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.