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TMI Blog2013 (3) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... everance moves to the arbitral forum. The tribunal has been constituted and, as the parties inform, the pleadings are in the process of being filed. 2. At the ad interim stage of these petitions, the Port's prayer for an order in the nature of attachment before judgment was declined. However, two special officers were appointed for the purpose of ensuring the removal of all machinery, equipment and material belonging to the contractor from berth Nos. 2 and 8 of the Haldia Dock Complex as expeditiously as possible. The machinery and equipment include six mobile harbour cranes - those over-sized metal chairs that stand out in modern ports and seem to be waiting for some gigantic Gulliver to occupy them - which have taken considerable time to be dismantled and relocated at the berths or elsewhere in the Haldia Dock Complex. The ad interim order permitted the contractor to remove all its machinery, equipment and material without there being any fetters as to the use thereof and the special officers were only to supervise the dismantling of the cranes and the removal of all machinery, equipment and material of the contractor from the Dock Complex. On appeals preferred from the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties agreeing to several suggestions made by the court and amicably arranging for the contractor's machinery, equipment and material to be relocated within the Haldia Dock Complex so that the two berths were available for use by the Port. The two berths are now functional, though the mechanised services are no longer available with the big chairs having been folded up by the contractor and made ready to be carried away by ships. In the euphoria of the sudden camaraderie between the parties in their hour of physical separation, these matters remained adjourned for a couple of weeks for the parties to suggest an amicable solution. But the parties could not be afforded any more time in view of the time-frame chalked out for these matters. A couple of days of lawyers' cease-work in the midst of the hearing and another day wasted by the Port have, regrettably, carried the judgment to two days beyond the deadline. 5. Following a global tender for the supply, operation and maintenance of cargo-handling equipment at berth Nos. 2 and 8 of the Haldia Dock Complex, a letter of intent was issued by the Port to the contractor on April 29, 2009. An agreement was executed between the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that if additional cargo was directed to its berths, the Port would stand to gain Rs. 2.5 crore per month by way of revenue. The letter threatened that the contractor would suspend the operations from September 8, 2012 if the Port did not address the issues raised by the contractor. 7. The Port carried a petition under Section 9 of the said Act to this court which was disposed of upon an agreement being arrived at between the parties as recorded in a consent order of September 12, 2012. The Port conceded to have all dry bulk cargo to be allotted to the two mechanised berths, if such berths were free. The contractor agreed that the additional work promised would help it recover its cost of investment and ensure more efficient functioning at the port. 8. The first sign that the agreement as recorded in the consent order would not be permitted to be implemented was in the form of another contractor at the Haldia Port seeking to prefer an appeal from the order of September 12, 2012. Though such other contractor's legal misadventure met with the obvious fate of rejection, it was evident that the additional work would not be permitted to be allocated to berth Nos. 2 and 8 in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into the matters complained of. The order dated September 19, 2012 recorded that neither the District Magistrate nor the Superintendent of Police had taken any initiative to control the lawlessness that prevailed at or around the Haldia Dock Complex. The court concluded on the basis of the material before it as follows: "It is not disputed that the extent of cargo handled at berths 2 and 8 by the mechanized cranes is double the extent of cargo handled at the berths which are manually operated. Disruption in cargo handling operations at the said berths by persons with interest of their own to derail the petitioners (the contractor herein) and thereby forcing a situation to abandon the operations at the HDC cannot be totally ruled out." 10. The contractor declares that it put in the several lakhs of rupees for the police bandobast to be made, but to no avail. It says that some of its officers were abducted from Haldia, made to come to Calcutta and board Mumbai-bound trains by persons acting at the behest of those who wanted the mechanised operations at the port to be scuttled so as to perpetuate their hegemony over the cargo-handling operations at Haldia. The Port, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to the picture painted by the contractor, it has abandoned the work upon realising that the profit margin for operating at Haldia was much lower than what it had estimated; and, notwithstanding the Port's claim being in damages, the contractor had quantified it and it is such amount that the contractor should be required to secure since it has no known assets beyond the machinery and equipment now relocated at the Haldia Dock Complex and the company was incorporated as a single purpose vehicle for conducting the cargo-handling operations at Haldia. 