Khaalid Muhammad Sami v. Marudhar Studios Pvt. Ltd.
2019-04-23
G.S.PATEL
body2019
DigiLaw.ai
JUDGMENT : G.S. PATEL, J. 1. If the bailee's money claim is completely time-barred, can he nonetheless continue to exercise a particular lien under Section 170 over goods until his claim is satisfied? This is the question for determination. 2. The Plaintiff, Khaalid Muhammad Sami, obtained a decree in this copyright infringement suit on 13th October 2015 in regard to a motion picture called Nargis. At the date of the decree, Sami owed Defendants Nos. 1 and 2 about Rs. 21 lakhs. That is not the subject matter of the discussion today. The prints and negatives of this film were admittedly by then with the 3rd Defendant, Prime Focus Limited, a processing laboratory that worked on these to prepare them for final distribution. No dispute survives between Sami and Defendants Nos. 1 and 2. My order of 1st/5th April 2019 covers this. The question is whether Prime Focus can continue to exercise a particular lien under Section 170 of the Contract Act until it is paid. This is a bailee's particular lien. According to Mr Gaikwad for Prime Focus, Sami owes roughly Rs.80 lakhs to Prime Focus for processing and other charges for work Prime Focus did on the film. 3. In the order of 1st/5th April 2019, having set out briefly the relevant facts, I framed the question for determination in paragraph 8 thus: "8. The facts are sufficiently stated above. The question for determination is this. When a bailee exercises a particular lien under Section 170 of the Contract Act, exercising what is essentially a statutory right, is this subject to the Limitation Act? In other words can a bailee exercising a particular lien under Section 170 hold on to bailed goods even if any claim that he might have is completely beyond limitation and can no longer be adjudicated or result in an enforceable claim against the bailor? This is to be distinguished from the general lien of bankers, factors and wharfingers under Section 171. The authorities in that regard are clear: that general lien under Section 171 is not constrained by periods of limitation. The reasoning appears to be that what a banker etc holds (most cases are in the context of banking matters) is a realisable security and a banker can always adjust the debt due to it against the security that it holds.
The reasoning appears to be that what a banker etc holds (most cases are in the context of banking matters) is a realisable security and a banker can always adjust the debt due to it against the security that it holds. A banker may also have the right to sell an asset over which he is exercises a lien under Section 171. A bailee acting under Section 170 has no such statutory right of sale. There is also an important point of distinction between a bailee's particular lien under Section 170 and the rights in regard to a lien and a sale under the Sale of Goods Act." 4. I then requested Ms Manjari Shah and Mr Sharan Jagtiani to assist as amicus on the question of law. I have heard both, and, too, Mr. Gaikwad and Sami. Both Ms Shah and Mr Jagtiani have drawn my attention to certain authorities, some very old, on the question. 5. Section 170 reads: Section 170 - Bailee's particular lien Where the bailee has, in accordance with the purpose of the bailment, rendered any service involving the exercise of labour or skill in respect of the goods bailed, he has, in the absence of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them. Illustrations (a) A delivers a rough diamond to B, a jeweller, to be cut and polished, which is accordingly done. B is entitled to retain the stone till he is paid for the services he has rendered. (b) A gives cloth to B, a tailor, to make into a coat. B promises A to deliver the coat as soon as it is finished, and to give a three months credit for the price. B is not entitled to retain the coat until he is paid. 6. Ms Shah frames the response like this. First, that there is no outer limit in Section 170 prescribing the time for which a bailee can continue to hold bailed goods. Second, a particular lien under Section 170 is a defence to a claim for chattel. It is not a right of action in itself. Limitation will not apply when a bailee sets up a defence of a possessory lien of particular goods.
