Back
2013 Supreme(Cal) 238
High Court of Judicature at Calcutta
ASHIM KUMAR BANERJEE & MRINAL KANTI CHAUDHURI, JJ.
Board of Trustees for the Port of Kolkata
Versus
Haldia Bulk Terminals Pvt. Ltd.
A.P.O. Nos. 121 & 122 of 2013 A.P. Nos. 972 & 984 of 2012
Decided On : 14-05-2013
For the Appellant:Jayanta Kumar Mitra, S.N. Mookherjee, Senior Advocates, Samrat Sen, Abhrajit Mitra, Paritosh Sinha, Ashok Jena, Ms. Debomitra Adhikary, K.K. Pandey, Ms. Manali Bose, Advocates.
For the Respondent:Ranjan Deb, Senior Advocate, Jishnu Saha, Prithviraj Sinha, Adil Murshed, Advocates.
The court's interpretation of the contractual provisions and documents in the absence of an explicit 'lien' clause, and its consideration of the floating charge and hypothecation of the equipment in determining the rights of the parties involved.
Headnote:
LIEN - ARBITRATION - EQUIPMENT - REMOVAL - DISPUTE RESOLUTION - CONTRACT TERMINATION - DAMAGES - LIEN - EQUIPMENT REMOVAL - ARBITRATION - DAMAGES - LIEN OVER EQUIPMENT - WRONGFUL TERMINATION - CONTRACTUAL PROVISIONS - INTERPRETATION - FLOATING CHARGE - HYPOTHECATION - ATTACHMENT BEFORE JUDGMENT - EFFECT - INTEREST OF JUSTICE - BALANCE OF CONVENIENCE - DISPOSING OF ASSETS - RESTRAINT ORDER - THIRD PARTY INTERESTS - AXIS BANK - DEED OF HYPOTHECATION - RIGHTS AND PRIVILEGES - COST - CONTRIBUTION TO STATE LEGAL SERVICES AUTHORITY.
Fact of the Case:
Dispute arose between Haldia Dock Complex and ABG Haldia Bulk Terminals Pvt. Ltd. (HBTPL) regarding the quantum of work assured to HBTPL but not given, leading to termination of the contract by HBTPL. KOPT, the operator of Haldia Dock Complex, claimed a 'lien' over HBTPL's equipment due to alleged damage caused by the wrongful termination. HBTPL sought to remove the equipment, leading to litigation.
Finding of the Court:
The court held that KOPT did not have a 'lien' over the equipment based on the contractual provisions and documents exchanged between the parties. The court interpreted the relevant clauses of the contract and found that they did not create an absolute 'lien' in favor of KOPT. The court also considered the fact that KOPT had already encashed a Bank Guarantee for Rs. 4 crores and that the equipment was hypothecated to Axis Bank.
Issues: 1. Whether KOPT had a 'lien' over HBTPL's equipment for payment of dues or protection of its claim for damages due to wrongful termination of the contract. 2. Whether the clauses in the contract and/or the documents exchanged between the parties created an absolute 'lien' in favor of KOPT. 3. Whether HBTPL could remove the equipment from the Dock complex and dispose of it without protecting KOPT's interest for realization of dues.
Ratio Decidendi: 1. The court interpreted the relevant clauses of the contract, including clauses 1.12, 1.24, 1.28, 1.34, and 4.19, and found that they did not conclusively suggest any absolute 'lien' for KOPT. 2. The court held that the term 'equipment' could not be construed as 'temporary works' or 'materials' as per the dictionary meaning, and therefore, did not fall within the scope of clause 4.19, which created a 'lien' on constructional plants, temporary works, and materials. 3. The court considered the fact that KOPT had already encashed a Bank Guarantee for Rs. 4 crores, which was provided as security for the performance of the contract, and that the equipment was hypothecated to Axis Bank, indicating that KOPT had other means of securing its claims.
