order of injunction
restraining the Respondent Nos.2 and 3 from handing over the
custody of the balance coal weighing 7400.082 metric tonnes
to any person and particularly to the Petitioner.
Subsequently, by its order dated 16.4.2011, the trial court
allowed the application of the Respondent No.1 for temporary
injunction and confirmed the ad-interim injunction granted
earlier on 9.2.2011. The trial court also passed an order
of injunction in mandatory form directing the Respondent
No.2 to hand over the balance coal of 7400.082 metric tonnes
in its possession to the Respondent No.1 on payment of rent,
if any, due from the said Respondent.
6. Aggrieved thereby, the Petitioner preferred an appeal
before the Nagpur Bench of the Bombay High Court, being
Appeal from Order No.53 of 2011.
7. From the submissions made on behalf of the respective
parties, the High Court noted that after taking into
consideration all the claims of the Respondent No.1, the
total amount due from the Petitioner in respect of the
transaction was 6,19,58,123/-. On the other hand, it
was the Petitioner's claim that the suit as filed by the
Respondent No.1 was not for recovery of money for the goods
supplied, but for cancellation/ termination of the
Agreements dated 12.4.2010 and 22.4.2010, which were
governed by the provisions of Section 46(1)(a) read with
Section 47(1) of the Sale of Goods Act, 1930. On behalf of
the Petitioners, it was also contended before the High Court
that the title and ownership of the goods had already passed
to the Petitioner. It was also urged that when the entire
quantity of coal was delivered to the Respondent No.2 for
the purpose of transmission of the same to the Petitioner
without reserving the right of disposal of the goods, the
lien on the goods stood terminated in view of the provisions
of Section 49(1)(a), (b) and (c) of the aforesaid Act. It
had also been urged that at best the Respondent No.1 herein
would be an "Unpaid Seller" as defined in Section 45(1)(a)
of the aforesaid Act, and would be entitled only to recovery
of cost of the goods supplied. It was also submitted that
since the Respondent No.1 had lost its possession over the
coal, even the question of exercise of the rights of an
unpaid seller and the seller's lien, did not arise.
8. Taking into consideration the submissions made on behalf
of the respective parties and the materials placed on
record, the High Court by the impugned order allowed the
appeal in part and modified the order of the trial court
passed on 16.4.2011 in Special Civil Suit No.187 of 2011, in
the following manner :-
"(a) The defendant no.1 is directed to deposit an
amount of Rs.6,19,58,123/- (Rupees Six Crores
Nineteen Lacs Fifty Eight Thousand One Hundred
Twenty Three Only) in the Trial Court, within a
period of six weeks from today.
(b) If such amount is deposited, within a
stipulated period by the defendant no.1, the
application Exh.5 for grant of temporary injunction
filed by the plaintiff, shall stand dismissed.
(c) If the defendant no.1 fails to deposit an
amount of Rs.6,19,58,123/- (Rupees Six Crores
Nineteen Lacs Fifty Eight Thousand One Hundred
Twenty Three Only), within a stipulated period, the
order of injunction passed by the Trial Court below
Exh.5 on 16.4.2011, shall continue to operate
pending the decision of the suit.
(d) The plaintiff shall be at liberty to file an
application for withdrawal of the said amount if
deposited by the defendant no.1 and the same shall
be decided by the Trial Court, within a period of
four weeks from the date of serving copy of the
application, upon the defendant no.1 or his
Counsels."
Mr. Biji Mathew, Adv.
9. Appearing for the Petitioner/Defendant No.1, Mr. Ranjit
KumaMr. Biji Mathew, Adv.r, learned Senior Advocate,
reiterated the submissions which had been made before the
High Court. In addition, learned senior counsel indicated
that since the Petitioner had already paid a total sum of
3,42,88,767/-, including payments made to the customs and
port authorities, to the Respondent No.1, the trial court as
also the High Court, erred in directing the Petitioner to
deposit a further sum of 6,19,58,123/- as against
the balance quantity of the coal, in order to lift the same.
Mr. Ranjit Kumar also urged that the High Court had also
erred in passing a conditional order that if the amount as
indicated hereinabove was deposited within the stipulated
period by the Petitioner, then the application for temporary
injunction filed by the Respondent No.1 would stand
dismissed. However, in default of deposit of the said
amount within the stipulated period, the order of injunction
passed by the trial court would continue to operate pending
the decision of the suit. Mr. Ranjit Kumar submitted that
having regard to the provisions of the Sale of Goods Act
referred to hereinabove and in particular Section 49(1)(a)
thereof, once the Respondent No.1 had lost possession over
the goods, it also lost its lien thereupon and is no longer
entitled to pray for recovery of the goods from the
Respondent No.2.
