Judgment :- 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. 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 appeal. CONTENTIONS: Mr. Jayanta Kumar Mitra, learned senior counsel appearing for the appellant was critical on the issue of the imposition of cost and the observations made therefor. According to Mr. Mitra, the case made out by KOPT could not be said to be “needlessly protracted”. It was too harsh and would raise a pointer to the learned counsel who appeared and argued on behalf of KOPT. Arguing on merits, Mr. According to Mr. Mitra, the case made out by KOPT could not be said to be “needlessly protracted”. It was too harsh and would raise a pointer to the learned counsel who appeared and argued on behalf of KOPT. Arguing on merits, Mr. Mitra based his submissions on two counts (i) KOPT had a ‘lien’ over the equipment for payment of dues by HBTPL that would appear from the agreement and/or the documents exchanged between the parties (ii) in the alternative, KOPT suffered damage in view of wrongful termination of the contract by HBTL. To protect claim for damage, KOPT was otherwise entitled to restrain HBTPL from disposing of the materials or removing them from the country. On the first issue, he would refer to clauses-1.12, 1.24, 1.28, 1.34 and ultimately 4.19 of the contract. In terms of clause-1.12 a successful tenderer was not entitled to remove or replace any equipment installed/or provided by him under the provisions of the contract. Clause-1.34 would suggest, the contractor shall have to peacefully remove all the equipment from the Dock on the expiry of the contract or early termination thereof. Clause-7.12 would relate to early termination that would also suggest removal of the equipment. The general conditions of contract that would also act as part of the agreement, would suggest all constructional plant, temporary works and materials brought to the site would be deemed to be the properties of the KOPT until satisfactory completion. Clause-4.19 that is quoted below : “All constructional plants, temporary work and materials when brought to the site by the contractor, shall be deemed to be the property of the Trustees who will have a lien on the same until the satisfactory completion of the work and shall only be removed from the site in part or in full with the written permission of the Engineer or his Representative.” Placing the aforesaid provisions, Mr. Mitra would contend, KOPT was entitled to resist removal of the equipment from the country or disposal of the same at the instance of HBTPL. Mr. Mitra would however suggest, KOPT would have no complain in restricted use of the equipment as directed by us in our order dated December 19, 2012. On the issue of damage, Mr. Mitra would contend, KOPT was entitled to resist removal of the equipment from the country or disposal of the same at the instance of HBTPL. Mr. Mitra would however suggest, KOPT would have no complain in restricted use of the equipment as directed by us in our order dated December 19, 2012. On the issue of damage, Mr. Mitra would suggest, even if the clauses mentioned above, did not conclusively suggest any absolute ‘lien’ for the KOPT, the claim for damage itself would pre-supposedly give rise to right of KOPT to pray for fetter on HBTPL, compelling them to remove the equipment from the Port area and not disposing of the same without protecting the interest of the KOPT for realization of their dues on account of damage due to wrongful termination of the contract. Mr. Mitra would lastly contend, HBTPL was formed only for the purpose of operating at the Haldia Dock Complex. The company did not have any tangible asset wherefrom KOPT would be entitled to recover their dues. He would refer to the Director’s report at page-542 and the Balance-Sheet of HBTPL in this regard. Mr. Mitra prayed for setting aside of the order of the learned Single Judge that permitted HBTPL to freely use the equipment including disposal of the same at their choice. Per contra, Mr. Ranjan Deb, learned senior counsel appearing for HBTPL would contend, the Letter of Intent dated April 29, 2009 was a part of the contract as would appear from the agreement itself. In the Letter of Intent there was no clause for ‘lien’ over the equipment. In the agreement, it was obligatory on the part of the contractor to remove all equipment on the expiry and/or termination of the contract. He would refer to clause-1.34 appearing at page-75 of the paper book. Mr. Deb would further contend, KOPT already encashed Bank Guarantee for Rs.4 crores. The equipment referred to above, were all hypothecated and pledged with Axis Bank for repayment of their dues. The fetter, if any, imposed on disposal of the equipment, would virtually effect the right of Axis Bank to claim ‘lien’ over the goods. Mr. Deb drew our attention to clause 4.19 to contend, it would not suggest any ‘lien’ of KOPT. According to him, equipment could not be termed as “temporary works” or “materials”. “Constructional plant” would mean, plant required for construction. Mr. Deb drew our attention to clause 4.19 to contend, it would not suggest any ‘lien’ of KOPT. According to him, equipment could not be termed as “temporary works” or “materials”. “Constructional plant” would mean, plant required for construction. The contractor was engaged in loading and unloading operation in berth Nos. 2 and 8. The equipment referred to above, were brought by the contractor for loading-unloading