KULATHUNGAL MOTOR CORPORATION Vs. OFFICIAL LIQUIDATOR
HIGH COURT OF KERALA
Kulathungal Motor Corporation
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(1.) A motor lorry belonging to a private limited company was entrusted with the appellant for being repaired;and the remuneration for the repairs was also fixed.The company went into liquidation;and the Official Liquidator(the respondent)demanded the return of the lorry after repairs without paying the repairing charges.The appellant claimed that he was entitled to retain the lorry under section 170 of the Indian Contract Act,since he had a bailee 's lien over the same.This contention has been overruled by the District Judge;and the question in the appeal is whether the said decision is correct.
(2.) THE District Judge seems to think that if the remuneration for the repairs is fixed by contract between the parties,there is no bailee 's lien under section 170.In other words,his view appear to be that if there is no contract between the parties regarding,the quantum of the remuneration to be paid to the repairer,then alone bailee 's lien is available.Probably,this view of the District Judge is the result of the expression 'due remuneration 'in the section.I may straightaway observe that this way of looking at the question is not right.Under section 148 of the Contract Act a bailment is the delivery of goods by one person to another for some purpose upon a contract that they shall,when the purpose is accomplished,be returned or otherwise disposed of according to the directions of the person delivering them.Then section 170 enacts that 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 the goods until he receives his due remuneration for the services rendered by him.It does not matter whether the remuneration payable is an amount fixed by contract between the parties or only due remuneration.When the parties fix the remuneration,that will be the due remuneration under the section.If the parties agree upon a fixed remuneration which in fact is smaller than due or proper remuneration and the bailee claims due remuneration instead of the contracted remuneration,the bailee cannot claim a lien for the difference between the contracted and the due remunerations.In other words,in such case the lien will be available only for the contracted or the fixed remuneration.The view of the District Judge that since there is an express contract for a specified sum of money as repairing charges the lien is not available under section 170 is erroneous.The lien will not be available only if there is a contract to the contrary,i.e .,a contract that the goods will be returned without waiting for the payment of the remuneration;and a contract merely fixing remuneration is not such a contract to the contrary.
(3.) IT is then argued by the counsel of the respondent that under section 456 of the Companies Act the appellant is not entitled to retain the lorry.The counsel argues that under sub -section(1)of the section where a winding up order has been made or where a provisional liquidator has been appointed,the liquidator shall take into custody or under his control all the properties,effects and actionable claims to which the company is or appears to be entitled.The counsel continues that on the passing of the winding up order the liquidator can take custody of the lorry which is in the possession of the bailee disregarding the latter 's lien;and that the latter has to prove his claim for remuneration in the winding up.
I do not think this contention can stand any serious scrutiny.It cannot be disputed that a bailee is a secured creditor.Palmer(20th edn.) says at page 720 that a secured creditor is one who has some mortgage,charge or lien on the company 's property.The same is the position under our insolvency law,where a secured creditor is defined as one who has a mortgage,charge or lien on the insolvent 's property.Therefore,the holder of a lien is a secured creditor.Palmer continues and enumerates at page 721 the several alternatives available to a secured creditor.The first remedy mentioned by Palmer is that a secured creditor may rest on his security and not prove,which means that the secured creditor is entitled to enforce his security.The property the company has in such a case is the bailor 's property;and that property,on a winding up order,vests in the liquidator.Bailee 's property is different from bailor 's property,as mortgagee 's property is different from mortgagor 's property,which is only the equity of redemption.Section 456(1)does not give the liquidator any right to take into custody the property belonging to a secured creditor like the bailee or the mortgagee.Therefore,section 456(1)of the Companies Act cannot also be pressed into service in the case.;
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