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MANMOHAN SARIN AND MANMOHAN, JJ.
Sagar Warehousing Corporation and etc.
Versus
Pawan Hans Helicopters Ltd. and Ors.
F. A. O. (OS) Nos. 258 and 259 of 2008
Decided on 11-8-2008
Arbitration Agreement - Sale of Goods - Section 9(2)(a) and (e) of the Arbitration and Conciliation Act, 1996 - [TRANSPORTATION] - [Sale of Goods Act, 1930, Section 9(1)] - [The order of restraint on appellants, who are not parties to the arbitration agreement, is intended to preserve and protect the goods. The property in goods was to pass only upon payment of the sale consideration. Since only a sum of Rs. 4,50,000 has been paid, the property in goods has not passed on to AES and continues to vest in Pawan Hans.]
Fact of the Case:
The case involved a dispute between Pawan Hans Helicopters and appellants Sagar Warehousing Corporation and Fly Jac Forwarders regarding the possession and payment of transportation and warehousing charges for helicopters and spares.
Finding of the Court:
The court found that the property in goods was to pass only upon payment of the sale consideration, which had not been fully paid. The order of restraint on appellants, who are not parties to the arbitration agreement, was intended to preserve and protect the goods.
Issues: The main issues were the transfer of property in goods, the liability for transportation and warehousing charges, and the jurisdiction of the court to issue the order of restraint.
Ratio Decidendi: The property in goods was to pass only upon payment of the sale consideration. The order of restraint on appellants, who are not parties to the arbitration agreement, was intended to preserve and protect the goods.
Final Decision: The court dismissed both appeals, affirming the order of restraint on appellants and permitting Pawan Hans to take possession of the goods without payment of warehousing or transportation charges.
MANMOHAN SARIN, J. :-
By this common judgment, two appeals namely FAO(OS) 258/2008 filed by M/s. Sagar Warehousing Corporation and FAO(OS) 259/2008 filed by M/s. Fly Jac Forwarders (now known as Fly Jac Logistic Pvt. Ltd.) are being decided, as challenge in both the appeals is to the common order and judgment dated 22nd April, 2008 by which IA No. 7864/2003 preferred by appellant Sagar Warehousing Corporation and IA No. 7863/2003 preferred by appellant M/s. Fly Jac Forwarders were decided, assailed in the present appeals. Both the appellants by the respective I. As had sought vacation of the ex parte ad interim order passed by the learned Single Judge on 20th February, 2002. Directions had also been sought by the appellants for removal of the goods by Pawan Hans Helicopters Ltd. after paying the dues of the appellants for transportation and warehousing charges. Vacation of the restraint on the appellant from alienating, encumbering and disposing of the goods was also sought.
2. For facility of reference, Sagar Warehousing Corporation-appellant in FAO (OS) 258/2008 is being referred to as 'SWC', M/s. Fly Jac Forwarders-appellant in FAO (OS) 259/2008 as TJF', Pawan Hans Helicopters-respondent No. 1 in both the appeals as 'Pawan Hans' and the foreign purchaser of the goods M/s. AES Aerospace Limited-respondent No. 2 in both the appeals is being referred to as 'AES'.
The applications for interim relief, namely, CM. 7826/2008 in FAO (OS) 258/ 2008 and CM. 7828/2008 in FAO (OS) 259/ 2008 were dismissed vide order dated 26th May, 2008 while judgment in the appeals was reserved.
3. The facts relevant for the disposal of two appeals may be briefly noted :-
(i) Pawan Hans had entered into an agreement with AES on 16th June, 1999 for the sale of 19 Westland Helicopters and spares and accessories for a sum of Rs. 9,00,000. The agreement to sell was followed by two addendums dated 24th September, 1999 and 31st May, 2000 making a provision for shipment of the helicopters and goods in not more than two consignments. Consideration of Rs. 9,00,000 was also split up corresponding to the value of the consignment shipped. The first consignment of six helicopters with spares was shipped to AES with a sum of Rs. 4,50,000 being 50% of the total sale consideration being remitted to Pawan Hans. The agreement ran into rough weather when the second consignment of 13 helicopters with spares were to be delivered.
(ii) In terms of the agreement, AES, the buyer was to take delivery from New Delhi and Bombay by deputing an authorized transporter. The term 'authorised transporter' was defined in the contract to mean any transporter having demonstrated the capacity to transport part of the package from Safdarjung Airport, New Delhi to Mumbai and from Juhu Airport, Mumbai to Mumbai Customs Port as approved by the purchaser (emphasis supplied). In the instant case, it is common ground that AES had appointed FJF as the authorized transporter. This becomes apparent from the letter dated 30th September, 1999 written by Pawan Hans to FJF which is reproduced for facility of reference :-
"We have been advised by M/s. AES Aerospace Ltd., England that Fly Jac Forwarders, New Delhi has been appointed by them for inland transportation of Westland 30 helicopters and related package in India. Earlier the Govt. of India had approved the disposal of Westland 30 package in favour of AES Aerospace Ltd., UK.
You are requested to contact the undersigned for arranging inland transportation of the package from Safdarjung Airport, New Delhi to Juhu Airport, Bombay and Mumbai/New Mumbai Port. Please note that the entire job should be completed before end of Nov. 1999."
(iii) AES issued further instructions regarding movement of cargo vide its letter of November 4, 1999, AES again vide its letter of November 9, 1999 instructed FJF to arrange godown facilities in Mumbai in case the full cargo cannot catch the planned vessel. The cost of warehousing was to be paid by AES through Pawan
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