10. Mr. Ranjit Kumar submitted that the Petitioner was ready
and willing to deposit the balance price of the remaining
quantity of the coal measuring 7400.082 metric tonnes for
lifting the same and the other claims of the Respondent No.1
towards demurrage and port charges etc. could be decided by
the trial court in the pending suit.
11. Mr. Ranjit Kumar also urged that by allowing the
Respondent No.1's prayer for interim relief and passing a
mandatory order of injunction thereupon, both the trial
court as well as the High Court, had provided the Respondent
No.1 with the ultimate relief prayed for in the suit at the
interim stage and if the remaining quantity of coal was
allowed to be removed by the Respondent No.1, the suit of
the Respondent No.1 would stand decreed at the interim
stage.
12. Mr. Ranjit Kumar's submissions were opposed by Mr. P.S.
Patwalia, learned Senior Advocate appearing for the
Respondent No.1 Company. It was urged that on the failure
of the Petitioner to deposit the amounts in terms of the
orders passed by the trial court, as also the High Court,
the interim order staying the handing over of the balance
quantity of goods by the Respondent No.2 to the Respondent
No.1, stood vacated and thereafter different quantities of
coal had been lifted by the Respondent No.1 from the
Respondent No.2 in order to recover the amounts already paid
by it to the foreign seller. It was submitted that not only
was the Respondent No.1 out of pocket in respect of the sale
price already paid by it to the foreign seller, but even the
Petitioner had not paid the price of the coal which was
lying with the Respondent No.2, which had compelled the
Respondent No.1 to lift the balance coal lying with the
Respondent No.2 and to dispose of the same after the period
stipulated by the High Court for deposit of the outstanding
dues had expired.
13. We have carefully considered the submissions made on
behalf of the respective parties and we see no reason to
interfere with the orders passed by the trial court and the
High Court. Having entered into an Agreement to purchase
the coal in question it was upto the Petitioner to fulfil
its obligation towards the payment of the price of the coal
and to lift the same from the Stevedore/Respondent No.2,
having particular regard to the fact that the Agreement was
a High Seas Sales Agreement which entails clearance of the
goods from the vessel and its entrustment with the Stevedore
which involved heavy costs per diem. In this regard,
paragraph 3 of the aforesaid Agreement, inter alia, provides
that the Respondent No.1/seller would have a lien over the
cargo unless payment was made in full and the
Petitioner/purchaser subrogated its right of insurance claim
in favour of the Respondent No.1. It was also stipulated
that the quality was to be determined and certified by an
independent inspection agency of Disport and the same would
be final and binding on both the parties. It was further
stipulated that the seller would thereupon transfer the
rights in respect of the goods to the buyer by endorsing in
favour of the buyer a set of negotiable documents and hand
over the same to the latter.
14. Prima facie, the terms of the High Seas Sales Agreement
appear to indicate that till the entire sale price was paid
by the Petitioner to the Respondent No.1, the Respondent
No.1 would retain its lien over the coal in question and
title would also pass to the Petitioner on payment of the
full price of the goods.
15. It would not be proper for us at the interlocutory stage
to make any further observations regarding the rights of the
parties in respect of the balance quantity of coal which was
lying with the Respondent No.2 after delivery of 9,542.920
metric tonnes to the Petitioner out of the total consignment
of 16,943 metric tonnes. However, in view of Mr. Ranjit
Kumar's submissions and having regard to the fact that an
opportunity had been given to the Petitioner to lift the
said balance quantity of coal on deposit of
6,19,58,123/- within the stipulated period of six weeks, we
dispose of the Special Leave Petition by modifying the order
of the High Court to the extent that in the event the
Petitioner deposits the amount directed to be deposited by
the High Court, after deduction of the price of the coal
already lifted by the Respondent No.1 within a period of
four weeks, the Petitioner will be entitled to lift the
remaining quantity of coal lying in the custody of the
Respondent No.2. In default of such deposit, the order of
the High Court, subject to the above modification, will
continue in full force.
16. In the facts of the case, the parties will bear their
own costs.
...............................................................J.
(ALTAMAS KABIR)
...............................................................J.
(CYRIAC JOSEPH)
...............................................................J.
(SURINDER SINGH NIJJAR)
New Delhi
Dated: 02.08.2011.