Final Decision: The court allowed the appeal in part and affirmed the judgment of the learned Single Judge, subject to a modification. HBTPL was restrained by an order of injunction from disposing of the equipment and/or creating any third-party interest thereon without the express leave of the Tribunal upon notice to KOPT. They were also restrained from removing any of the equipment out of the country. However, they were free to use the equipment anywhere within the country under the supervision of the Special Officers. The court also made it clear that its order should not prejudice the rights and privileges of Axis Bank under the Deed of Hypothecation and/or mortgage that they entered into with HBTL.
Ashim Kumar Banerjee, J.
BACKDROP:
Haldia Dock Complex entrusted ABG Haldia Bulk Terminals Pvt. Ltd. (hereinafter referred to as ‘HBTPL) to install, maintain and operate loading-unloading system at berth Nos. 2 and 8. Disputes and differences arose as to the quantum of work that HBTPL was assured, but not given. HBTPL complained, they were assured a minimum amount of work that they were not getting. When Haldia Dock Complex run by Board of Trustees for the Port of Kolkata (hereinafter referred to as ‘KOPT’) assured co-operation after a joint meeting, other operators created problem for them by instigating the workers making a situation totally unmanageable for HBTPL. They were compelled to terminate the contract more particularly complaining of the law and order problem. KOPT disputed such contention. According to them, they extended all co-operation to make the situation congenial for HBTPL to perform their job. They also assured to allot more work to berth Nos. 2 and 8. The law and order problem that would arise outside the Dock complex, was not within their control that HBTPL should have taken up with the local administration. They blamed HBTPL for wrongfully terminating the contract. We do not wish to deliberate any further on the issue as the dispute was already referred to Arbitral Tribunal. The present controversy would arise on the post termination situation. As per the contract HBTPL was supposed to remove all the equipment and/or materials whatever belonging to them so that KOPT could make alternative arrangement for running of the said two berths. HBTPL also wanted to remove their equipment however KOPT was claiming ‘lien’ over the equipment in view of damage being suffered for such wrongful termination.
LITIGATION:
KOPT made an application under Section 9 of the Arbitration and Conciliation Act (hereinafter referred to as the said Act of 1996) being A.P. No. 699 of 2012 inter alia praying for injunction restraining HBTPL from acting in breach of any of the negative covenants as also injunction restraining them from removing the plant, machineries and materials etc. from the berth Nos. 2 and 8 and from other reliefs. The parties settled their dispute. KOPT took steps to extend assistance to them. The dispute again arose principally on the issue of retrenchment of 275 workmen that ultimately resulted in termination of the agreement.
The learned Single Judge appointed Joint Special Officers for removing the equipment from the Dock complex. KOPT filed an appeal. We asked the Joint Special Officers to complete the removal within a certain period. Considering the volume of work, we appointed a 3rd Special Officer to assist the Joint Special Officers. We restrained HBTPL from disposing or dealing with the equipment save and except using it for commercial exploitation as permitted by the learned Single Judge. The parties approached the Apex Court against our order dated December 19, 2012. On January 13, 2013 the Apex Court entertained the application and ultimately disposed of the Special Leave Petition on January 31, 2013 by observing, “the learned Single Judge should dispose of the application without being influenced by the observations made by us in the orders dated December 13, 2012 and December 19, 2012”. The learned Single Judge ultimately disposed of the application by judgment and order dated March 22, 2013 inter alia withdrawing the fetter that was imposed earlier on HBTPL. On the removal and user of the equipment, His Lordship held, KOPT did not have any ‘lien’ at all over the equipment and HBTPL was free to use and/or deal with and/or dispose of the same. While doing so, His Lordship observed, “For the Port having needlessly protracted the matter over the avoidable bogey of its perceived lien, it will pay cost assessed conservatively at Rs.4 crores since the Port is a statutory body, to the contractor and to the State Legal Service Authority in equal measure”. Being aggrieved, KOPT filed the instant ap
