Rental Dues Of Cold Storage Keeping Seized Contraband On Magistrate's Order: Madras HC Directs Payment From Victim Compensation Fund

The petitioner had approached the High Court seeking removal of the dates that had gone bad, its foul odour making the situation unbearable for it.

Considering the factual circumstances surrounding the issue, the High Court observed that the jurisdictional magistrate was not justified in directing the police to keep the perishables in safe custody via its October 2018 Order.

"Section 459 of Cr.PC authorizes the magistrate to direct sale of seized properties that are subject to speedy and natural decay. Fruits obviously come under the said category. The prosecution would not in any way be weakened by the disposal of the goods. The fake labels and wrappers are sufficient to establish the case against the accused", the court observed, adding that the order was 'erroneous in extreme'.

About the dilemma faced by the Manager of storage facility, the court noted that the monthly rental charges of Rs. 7,500/- has now added up to Rs. 3,54,000/- since 2018. However, on the question of whether the petitioner deserves the payment of rental charges in full, the court answered in negative.

The court evoked the rule of mitigation under Section 73 of Indian Contract Act, 1873 for estimating the loss arising out of the breach of contract. According to the rule of mitigation, petitioner had the duty of taking all reasonable steps to mitigate the loss and remedying the inconvenience caused by the breach of contract. Without doing the same, the petitioner also opted not to approach the jurisdictional magistrate at the earliest for remedy, added the court.

As a result, the court determined that the quantum of compensation should be Rs. 1 lakh and not the original rental charges accumulated over the years. Additionally, payment of Rs. 25,000 was also permitted considering the costs for removing the perished goods and sanitising the storage facility.

Other Observations

"The petitioner is keeping the goods ever since (since 2018). Unfortunately, the case went into cold storage. Weeks and months rolled by. A full three years elapsed. What should have been a routine business engagement turned out to be a fatal "date" with the dates. Even the best of facilities cannot halt decay of the stored material beyond a point. The foul odour and stink made the situation unbearable. The police also did not oblige the petitioner", the bench of Justice G.R Swaminathan noted at the outset about the prevailing situation.

When the question arose as to who would be liable to pay the compensation to the cold storage facility, the court observed that neither the police nor those accused under Copyright Act can be held liable. The court reasoned that the local police was merely complying with the order of the magistrate. As far as the accused are concerned, the case has not been charge-sheeted yet. The court underscored that it cannot insist the complainant facility to bear the costs accrued as a consequence of the court order either.

About the complainant's right of lien over bailed goods and the helplessness of the complainant in the current situation, the court remarked:

"Though as per Section 170 of Indian Contract Act, 1872, the petitioner as bailee has the right of lien over the bailed goods till the charges are paid, he is in an unenviable position of being unable to exercise the said right. This is one classic instance where exercise of statutory right would further worsen the condition of the right-holder. The petitioner obviously could not have acted on his own because of the operation of the court order."

The High Court also went on to assert its duty under Section 483 CrPC to intervene when it is known to the court that there has been improper disposal of cases by the subordinate judicial magistrates.

"What has happened has happened. There is no point in crying over spilt milk or spoilt dates. Quoting the legal maxim that act of court harms none (actus curiae neminem gravabit) would only be rubbing salt over the petitioner's wounds", observed the bench while noting that its power of superintendence is coupled with duty to right a wrong.

Therefore, the petition was accordingly allowed. Advocate A. Azhageson appeared for the petitioner while the respondents were represented by Government Advocate A. Albert James.

Case Title: Trichy Cold Storage (P) Ltd., Rep.by its Manager v. The Superintendent of Police, Trichy & Anr.

Citation: 2022 LiveLaw (Mad) 7

Case No: W.P.(MD)No.22382 of 2021