A Detail study on Importance of lien and its Kinds

Submitted by

Sparsh Agrawal 18010323125

B.A. LLB – Divison: B (Batch: 2018-23)

In March, 2019

Under the guidance of

Dr. Priyanka Mohod
Assistant Professor
Symbiosis Law School, Hyderabad

SPECIAL CONTRACTS
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 CERTIFICATE

The Project entitled “A Detail study on Importance of lien and its Kinds”
submitted to the Symbiosis Law School, Hyderabad for Special Contracts as part of
Internal Assessment - III is based on my original work carried out under the
guidance of Dr. Priyanka Mohod from February, 2019 to March, 2019. The
research work has not been submitted elsewhere for award of any degree.

I understand that I myself could be held responsible and accountable for

plagiarism, if any, detected later on.

Signature of the candidate Signature of the Course In charge

Date: 18/03/2019

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 Acknowledgement

I would like to express my sincere gratitude and indebtedness to Dr. Priyanka

Mohod for her enlightening lectures and constant guidance and eternal support
for helping me carry out this research paper smoothly. I would also like to express
my sincere gratitude to our teaching staff for guiding me the path towards gaining
knowledge.

I would like to thank the Library Staff of Symbiosis Law School, Hyderabad as well
for their fruitful co-operation and help in providing me with whatever material I
needed.

I would like to thank our Officiating Director, Dr. Sukhwinder Singh Dari for his
constant guidance, support and motivation.

I would also like to thank my batch mates and seniors who inspired, helped and
guided me in making this project.

Regards,
Sparsh Agrawal
Date: 18/03/2019

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 TABLE OF CONTENTS
S.NO TOPIC PAGE NO.
1. Introduction 5
2. Review of Literature 7
3. Definition and Nature of Lien 8
4. Particular and General Lien 10
5. Lien of Finder of goods 15
6. Lien of Agents 17
7. Importance of Lien 18
8 Conclusion & Suggestions 20
9. Bibliography 21

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 Introduction
LEIN:

Lien is the right to retain the possession of a property of another till the other person meets
the demands of the person in possession. The demand could be any- performing a duty or
paying a due some of money. During the developments of trade and commerce the common
law considered lien as a “Self Help” practice. It was named as “self help” as it did not require
any intervention of the courts. When there was further progress in trade and commerce
the court recognized that leaving such primitive remedy freely can led to every person
recklessly holding on whatever he had. And ultimately, it can hamper trade and commerce.

Lien was in a nature of remedy and it was recognized as a right. The basis of contract of lien
was that it was not between the parties, and the party had its rights because it was imposed
a law by the common law courts.

Honourable Supreme Court explained the nature of the Right of Lien by stating that “Lien in its
elementary sense is a right of a person to retain the possession of goods until the demands of the
possessor are satisfied. Therefore, Right of Lien is a right granted by law and is merely not
granted by a contract”.

SCOPE OF RESEARCH:

The scope of this research on importance of lien and its kinds is to get first hand information
about lien and its kinds as to who can be called as a lien and what are the different rights
available to him. It also extends up to understanding the ways in which the lien can exercise his
rights and to what extent can they be exercised. It also explores through the recent judgments
given by different courts in India in this regard. It aims to study the reach of both general lien
and particular lien and how far the concept of rights of lien been useful to the masses has. The
research would also explicitly highlight the obiter of the eminent judges who have studied the
aspects of these rights in an elaborate manner.

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RESEARCH METHODOLOGY:

Doctrinal Methodology is followed throughout the research paper. Secondary sources have to
be used due to the unavailability of first hand surveys and information.

The systematic analysis involved or derived in the provisions of a statue and legal principles and
logically and rationally ordering them constitutes doctrinal research. A research into law which
lays emphasis on substantive rules of law, doctrines, concepts and judicial pronouncement
forms the doctrinal research. The materials used in this research include the pronouncement of
the judicial courts, debates, policies, history, rules, doctrines, principles, etc. The content in the
paper is mostly descriptive and analytical. A comprehensive study on importance of lien and its
kinds as mentioned in the Act and the applicability of such rights and their exercise are studied
using the cases which deal with contract law. An analysis of the excerpts of the judgments and
obiter of various judges and the experts in this field have been done and presented accordingly.