operation. Those equipment would not belong to KOPT and the KOPT had no ‘lien’ over the said equipment either under clause-4.19 or any other clause. The “equipment” being not specifically mentioned in any of the clauses, could not come within the mischief of ‘lien’. He would lastly contend, the case of ‘lien’ even if germane for KOPT, was given up once they applied for attachment before judgment. On the issue of mortgage and/or hypothecation, Mr. Deb would draw our attention to the relevant dates. We find, the Deed of Hypothecation was executed by the contractor in favour of Axis Bank on July 20, 2009 whereas the subject contract was entered into on October 16, 2009. The Letter of Intent was issued on April 29, 2009 that did not suggest any clause for ‘lien’. The Axis Bank registered the charge under Section 126 of the Companies Act, 1956 on September 3, 2009 prior to the contract being executed by the parties. According to Mr. Deb, once the right of ‘lien’ was waived by claiming attachment before judgment the same could not be revived. While giving reply, Mr. Mitra would refer to the dictionary meaning of “constructional plant”, according to him, it would include equipment. On the hypothecation issue, Mr. Mitra would suggest, it was a floating charge on the equipment that the Bank registered under Section 126. The floating charge could not be termed as an absolute charge that would prevent KOPT from claiming any ‘lien’ over them. He reiterated, when there was a quantified damage that too, admitted by HBTPL in their pleadings, KOPT was entitled to claim ‘lien’ over the equipment. He would refer to page-341 of the paper book where HBTPL admitted, KOPT would be deprived of revenue to the extent of Rs.11 crores per month. CASES CITED: 1. All India Reporter 1914 Lower Burma page-265 (Manackjee Pallanjee –Vs.-S.A. Meyappa Chetty). This decision would suggest, a bona fide encumbrancer without notice would not be effected by a subsequent encumbrance. 2. He would refer to page-341 of the paper book where HBTPL admitted, KOPT would be deprived of revenue to the extent of Rs.11 crores per month. CASES CITED: 1. All India Reporter 1914 Lower Burma page-265 (Manackjee Pallanjee –Vs.-S.A. Meyappa Chetty). This decision would suggest, a bona fide encumbrancer without notice would not be effected by a subsequent encumbrance. 2. All India Reporter 1953 Calcutta page-526 (Kanhaiyalal Jhanwar – Vs. – Pandit Shirali & Co.). In this decision, shareholders of a company pledged their shares to the company against dues to the company. Selfsame share was pledged with the third party for re-payment of dues. Question arose, what would be effect of prior lien of the company. 3. All India Reporter 1961 Calcutta page-621 (G. Bhar & Co. – Vs.- United Bank of India Ltd.) Mr. Deb would rely upon the Division Bench decision of this Court on the interpretation of floating charge. The Division Bench observed, “By the very nature of the business, the stock fluctuated not only from day to day but from hour to hour. A hypothecation of such a business of which possession was left with the borrower, is a floating charge in the true sense of the term”. The Division Bench further observed, the charge or mortgage became crystalized as soon as the attachment before judgment was effected at the instance of the appellant, because, after that date, the stock-in trade of the business became fixed, and the borrower could not possibly deal with the stock-intrade after the attachment”. Citing this decision Mr. Deb would contend, once the business was stopped the floating charge would crystalize, and the Bank would be entitled to take possession of the assets and make attempt to dispose of the same for realization of their dues. 4. 1974 Volume-I All England Reporter page-900 (George Barker (Transport) Limited Vs. Eyrion). Mr. Mitra relied on the decision on the issue of floating charge and its effect. 5. All India Reporter 1996 Volume-X Supreme Court Cases page-405 (Rajasthan Cooperative Dairy Federation Ltd. –Vs.-Maha Laxmi Migrate Marketing Service Pvt. Ltd.). Mr. Deb cited this decision to support his interpretation of Letter of Intent. According to him, the Letter of Intent was merely an expression or intention to enter into a contract. There was no binding relationship. The Apex Court held so in paragraph-7. 6. Mr. Deb cited this decision to support his interpretation of Letter of Intent. According to him, the Letter of Intent was merely an expression or intention to enter into a contract. There was no binding relationship. The Apex Court held so in paragraph-7. 6. All India Reporter 1992 Supreme Court page-496 (Triveni Shankar Saxena – Vs.-State of U.P. & Ors.). This decision was also cited on the issue of ‘lien’. 7. All India Reporter 1994 Gujrat page-2 (Syndicate Bank Vs. National Wire Products and Ors.). The Single Bench decision of the Gujrat High Court would suggest, the attachment before judgment under Order XXXVIII Rule 5 would not affect the rights existing prior to the date of attachment. Citing this decision Mr. Deb contended, the charge registered by Axis Bank was much prior to execution of the subject contract. Hence, the Deed of Hypothecation was not affected by the ‘lien’, if any, incorporated in the contract. 8. 