13. The Port founds its case of lien on several clauses of the primary agreement and the special and the general conditions appended thereto, though there is only a solitary clause in the general conditions that uses the word "lien". The Port refers to clause 1.12 of the primary agreement embodied in the tender documents that provides that the contractor shall not remove or replace any equipment installed without the previous permission of the Port; clause 1.24 that gives the Port the right to inspect all equipment supplied by the contractor and obliges the contractor to take such action with regard thereto as directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the work or temporary work and includes (without thereby limiting the foregoing definition) all machinery and tools but does not include materials or other things intended to form or forming part of the permanent work. 1.6 "Work" means the Work to be executed in accordance with the Contract and includes authorised "Extra Work", "Excess Work" and "Temporary Work". 1.7 "Temporary Work" means all temporary work of every kind required in or about the execution, completion, operation or maintenance of the work and includes (without thereby limiting the foregoing definitions) all temporary erections, scaffolding, ladders, timbering, soaking vats, site offices, cement and other godowns, platforms and bins for stacking building materials, gantries, temporary tracks and roads, temporary culverts and mixing platforms. 1.8 "Extra Work" means those work required by the Engineer for completion of the Contract which were not specifically and separately included in the scope of work of the tender. "Excess Work" means the required quantities of work in excess of the provision made in the scope of work.' 16. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e termination of the agreement between the parties has been accepted by the Port, albeit without prejudice to the Port's right to claim against the contractor, there is no scope for the completion of the work under the agreement any more. In any event, the contractor asserts that the Port has obtained its pound of flesh by encashing the bank guarantees that had been furnished by the contractor in lieu of performance. It is not denied by the Port that bank guarantees of a total value of about Rs. 4 crore have been encashed by the Port. 18. The second limb of the contractor's submission on the issue of lien is that all its machinery and equipment are hypothecated to its bankers. Copy documents appended to the contractor's affidavit reveal the hypothecation to be of July, 2009 and the application for registration of the charge to be of August, 2009. A copy of a certificate dated September 3, 2009, evidencing registration of the charge under Section 125 of the Companies Act, 1956, has been made over by the contractor and not taken exception to by the Port. The contractor says that since the hypothecation was created prior to the agreement of October 16, 2009 between the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en claimed against the receiver, relying on their lien for the amount due from the company to the transporters for services rendered. Since the goods were perishable, the receiver required the transporter to deliver the same and undertook to pay the transporters if the lien asserted by the transporters was found to be valid. An action by the transporters for the amount claimed was dismissed on the ground that prior to the transporters coming into possession of the last lot of goods, the receiver had already been appointed and the general lien of the transporters stood obliterated thereby. The court of appeal reversed the judgment on the ground that the relevant order for transportation had been placed by the company prior to the receiver being appointed and the receiver's rights were no higher than the company's rights and were subject to the charge in favour of the transporters that crystallised upon the order being placed on the transporters by the company, a debt being due from the company to the transporters and the transporters being in possession of the goods. 20. A judgment Mancakjee Pallanjee v. S.A. Meyappa Chetty AIR 1914 LB 265 has been placed by the Port for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 6 of the primary agreement makes the general conditions applicable to the agreement between the parties, subject to the provisions thereof not being repugnant to or at variance with the terms of the primary agreement. The definition of "constructional plant" in the general conditions, within the fold of which the Port seeks to include the contractor's machinery and equipment at the site, appears to cover a building or civil construction. The definition of "constructional plant" cannot be read in isolation and has to be understood with reference to the definitions of "work", "temporary work", "extra work" and "excess work" in clauses 1.6, 1.7 and 1.8 of the general conditions. It is true that if the words of a contract imply something, the court has little authority to read it down or infer what the plain words do not suggest. Yet, common sense and logic cannot be given a complete go-by in the interpretation of the terms of a contract, particularly when the window for another implication is available upon the provisions being made applicable subject to their relevance to the primary agreement. It is not for nothing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of the agreement that the Port has referred to for the purpose of retaining the machinery and equipment of the contractor, do not so entitle the Port. That the contractor shall not remove or replace any equipment installed without the permission of the Port, as recognised in clause 1.12 of the primary agreement, does not confer on the Port any authority to retain the machinery and equipment of the contractor to