HYPOTHESIS:
The rights granted to lien as mentioned in the Section 170 and section 171 of the Indian
Contract Act, 1872 are a sufficient remedy for the seller to claim his amount from the buyer.
Lien is the right to retain the possession of a property of another till the other person meets
the demands of the person in possession. Lien was in a nature of remedy and it was
recognized as a right.

OBJECTIVES OF RESEARCH:
 To understand who is a lien, and what are the types and the importance of the
lien to explore the enacted Act by the legislature with regards to the rights of lien.
To examine various rights available to lien.
 To analyze the judicial interpretation of these rights using case laws and obiter of
judges.
 To highlight the flaws in any of the provisions as mentioned in the act, if any. To
form a conclusion and add suggestions, if needed.

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 Review of literature
1. The Bare Act of Indian Contract Act, 1872 was instrumental in finding relevant sections
of the act and finding the rights of the lien.

2. Contract – II by Dr. R.K. Bangia is instrumental for understanding the various forms of
contracts. It includes the chapter on nature and importance of lien which is presented
very lucidly and clearly. It also helps in bringing to light important case laws in relation
with the concerned chapter for better understanding of the concept.

3. A commentary on the Indian Contract Act, 1872 as amended up-to-date, based on latest
case law and statute law by Jainti Prasad Gupta is also useful in comprehensive
understanding of each provision of the Indian Contract Act with respect to lien. It gives
clear picture about the rights and remedies available to the parties to a contract with
the help of case laws in a very easy and systematic way.

4. Pollock & Mulla on the Indian Contract Act, 1872 authored by Sir Frederick Pollock, Sir
Dinshah Fardunji Mulla is instrumental in finding relevant case laws for smooth carrying
of the research.

5. The Chapter on Rights and importance of lien in the Business Law Book authored by The
Institute of Chartered Accountants of India is very useful in detailed examination of the
provision of the act and also helps in understanding the case laws and the judgements
given by the courts.

6. A research article on Rights of lien and its importance published on

https://lawschoolnotes.wordpress.com by Harpreet Kaur, Advocate is also used to cite
certain references to make the content strong. Several other websites and research
paper have been referred to and the research was carried out.

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Definition and nature of lien

Lien is the right to retain the possession of a property of another till the other person meets the
demands of the person in possession. The demand could be any- performing a duty or paying a
due some of money. During the developments of trade and commerce the common law
considered lien as a “Self Help” practice. It was named as “self help” as it did not require any
intervention of the courts. When there was further progress in trade and commerce the court
recognized that leaving such primitive remedy freely can led to every person recklessly holding
on whatever he had. And ultimately, it can hamper trade and commerce.

Lien was in a nature of remedy and it was recognized as a right. The basis of contract of lein was
that it was not between the parties, and the party had its rights because it was imposed a a law by
the common law courts.

The following are the cases where the rights of Lien has been recognized :-

 An unpaid seller had a Lien over the goods in possession.

 The agent had a lien on the property of the principal for unpaid remuneration
 A bailee had a lien on property in his possession.

The major difference between a pledge and a Lien is that in a lien the person in possession only
reserves a right to retain the possession of the goods. He reserves no right to sell the property that
is in his possession. Lien is a right while pledge is contract between the parties. But it is implicit
that the contracting parties are free to create lien by contract and waive the right of lien. An
important aspect in pledge is that the person has been given voluntarily possession of goods
while lien is performance od duty for paying a due sum of money.