Second, a particular lien under Section 170 is a defence to a claim for chattel. It is not a right of action in itself. Limitation will not apply when a bailee sets up a defence of a possessory lien of particular goods. The Limitation Act would apply to the initiation of a claim presented for adjudication, not to a defence set up. Thus even if Prime Focus was itself a defendant it could always set up its possessory lien under Section 170 as a defence. It matters not at all that Prime Focus's own claim is completely barred by limitation. 7. She draws my attention to a Division Bench judgment of Madras High Court in Prasad Film Laboratory v. GV Films Ltd., (2005) 2 CTC 372 (DB) The Division Bench was considering an appeal against an order of 25th February 2005. The appellant was the original 1st defendant. He and counsel for the 4th respondent were jointly appointed receivers of a motion picture. The 1st respondent was the original plaintiff. There were 17 other defendants. The plaintiff claimed an absolute copyright in a film. He sought a mandatory injunction for delivery of the prints. The Single Judge held that all creditors and in particular the 1st defendant had a lien on these prints. He therefore made an order of joint receivership, and issued directions for the exhibition of the film. The Appeal Court held that the 1st defendant was at liberty to raise all contentions including that of a bailee's particular lien under Section 170 at the further hearing before the trial court. The decision of the Trial Court is also reported. GV Films Ltd v. Prasad Film Laboratories & Ors, 2005 2 LW 501 It notes that the defendants did claim precisely such a lien. The Single Judge held for the defendants. It said that unless the holder of the lien was paid his dues, the film could never be released. 8. While it is true that no question of limitation was directly raised in Prasad Film Laboratories, the finding returned by the learned Single Judge and approved by the Division Bench is clear: the lien itself can continue without limitation. 9. It is for this reason, Ms Shah points out, that whenever a lien is exercised very often there are criminal complaints made demanding that the goods be returned to them.
9. It is for this reason, Ms Shah points out, that whenever a lien is exercised very often there are criminal complaints made demanding that the goods be returned to them. She draws attention to two decisions of the Guwahati High Court, in criminal proceedings, where the claim was that of a repairer as a bailee.[Shyamal Sharma v. Nagengra Nath Dutt, 1983 2 GauLR 108 ; Bachraj Dugar v. Narendra Kumar Singh & Anr, (1979) CriLJ 116. See also: R v. Turner, 1 WLR 901, an appeal against the conviction of a car owner for taking away his car from a garage without paying the garage s proprietor for repairs; E J Judah v. The KingEmperor, (1926) AIR Calcutta 464 (forcible removable of a kettle only partly repaired was not theft, and no lien could be exercised); Dr v. S Prabhu v. R D Mujumdar, (1993) 2 KarLJ 1 (a garnishee who repaired the vehicle had a preferential lien until his repair charges were paid).] 10. Therefore: a claim to a possessory lien under Section 170 is essentially a right of defence. It is a statutory right. It is not subject to the Limitation Act. The lien continues until the bailee is paid his remuneration for the services rendered in respect of these goods. 11. Mr. Jagtiani supplements these submissions with a separate note. He accepts that limitation would apply if the amount for which a lien was claimed was set up as a set-off or a counter claim. But as a defence simpliciter it is not subject to limitation. Between Section 170 and 171, even given that the latter speaks of the general lien of bankers, factors etc, there is no material distinction when it comes to the question of limitation. Under Section 171 a general lien is exercised over a realizable security. The law is settled: the security may be encashed or realised at any time and is unaffected by limitation. That Section is in respect of a general balance of accounts. It is unlike Section 170 which deals with a possessory lien over specific goods or chattel. It is therefore Mr. Jagtiani's submission that limitation itself does not bar such a defence. A bailee under Section 170 does not have the power to realise any amount towards his dues by selling the goods bailed.
It is unlike Section 170 which deals with a possessory lien over specific goods or chattel. It is therefore Mr. Jagtiani's submission that limitation itself does not bar such a defence. A bailee under Section 170 does not have the power to realise any amount towards his dues by selling the goods bailed. His right is merely possessory, i.e. to retain possession until he is paid for the work done on the goods. The Limitation Act precludes a plaintiff from instituting a time-barred suit but does not prevent a party from raising a lien as a defence. 12. Mr Jagtiani draws a parallel with the purpose of Section 53-A of the Transfer of Property Act. [Shrimant Shamrao Suryavanshi & Anr v. Pralhad Bhairoba Suryavanshi & Ors, (2002) 3 SCC 76 . The Supreme Court noted the Special Committee s report on the aims and objects of this Section. Part performance can always be set up as a defence even if a positive claim based on that very part performance falls outside limitation] This protects a transferee who, in part performance, has taken possession of the property even if a suit for specific performance is beyond limitation. As the schedule to the Limitation Act shows, limitation applies to suits and applications. There is nothing in the Limitation Act that makes it applicable to a defence taken. To say, therefore, as Sami would, that Prime Focus cannot today have its claim adjudicated because it is time-barred is of no relevance whatever. The fundamental underpinning is that limitation does not extinguish a right. It merely bars a remedy. Banhatti Cooperative Spinning Mill Ltd v. Karnataka Electricity Board, (1990) ILR(Kar) 3518 No defence is affected by limitation. 13. Mr Jagtiani draws attention to a very early decision of Rankin J of the Calcutta High Court in Narendra Lal Khan v. Tarubala Dasi., (1921) 48 ILR(Cal) 817 This was an application by an attorney under the applicable High Court Rules for an order against his client for payment of a sum taxed under various bills of costs. The question was whether the particular or active lien of a solicitor over a sum received was available for recovery of his costs in all or in only one of several execution cases.
