Interim Return Of Property Can Support Arbitration Without Granting Final Relief: Bombay High Court

The Bombay High Court on 27 August held that directing the return of property as an interim measure does not amount to granting final relief where the direction is intended to protect and support arbitral proceedings.

Justice Amit Borkar partly allowed a petition filed by Limited Liability Company “LTB” seeking interim protection in respect of its tank containers and directed their release, while leaving the parties' substantive claims open for appropriate proceedings. He held:

“I do not accept the submission that directing return of the tanks would amount to granting final relief. Section 9 relief is intended to support the arbitration and is not meant to finally decide the entire dispute. But an interim direction for return or protection of property does not, for that reason, become a final order.”

The case concerned LTB's claim over 138 T-11 ISO tank containers handed over to Shri Vaibhavi Logistics, its Indian agent, under an Agency Agreement dated 4 March 2021. Clause 3.5.1 of the Agreement required the tanks to be returned to LTB upon its instruction.

Shri Vaibhavi Logistics subsequently placed the tanks with EFC Logistics India Pvt Ltd., JMJ Container Solution and Kashipur Infrastructure and Freight Terminal Pvt Ltd. LTB sought their return, while Shri Vaibhavi Logistics claimed a lien over the tanks for USD 389,576.07 allegedly due under separate agreements.

The Court rejected the objection that the petition was not maintainable because it originally raised claims arising from three separate agreements. Since LTB restricted the petition to the 4 March 2021 Agreement, it permitted it to pursue claims arising from the 8 December 2020 and 20 November 2023 agreements separately. It held that a lien arising from one contractual dealing cannot automatically be used to retain property to secure dues arising under another agreement. It observed:

“This distinction has direct relevance here. If the claim of Respondent No.1 is for charges relating to these 138 containers, a question of particular lien may arise. But if Respondent No.1 is retaining these containers for securing amounts claimed under other separate agreements, then it is claiming a cross- contractual right of retention. Such a right cannot be assumed.”

Further, the Bench found that no contractual provision had been shown permitting Shri Vaibhavi Logistics to retain the 138 tanks against separate dues. It therefore held that no prima facie right of retention had been established.

Accordingly, the High Court directed EFC Logistics India, JMJ Container Solution and Kashipur Infrastructure and Freight Terminal to release and hand over the tanks in their custody. Kashipur Infrastructure was directed to release four tanks upon LTB furnishing security of Rs. 57,297.02.

It also directed EFC Logistics not to withhold the tanks towards its dues against Shri Vaibhavi Logistics. Also, to file an affidavit disclosing the whereabouts and custodian of two tanks.

For Petitioner: Advocates Prathamesh Kamat, Mr. Nakul Jain a/w Apurva Mehta Pohanerkar a/w Anuj Hande i/by ANB Legal

For Respondents: Venkatesh Dhond, Sr. Counsel a/w Advocates Akshay Kolse Patil, Prateek Pansare, Dr. Shrikant Hathi, Binita Hathi and Pritish Das i/by Brus Chambers, Kayush Zaiwalla a/w Laxman Jain i/by Jainish Jain, Mangesh Patel