In the Judgment of Diplock in Tappenden V. Artus1, the mature of Lien is described. (artificier
means skilled manual worker) it reads as the coomon law lean of an artificier is very ancient in
nature as wells as its origin, it is dated in the time where where remedies by action upon the
contract were still considered as an imperfect stage of development. Because Lein arises because
of the consequence of the contract it is very tempting for the lawyer who belongs to 20 th century
lawyer to think of a common law lien as possessing the characteristics of a contractual right,
express or implied which has been created by a mutual agreement who are parties to a contract.
But it would be a mistake in legal nature as like a right of action for damages, it is a remedy for
breach of contract which actually is conferred by the common law to an artificer to whom the
possession of the goods have been lawfully given for the purpose of doing his work in return
money as its consideration. A common law lein however is not enforceable by action and thus it

1 Diplock in Tappenden v. Aurtus, (1964)2 QB 185

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affords as a defence to action for recovering the possession of the goods, but for the lien, he
Would be entitled to immediate possession.

Right of Lien is one of the Rights available to the Bailee. The Indian Contract Act,1872 classify
the Right of Lien into two types: Particular Lien and General Lien. Section 170 of the aforesaid
Act gives the exact definition of Particular Lien which states that the Bailee is free to hold
control of a precise property with position to the charge which is due. For Example, A gives a
piece of Cloth to B, a tailor, to stich it into a pant as soon as it is over, and to give a three
months’ credit for the price. Therefore ,According to this instance, B is not entitled to return the
pant until he is paid. The Indian Contract Act, 1872 specifies that the Right of Particular Lien is
available to the Bailee subject to certain conditions. The most important Condition among the
other conditions is the Exercise of Skill or Labour which is regarding the goods bailed. Further, it
has been very often highlighted that the skill or labour exercised by the Bailee must be of such a
nature that may or that will improve the quality of the goods.

The two types of Lien which are recognized by the common by the common law courts are

 Particular lien
 General lien

In Particular lien the person reserves the right to retain the possession of the goods until the
charges due in respect of the property are paid.

A general lien is a right to retain the possession for the payment of the sum which is owed and
even if the payment is not connected with the property in possession.

Section 170 2of the Indian Contract Act, 1872 deals with particular lien while Section 171 3deals
with General Lien.

Particular lien

Bailee’s particular lien which is specified under section 170 states that where the Bailee has in
accordance with the purpose of Bailment, rendered any service which involves activity such as
exercise of Labor skill in respect of the goods which are bailed , he has in absence of the contract
to the contrary, a right in order to retain such type of goods until he receives due remuneration
for the services he has rendered in respect of them.

Illustrations

(a) A delivers a watch to B, a shopkeeper to repair his watch and which is to be done
accordingly. B is entitled to retain the watch till he is paid for the services that he has
rendered

2 Section 170 of the Indian Contract Act, 1872

3 Section 171 of the Indian Contract Act, 1872

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 (b) A gives a piece of cloth to B who is a tailor in order to make a shirt. B promises A to
deliver the shirt as soon it is finished, and to give three months credit for the price.
Therefore, B is not entitled to retain the court until he is paid.
(c) A gives a machine to B who is running a transport business to transport the carrier from
one location to another.

Let us analyze this particular principle with the help of the court Judgments

In the case of Hatton V. Car Maintenance Company, limited 4, the owner of the car and the
company entered into a agreement where the condition was supposed to maintain the mar,
repair it and supply adequate petrol. The owner was suppose to pay Rs.8000 to the owner of
the company, but the company was not paid the above stated amount. Then the company
exercised the lien over the car. The learned Judge Sargant J noted that whenever a particular
Article is repaired, the repairer is bound to get a lien on the article for the amount of his
charges. However he said that he certainly can’t find the authorities which are cited which
will depict if the contractor does is not to improve the Article but just to maintain its former
condition , that whether he gets lien for the amount been spent for the maintenance.

Thus, it can be concluded that a lien is not available in each and every cases where the
services have been rendered, and it is only available when the actual skill and labor i.e
manpower is applied to the goods, which ultimately results in the improvement of the goods.
In the above stated case law it was just for the maintenance of the good but not for
improvement of the condition of the goods.

In the case of Pennycuick J. In Re Southern Livestock Producers Ltd.5 it was held that it is
perfectly clear enough that unless and until bailee establishes the scope of improvement he
will have no lien, he even narrated a example which stated that it will be quite illogical that a
Kennel Keeper should have a lien for stripping of a dog, but not for boarding it. The stated
that it would be impossible for him to introduce a complex modification into a well
established principle..