The question was whether the particular or active lien of a solicitor over a sum received was available for recovery of his costs in all or in only one of several execution cases. Rankin J held that in addition to a particular lien that an attorney may have upon monies recovered in a suit, he has also a general or a passive possessory lien upon all movables, deeds, documents and the like that came into his hands, unless he receives them for a specific purpose inconsistent with the right of retainer. Therefore, if an attorney has any form of lien on property, he can exercise that lien not withstanding that by the terms of the Limitation Act his suit would be barred. The decision is a clear authority for the proposition in question. It is also an authority for the second proposition that Mr Jagtiani canvasses, viz., that limitation would apply to a defendant asserting a set-off. 14. For this part Mr Gaikwad relies on the judgment of a Single Judge of the Calcutta High Court in Unity Company Private Ltd v. Diamond Sugar Mills & Ors., (1971) AIR Calcutta 18 The Court drew a distinction between a lien and an equitable charge and said the two are not the same. The question in that case was about the equity shares of a company and whether these could be sold. The Court held that the lien any company has over the shares depends upon the Articles of Association. The learned Judge went on to hold that the Limitation Act would have no application in a case such as this. This was on the general principle of course regarding the ambit of the Limitation Act and its intended purpose. 15. Then there is an old decision Miller v. Nasmyths Patent Press Company of the Calcutta High Court., (1882) 8 ILR(Cal) 312 Here again the question arose under Section 170 of the Contract Act and Wilson J held, after having set out the section, that the position in India was no different from that in England. The Defendant has a right to retain goods over which it was claiming a lien until all charges claimed were paid. The retention or detention of these goods continues until payment is actually effected. 16.
The Defendant has a right to retain goods over which it was claiming a lien until all charges claimed were paid. The retention or detention of these goods continues until payment is actually effected. 16. Mr Gaikwad places reliance on the decision of the Supreme Court in Shipping Corporation of India Ltd v. CL Jain Woollen Mills & Ors., (2001) 5 SCC 345 This arose both under the Customs Act and under the Contract Act. The question was whether the lien exercised under specific terms and conditions of a bill of lading could be dislodged by the provisions of the Customs Act. The Supreme Court noted the submission on behalf of the appellant based on Section 170 of the Contract Act. The Supreme Court held that the relationship between the importer and the goods carrier was governed by the contract they made. Section 170 of the Contract Act made it clear that the bailee could retain the goods until his dues were paid. The customs authorities were held not to have the power to direct the carrier to not charge any demurrage merely because the carrier was exercising such a lien. 17. In Kalloomal Tapeshwari Prasad v. Rashtriya Chemicals & Fertilizers, (1990) AIR Allahabad 214 it was the plaintiff who asserted a lien under Section 170 of the Contract Act. He brought suit for an injunction because the defendant was trying to remove goods without paying the plaintiff. This authority sets out the general principle applicable to Section 170, but no question of limitation arose in that case. It is an authority for the general proposition that a bailee can exercise his lien under Section 170 until he is paid. 18. In the present case, with Prime Focus exercising its lien, the question is whether Sami is entitled to an order against Prime Focus compelling it to deliver it to prints to Sami even if Prime Focus has not been paid. Having regard to this position in law, and notwithstanding that any claim that Prime Focus may have as a plaintiff it entirely time barred, Prime Focus is nonetheless entitled to continue to exercise its particular lien under Section 170 of the Contract Act. 19.
Having regard to this position in law, and notwithstanding that any claim that Prime Focus may have as a plaintiff it entirely time barred, Prime Focus is nonetheless entitled to continue to exercise its particular lien under Section 170 of the Contract Act. 19. Thus while Sami has an adjudicated right by virtue of the decree in his favour he is not entitled to an order against Prime Focus for delivery of the prints of the film until such time as he makes full payment of the amounts due to Prime Focus and in respect of which Prime Focus is exercising its Section 170 possessory lien. 20. The Chamber Summons and Execution Application are accordingly disposed of. There will be no order as to costs. 21. I have to express my gratitude to Ms Shah and Mr. Jagtiani for their assistance in the matter.