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Restrains Sale of 386 MT Cashew Cargo Diverted to Mangalore
The has issued an protecting 386.541 metric tonnes of raw cashew nuts lying at New Mangalore Port, barring the supplier, an Indian trader, and two individuals from selling or transferring the cargo pending arbitration.
Justice M.G.S. Kamal, while partly allowing a petition under , ruled that an preserving the subject matter of arbitration can bind even a who voluntarily stakes a claim but fails to establish it .
The dispute involves a tangled web of contracts, , and over the cashew consignment.
A Tale of Two Contracts
The saga began on , when , a company incorporated in the United Arab Emirates, contracted with (also UAE-based) to purchase 500 metric tonnes of raw cashew nuts in shell. The contract stipulated delivery from Tema, Ghana to Ho Chi Minh City, Vietnam, and contained an under the Rules.
Avanikailani raised two invoices: one for 386.541 MT (Invoice No. 2026-RCN-004A dated , valued at USD 566,282.57) and another for 112.072 MT (Invoice No. 2026-RCN-004B dated ). COAF claimed to have made full payment for both, and Avanikailani acknowledged receipt. The smaller consignment was delivered to Vietnam, but the larger one – the “undelivered cargo” – never reached its destination.
COAF alleged that Deekshith Ananta Poojary (Respondent No. 6), a director of Avanikailani and also a key figure in , had fraudulently altered shipping documents mid-transit, diverting the 15 containers from Vietnam to New Mangalore Port. Poojary admitted the diversion, claiming it was a desperate measure because Avanikailani, through its majority shareholder Mahesh Selvan, had failed to pass payments to SR Agro, which had actually procured the goods.
Into this fray stepped Sindhu Cashew India Pvt. Ltd. (Respondent No. 5), which claimed independent ownership over the same cargo. Sindhu Cashew asserted that it had purchased 400 MT of raw cashews from under a separate contract dated and that it held the .
When Documents Tell Contradictory Stories
The court undertook a meticulous comparison of the rival documents. COAF produced a (Annexure-K), while Sindhu Cashew produced what it claimed was the (Annexure-R4A). Justice Kamal noted striking similarities between the two: both bore the same Bill of Lading number (MEDUTM439682), described the same quantity (391,440 Kgs), the same shipper (), and the same port of loading (Tema). The critical differences were in the consignee and notify parties.
Crucially, the court observed serious discrepancies in Sindhu Cashew’s documentary evidence. An initial copy of the purported contained no seals, but a later version filed on bore impressions of six different seals, including those of Avanikailani, , and SR Agro – entities Sindhu Cashew claimed to have no connection with. No explanation was offered for when, where, or how these were obtained.
Even more telling was the commercial invoice. Sindhu Cashew claimed to have paid 30% of the invoice amount (USD 1,32,000) on against an advance import payment invoice (No. WIC/CAS/010-26). Yet the commercial invoice bearing the same number was dated – three months after the payment. The court found this “gives rise to serious doubts as to how respondent No.5 could have made the payment against an invoice with its specific number during the month of March itself, which has admittedly come into existence three months thereafter”.
Consequently, the court held that Sindhu Cashew’s documents “failed to evince credibility” and declined to order release of the cargo to it.
Binding Strangers: A Key Legal Principle
Justice Kamal cited the ’s decision in Cox & Kings Ltd. v. SAP India Pvt. Ltd. and Another (2024) 4 SCC 1 to hold that persons claiming through or under a party can be bound by arbitration proceedings. The court then laid down the who seek to assert rights in Section 9 proceedings:
“A stranger who voluntarily gets himself impleaded, staking independent right, title, and interest over the subject matter of the arbitration, and fails to establish and justify his claims over the subject matter of the arbitration cannot seek to wriggle out of the that may be granted to preserve the subject matter of the arbitration either.”
The court also clarified that while a is not conclusive evidence compared to an original, the genuineness of the original must itself be established. Since COAF did not hold the original Bill (it had only a draft), the court did not direct delivery of the cargo to the petitioner either.
The Final Order: Preservation Pending Arbitration
The court partly allowed COAF’s petition. It restrained , Sindhu Cashew India Pvt. Ltd., Deekshith Ananta Poojary, and Likhitha from alienating, transferring, diverting, or disposing of the 15 containers (identified with specific numbers). It directed to preserve the cargo and prevent deterioration, with costs and expenses to be borne by the party eventually found entitled to the cargo.
The is to remain in force for the period contemplated under , effectively until the arbitral tribunal is constituted and can pass its own orders.
This ruling serves as a sharp reminder that parties who interject in arbitration proceedings with weak claims cannot avoid being bound by protective orders, and that the like Bills of Lading must be rigorously tested even at the interim stage.