Thus it has been noted that in common law lien has been limited to cases where the scope of
improvement is necessary where there is exercise of labor and skill. However there is no
substantial case laws available in Indian Courts. ]

Exercise of Labor or Skill

The right is highly subjected to scope of improvement and conditions. The first and foremost
thing in the case is that the Bailee must have rendered some service which involves
improvement of the goods. 6 In accordance of the judgment which is mentioned in hatton v.

4 Hatton v. Car Maintenance Company Limited, (1915) 1 Ch 621

5 In re Southern Livestock Producers Ltd., (1964) 1 WLR 24
6 Best CJ in Bevan v Waters, (1828) 3 C & P 520

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 Car Maintenance Company7, Ltd it can be proved that scope of improvement is necessary in
exercise of labor and skill.

In Accordance with Contract

The second most important element is that the skill and labor both must be exercised in
accordance with the terms of contract and well as the purpose of the bailment. 8

Goods on which Labor or Skill Bestowed

The third element is that only such goods can be considered for the retention on which the
bailee had actually faced trouble and expense. And he reserves no right to retain the goods
which belongs to the Bailor and are in his custody.9

Possessory Right

Lastly,this particular right also depends upon the possession and also is lost soon as
possession of the goods is lost. In the case which was before the Nagpur High Court 10it was
held that after repairs the delivery of possession which are affected puts an end to the lien
which repairer has for the charges of repairs and it cannot be revived because the repairer
had undertaken further repairs which are merely out of grace and they are not a matter of a
fresh Contract.

In the case of Kalloomal Tapeshwari Prasad and Co., M/s v. M/s R.C. and F. Ltd 11 it was
observed that the activities of a stockiest uner the contrac which includes, unloading, loading,
stacking as well as storing. The court in this particular case upheld the decision that the above
stated services above does not led to improvement in the condition of the goods.

General Lein [ Section 171 ]

General lien is defined in Section 171 of the Indian Contract Act, 1872. Section 171 talks
about the General Lien of bankers, factors, wharfinger, attorneys and policy brokers, in
absence of a contract to the contrary, retain, as a security for general balance of account, and
any goods which are to be bailed to them, unless there is a express contract to that effect.

Generally the service providers are given the privilege of general lien. These identifies
service providers reserve a right to retain the goods which are bailed to them for the sake of
general balance of sum which is due from their customer. This particular section is quite
anxious to limit the use of general liens by telling that that no person reserve a right to claim

7 ibid
8 Skinner v Jager, ILR (1883) 6 All 139
9 Chase v Westmore, (1816) 15 M&S 180
10 Eduljee v. Café John Bros, ILR 1944 Nag 37
11 AIR 1990 All 214

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 a general lien unless the parties have provided for it in their contract in express terms. Lien is
considered as a ‘primitive remedy’ and common law do not encourage it but just took a note
of it. A general lien could particularly impede trade and commerce, because everybody can
hold onto goods of one and another. In a particular case from Rushforth v. Hadfield12,
particular carrier goods made an attempt to claim a general lien on the ground for its usage of
practice for trade and commerce. He carefully noted that there is a disadvantage in case of
General Lien when there is a case of insolvency. In this particular case it was also noted that
General Lien cause a great deal of inconvenience when it comes to the generality of the
traders, because they give a great deal of advantage to certain individuals a special privilege
who claim to have special privilege against the body of the creditors instead of coming with
them for the sake of insolvent of the state.

Therefore in accordance with this particular section parties which are entitled and reserve a right
of General lien are as follows:-

 Bankers
 Factors
 Wharfingers
 Attorneys of High Court
 Policy-brokers

Bankers

The general lien of the bankers, is considered to be as a judicially recognized and it is mainly
dealing with the goods and securities deposited by the customers in the Bank accounts of the
customers, provided by a condition that there is no contract which is implied, inconsistent with
such type of lien13. When certain type of gold ornaments were pledged with a particular Bank as
a bailee, because the lien extends on the borrower and the borrower then paid back the loan
amount. The same bank kept something for the security because of the loan of another type was
taken by the same borrower. 14In this case the bank reserve a right to be held entitled to do so that
they are having satisfaction for the other loan also.