satisfy the Port's claim in damages. Similarly, the Port's right to inspect all equipment supplied by the contractor and the contractor's obligation to take such action with regard thereto as directed by the Port, under clause 1.24 of the primary agreement, cannot be read to allow the Port any modicum of authority to retain the machinery and equipment of the contractor till its claim in damages is discharged. Indeed, clause 1.34 of the primary agreement permits the contractor to remove its equipment from the port premises on the expiry of the period of the contract or the early termination thereof; that would mean that the contractor has the right to remove its machinery and equipment from the premises upon the termination of the agreement. Clause 7.9 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efulness of certain vested interests and set up the contractor as the lamb to the slaughter. The contractor insists that its willingness to perform the work under the contract would be evident from the undisputed documents on record and the letters issued by the Port to third parties bear testimony to the prejudice and hardship that the contractor had to endure to do no more than discharge its obligations under the agreement and help increase the efficiency of operations at the Haldia Port. 28. The contractor has referred to the correspondence disclosed in the petitions and affidavits to emphasise that vested interests were at work even before the contractor got a toe in at the Port premises. In particular, the contractor places the communication between the Port and other authorities and how the Port's letters depicted the state of affairs at the Haldia Dock Complex in the month and a half leading up to the termination of the agreement by the contractor. In the Port's letter of September 18, 2012 to the officer-in-charge of the Haldia Police Station, it spoke of "a group of about 200-250 workers" employed by other contractors at the Haldia Dock Complex having ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e "under financial strain." The chairman quoted the contractor as having reported "a loss of about Rs. 2 crores per month at the present level of business being done by them considering their high cost of manpower …" The chairman then referred to the order of September 12, 2012 passed by this court and the agitation that followed at the Port by "workers of various private handling agents working at Haldia." The chairman said that "such a situation was anticipated by the port after the court order for taking more vessels at Berth Nos. 2 and 8 was passed" and the Port had kept the local "police and civil administration informed … (of the) possible labour unrest affecting the law and order situation" at Haldia. 30. The contractor maintains that it would be a travesty of justice to infer from the admitted documents that the contractor abandoned the work for commercial reasons. The contractor emphasises that it had to give in to the unreasonable demands of the influential locals and the Port gave little support to its contractor to deal with a situation that was extraneous to the work contemplated under the agreement and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prohibits a claim in damages to be secured by an order of court. The Port argues that the conditions in Order XXXVIII Rule 5 of the Code have been made out in this case for an order of attachment to be passed. Legally speaking, the Port may be selling itself short by subjecting itself to the rigours of Order XXXVIII Rule 5 of the Code in course of a matter under Section 9 of the 1996 Act. Though it may be academic in the present context - and despite there being authoritative judicial pronouncements on such legal question - strict compliance with Order XXXVIII Rule 5 of the Code may not be necessary in course of a prayer for attachment in a petition under Section 9 of the 1996 Act. The principle embodied in Order XXXVIII Rule 5 of the Code has to be recognised as a statement of public policy in its sound adherence to the rules of natural justice that are fundamental to any judicial process. But it is only the principle of Order XXXVIII Rule 5 of the Code that has to be imported in a similar situation under Section 9 of the 1996 Act; for there is no other statement of the underlying public policy for such purpose in the general law of the land. Notwithstanding such legal concession, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not excite a court to consider a prayer for security or attachment, though there may not be any express law to prohibit an order of such nature. Unlike several other causes of action where a prima facie assessment may be more easily made, a claim in damages is rather more difficult to assess on mere affidavit evidence. The Port has first to establish that it is entitled to damages and then have the quantum thereof ascertained. It is possible that there could come a case where the claimant's entitlement to damages is apparent. The Port's claim in the present case is not of such exalted quality. On the evidence now presented by the parties, it can safely be said that both the Port and the contractor have suffered upon the agreement having been terminated. But the fact that the Port has suffered loss does not imply that it is entitled to recover it from the contractor. If such is the prima facie assessment on the basis of the material now brought by the parties, the Port falls well short of the quality of claim that it has to demonstrate to be entitled to the high order that it seeks. Further, the balance of convenience does not warrant that the contractor's machinery and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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