2006 Volume-VI Supreme Court Cases page-736 (Indian Oil Corporation Vs. NEPC India Ltd. & Ors.). Mr. Mitra relied upon paragraph 25-26 of this decision to support his interpretation of the word ‘hypothecation’ that would relate to a floating charge. OUR VIEW: The relevant clauses discussed above, in our view, would suggest, there would be no ‘lien’ over the equipment. Mr. Mitra put all his emphasis on clause-4.19 that would be general conditions of contract applicable for all contracts. The “equipment” could not come within the scope of “temporary work” or “materials”, at least dictionary meaning would not suggest so. The “constructional plant” would mean a plant required for construction. The equipment would admittedly belong to the contractor. The ‘lien’ claimed by KOPT would be for collateral security. The clauses mentioned by Mr. Mitra, even if given full credence, would not relate to the security for any unforeseen damage. Such retention was, even if interpretation of Mr. Mitra is correct, would relate to operation of the loading-unloading job. The contractor was entrusted to install, maintain and operate. Such installation would relate to the loading-unloading mechanism. So long the contract would remain alive the contractor would not be permitted to remove the equipment and/or any part of it that would be required for the loading-unloading operation. Admittedly, contract stood terminated hence, question of discharge of further duty would not arise. Such installation would relate to the loading-unloading mechanism. So long the contract would remain alive the contractor would not be permitted to remove the equipment and/or any part of it that would be required for the loading-unloading operation. Admittedly, contract stood terminated hence, question of discharge of further duty would not arise. One party terminated the contract, the other party accepted termination, however termed it as wrongful claiming damage for such premature termination. The clauses referred to by Mr. Mitra, would be relevant during subsistence of the contract. The security for performance was guaranteed by Bank Guarantee that stood encashed. Despite our best efforts we could not find any additional protection KOPT had under the contract to secure the claim for damages. The learned Judge also held as such. His Lordship was little bit harsh while awarding cost. Everyone has his own perception, however the ultimate finding on the issue was accurate that would need no interference. We could have stopped here, however for ends of justice, we do not wish to. The contractor was prevented untimely, it must have embarrassed KOPT as they were not prepared for this untimed termination. There was certainly a loss of revenue, fixing of responsibility as well as the quantum would be entrusted to the Arbitral Tribunal. It would be too early to say, KOPT did not and could have any claim for damage or that the responsibility would certainly lie on KOPT foreclosing their right to claim damage from HBTPL. Hence, we feel, interest of justice would sub-serve if we retain the fetter that we imposed by our judgment and order dated December 19, 2012. The learned Judge permitted HBTPL to dispose of the equipment as well that would definitely foreclose the chance of KOPT to realize dues from HBTPL, if any, awarded in their favour ultimately by the Tribunal. At the same time HBTPL should not be deprived of commercial exploitation of the equipment. HBTPL was a company incorporated principally for the purpose of conducting the loading-loading operation at berth Nos. 2 and 8. They do not have any other tangible asset. Considering the entire situation, and the advantages and disadvantages the parties might face, we strike the balance by affirming the judgment and order of His Lordship with a small rider imposing fetter on HBTPL from disposing of the assets or taking it out of the country. Mr. 2 and 8. They do not have any other tangible asset. Considering the entire situation, and the advantages and disadvantages the parties might face, we strike the balance by affirming the judgment and order of His Lordship with a small rider imposing fetter on HBTPL from disposing of the assets or taking it out of the country. Mr. Ranjan Deb, learned senior counsel appearing for HBTPL expressed his difficulty as to repayment of the dues of Axis Bank. He would apprehend, the fetter, if any, might affect the right of the mortgagee Bank. We feel, Mr. Deb perhaps, was not fully correct, however for abundant caution, we make it clear, our order must not prejudice the rights and privileges of the Axis Bank under the Deed of Hypothecation and/or mortgage that they entered into with HBTL. RESULT: The appeal thus succeeds in part and is allowed. The judgment and order of the learned Single Judge is affirmed, subject to the modification to the extent, HBTPL would be restrained by an order of injunction from disposing of the equipment and/or creating any third party interest thereon without the express leave being obtained from the Tribunal upon notice to KOPT. They would also be restrained from removing any of the equipment out of the country. They would be free to use the equipment anywhere within the country under the supervision of the Special Officers. The cost so awarded by the learned Single Judge is made easy. We would however request both the parties being KOPT and HBTPL to contribute Rs.10,000/- each to the State Legal Services Authority and file Xerox copy of the receipts with the Officers of the Court in course of this week. A.P.O. No.121 and 122 are disposed of accordingly. There would be no order as to costs. Dr. Mrinal Kanti Chaudhuri, J: I agree.