There is also a relevant case where the Bank provided some financial assistance to the sugar
factory which was against the pledge of its entire stock and it was stored in seven godowns of
that factory owner as a security. The stock was seized for the sake of payment. In this case the
court held that the commissioner of sugar could not prevail over the rights which are reserved for
the Bank. The bank was held to be entitled for the rights of godown and subsequently it was sold
at the public auction.

12 (1806) 7 East 224

13 Mercantile bank of india ltd v Rochaldas gidumal and co, AIR 1926 Sind 225
14 K. sita v Corporation Bank, (1999) 3 An WR 393 (AP)

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Factors

Factor means that an agent was entrusted with the possession of the goods and the purpose of
selling them was for the principal.15 When the person is given the possession of the goods in the
ordinary course in the business for the purpose of sale. Then he will be having the general lien on
such type of goods.

The term “factor” means an agent assign with the possession of the goods for the only purpose of
selling it to the principal. For the purpose of sale, he is free to hold the ownership of goods in the
ordinary course of commerce. He is also entitled to the Right of general lien for the amount due.
For Example ,if a Bicycle was delivered to an agent, he was entitled to detain the possession of
the Bicycle until his charges are paid. It is important to note that in order to avail the Right of
Lien the goods must or should be delivered to the factor in the course of commerce.

Wharfingers

The word Wharf means a place which is contiguous of water and it is used for the purpose of
loading and unloading of the goods. It as a general lien means that goods are bailed to him until
the Wharfingers that is the charge due for the Wharf is paid.

Attorney of the High Court

The attorney or a solicitor also reserves a right of general lien when it comes his payment of fees
for the services which he have rendered. The supreme Court in the landmark case of R.D saxena
v Balram 16clearly pointed out that the advocate papers over the lien will have no right over the
fee which is said to be unpaid.

Policy brokers

The insurance agent also holds a right with respect to the General lien. His rights extends to the
clients who have taken the insurance policy and also the amount which is due to him which the
client is suppose to pay.

15 EH.Parakh v King Emperor, AIR 1926 Oudh 202

16 (2000) 8 SCC 278

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 Lien of finder of goods

The Sale of Goods Act, 1930 grants certain rights to an unpaid seller in case when the goods
have already been transferred to the buyer but buyer fails to pay the price of the said goods to
the seller. One such right is the right of Lien17

Lien means the seller’s right to keep certain property of the buyer until the buyer pays the debt
of the goods that was sold to him18. The rights of the unpaid sellar are explained in section 46,

17 Section 45 of the Sale of Goods Act, 1930

18 Cambridge Dictionary, 11th Edn.

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46 and 49 of this particular act . The unpaid seller can exercise this right by retaining the goods
of the buyer or by refusing to deliver the goods of the buyer until the amount which is due to
the buyer is paid to the sellar. In the case of transfer of the ownership the sellar can still refuse
the payment to the buyer, until the amount due is paid by the buyer. This contract of sale will
not be void ab initio if the unpaid seller exercises this right against the goods bought by the
buyer19. The right of lien is to retain the possession of goods. Therefore it is necessary that the
goods have to be in possession of the seller even after the sale agreement. This right is not
affected by transfer of title to the buyer. In fact, right of lien is a right which can be Section 47 of
the aforementioned act states the situations in which this right can be exercised in case the
amount due to buyer is not paid to the seller

(1) Where the goods are sold without any stipulation as to credit: 20 Under this provision
which is specified by the Sales of Goods act, 1830 if the buyer agrees to pay the price of
the goods, then seller cannot refuse to deliver such goods to the buyer. This provision is
for cash sale. The paying of price and goods delivery are concurrent conditions unless
otherwise specified according to the agreement. In other words, if the seller does not
sell his goods on credit, he expects the buyer to pay the amount for the goods
immediately. And if the buyer refuses to pay or expresses his unwillingness to pay the
price, the seller can exercise the right of lien and retain with himself the goods until the
buyer pays the whole amount. In Miles v. Gorton21, it was held that in a contract where
there are no specifications about the payment or delivery of the goods, then the seller
can retain the goods of the buyer until the latter pays the price of the goods meanwhile
the risk of such goods will be the responsibility of the seller under his possession.

(2) When there is a credit sale on goods: The right of lien can be exercised by the unpaid
seller when there is expiry of the credit period. In case where the seller has sold the
goods on credit basis, then the seller can retain the goods with himself, if the buyer is
not willing to pay the amount after the expiration of the time period of credit.

19 Section 47 of the Sale of Goods Act, 1930

20 The Sale of Goods Act. 1930
21 Miles v Gorton (1834) 2 C & M 504, at p.511 : 39 R.R. 820

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 (3) If the buyer becomes insolvent before the goods are delivered to him, then the seller
can exercise the right of Lien. If the seller sells the goods on credit and the time period
of credit is not expired yet, and the buyer becomes insolvent during the period, then,
the seller can exercise his right of lien towards the buyer. Section 2(8)of Sale of Goods
Act, 1930 defines the term ‘insolvent’ as, any person who has ceased to pay or is not in a
position to pay the debts which have become due irrespective of commission of an act
of insolvency or not.

Lien of agents[221]
Under section 22122 the agent is given lien property, for recovering the dues from the principal.
The section states that in the absence of any contract, an agent is bound and entitled to retain the
goods, papers and property which can either be movable or immovable, of the principal amount
which was received by him, until the particular amount due to himself for the commission,
disbursements and the services which have been rendered in respect of the same which have
been paid or had accounted to him.

22 Section 221 of the Indian Contract Act, 1872

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Therefore, the principal can come to owe the money in two ways, that the agent sould have
incurred expenses for the agency or it could be for his commission or remuneration.

In the case of Gopaldas v. Thakurdas 23:-

The High court reviewed the provision of the Agent’s lien. The agent was the firm for the
commission of agents who brought some goods for the principals who were under them. Even
the principal supplied the money for buying the goods. But at some other times agent spent the
money from his own pocket. Therefore, the agent sold the goods of the principal to recover his
due amount.

It was observed by the court that the agent selling the goods of the principal may not be
justified, since he dint have any authority over the goods of the principal. However, the agent
spent some amount from his own pocket and he is in apposition where a tacit pledgee reserve a
right to recover the amount as much of his outlay as possible by selling the goods which belongs
to his custody.

This particular section gives the right to the agent so that he can retain the goods, that would
not be a part of the possession until the dues are paid. However this doesn’t means that the
agent has a right to sell the goods. If the principal pledges the goods, then the principal
becomes a pawnee. And the lien of such goods is not governed by section 221 of the Indian
Contract Act, 1872 but under the provisions of the Bailment and Pledge.

A lien reserves aright only to retain the possession in the property of the principal. If there is a
condition that the rights of principal are considered to be limited, as the agents are the third
parties to the agreement , then the lien will be also limited. A lien is lost when the agent
actually losses the possession. The agent is successful in delivering the property to the agent,
through any of the means, the lien is lost.

Importance of lien
Lien is the right to retain the possession of a property of another till the other person meets the
demands of the person in possession. Lien was in a nature of remedy and it was recognized as a
right. The basis of contract of lien was that it was not between the parties, and the party had its
rights because it was imposed law by the common law courts. Therefore, here are the importance
of lien

1. Protects the Buyer

23 AIR 1957 madhya Bharat 20

17
 Existence of lien is very important as it protects the rights of the lenders when there is non-
payment of the dues. The loans with collateral as its implicit that are less risky for the lender,
they can lead to the lower interest rates for the borrowers. For example- when a person is
purchasing a particular vehicle it is important for him that he checks all the liens which are
there against that vehicle. Moreover, if there is a debt which is outstanding debt on that
particular vehicle, the buyer would run the risk of having it repossessed by the lender.

2. Allows the sellar or a agent to recover the amount.

Lien is the right to retain the possession of a property of another till the other person meets the
demands of the person in possession. The demand could be any- performing a duty or paying a
due some of money. In case the principal or the buyer fails to pay the amount to the agent or a
sailor, the agent can recover the amount by selling the security and such right came into
existence because of the lien.

3.Importance of lien- when buying a business

Importance of lien- when buying a business- It is advisable that when one person is buying a
particular business, he should make sure that the business assets which are there are not
encumbered by liens and this could hamper the growth and progress of the business. Therefore
one can actually protect themselves actually when there is negotiating the business.

4. Recovering the necessary and extra orbit expenses

The importance of lien comes into existence when it comes to recovering the necessary and extra
orbit expenses which the seller or the agent reserves to have. As observed in the case of
Gopaldas v. Thakurdas 24 that the High court reviewed the provision of the Agent’s lien. The
agent was the firm for the commission of agents who brought some goods for the principals
who were under them. Even the principal supplied the money for buying the goods. But at
some other times agent spent the money from his own pocket. Therefore, the agent sold the
goods of the principal to recover his due amount. It was observed by the court that the agent
selling the goods of the principal may not be justified, since he dint have any authority over the
goods of the principal. However, the agent spent some amount from his own pocket and he is in
apposition where a tacit pledgee reserve a right to recover the amount as much of his outlay as
possible by selling the goods which belongs to his custody.

24 AIR 1957 madhya Bharat 20

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CONCLUSION AND SUGGESTION
Lien is one of the rights available to a person to retain possession of goods owned by another
person until the assertion of the person having the control is satisfied. Under the Indian Contract
Act, 1872 the Bailee is free to employ or operate the Right of Lien in a Contract of Bailment.
Honourable Supreme Court explain the nature of the Right of Lien by stating that “Lien in its
elementary sense is a right of a person to retain the possession of goods until the demands of the
possessor are satisfied. Lien can be considered as a person of great value. A bailee who is
handling several Hundrends TEU’s a day, especially where none of those containers are

19
subjected to the outstanding debt. In my opinion, a General Lien is much more effective tool in
securing outstanding debt. But it is subjected to its own limitations and risks, particularly from a
potential liability point of view. Basically, if there is a general operator who is seeking to
exercise a lien and then resolve to see the matter through something which is potentially difficult
as a matter of commercial negotiations to a successful conclusion. A lien can be subjected to
large number of risks, but despite of risks liens actually continue huge assistance and support to
Operators. A well drafted Lien clause can be considered to be a huge assistance and support to
the operators. In the terminals of Lien worldwide, group and subsidiary of a particular
companies, and with respect to matter of debt and liabilities ranging from far wider than
traditional terminal services.

BIBLIOGRAPHY
References:

1. The Indian Contract Act, 1872 (Bare Act) S.Gogia & Co., Hyderabad.

2. Contract-II by R.K. Bangia, Allahabad Law Agency,2009.

3. Black’s Law Dictionary

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 4. Contract and Specific Relief by Avtar Singh, Eastern Book Company, 2012.

5. Pollock and Mulla : The Indian Contract Act, Lexis Nexis, New Delhi,2007

Cases Referred

1. Diplock in Tappenden v. Aurtus, (1964)2 QB 185

2. Hatton v. Car Maintenance Company Limited, (1915) 1 Ch 621
3. In re Southern Livestock Producers Ltd., (1964) 1 WLR 24
4. Bevan v Waters, (1828) 3 C & P 520
5. Skinner v Jager, ILR (1883) 6 All 139
6. Chase v Westmore, (1816) 15 M&S 180
7. Eduljee v. Café John Bros, ILR 1944 Nag 37
8. Mercantile bank of india ltd v Rochaldas gidumal and co, AIR 1926 Sind 225
9. K. sita v Corporation Bank, (1999) 3 An WR 393 (AP)
10. EH.Parakh v King Emperor, AIR 1926 Oudh 202
11. Miles v Gorton (1834) 2 C & M 504, at p.511 : 39 R.R. 820
12. AIR 1957 madhya Bharat 20
13. R.D. Saxena v Balram Prasad Sharma, (2000) 7 SCC 264.

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