General lien of bankers, factors, wharfingers, attorneys and policy-brokers
Section 171 of the Indian Contract Act, 1872 deals with general lien of bankers, factors, wharfingers, attorneys and policy-brokers. Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; The Act came into force on 01 Sep 1872.
Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect1 .
Section 171, The Indian Contract Act, 1872 (Act 9 of 1872).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Axis Bank vs Sbs Organics Pvt. LTD
Court's Decision & Legal Precedent
Upon disposal of an appeal under Section 18 of the SARFAESI Act, either on merits or by withdrawal, the mandatory pre-deposit of fifty percent (or reduced amount) of the debt made as a condition precedent for the appellate tribunal to entertain (admit to consideration) the appeal must be refunded to the depositor-borrower in full, unless: (i) the tribunal has appropriated the deposit towards the borrower's outstanding liability with the consent of the depositor, or (ii) the deposit has been adjusted with the consent of the depositor, or (iii) there is lawful attachment on the pre-deposit under Section 13(10) proceedings read with Rule 11 of The Security Interest (Enforcement) Rules, 2002, or any other proceedings known to law. The deposit does not constitute a secured asset or secured debt under the SARFAESI Act, and the secured creditor has no general lien over the deposit under Section 171 of the Indian Contract Act as the deposit is held by the tribunal, not bailed with the bank.
On this section: Cited by the appellant-Bank to claim a right to retain the deposit as security, but rejected by the Court as inapplicable since the deposit is with a tribunal, not bailed with the bank
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Chairman, Cochin Port Trust vs Seahorse Ship Agencies Pvt. Ltd.
Court's Decision & Legal Precedent
After the Port Trust takes charge of imported goods and issues a receipt therefor, liability for payment of storage charges and demurrage shifts exclusively from the steamer agent (who may remain liable only for unloading services up to custody point) to the owner of the goods, which may be the consignor, consignee, importer, or their agents. The passing of title in goods to the consignee, the endorsement of the bill of lading by the steamer agent, and whether delivery order is issued are all immaterial to determining demurrage liability post-custody. The steamer agent ceases all liability once goods are taken into Port custody as the statutory bailment relationship established between Port (as bailee) and shipowner (as bailor) is discharged by section 42(7) when receipt is given. Containers, being receptacles for goods and subject to return rather than consumption, are not themselves imported goods subject to demurrage in the same manner; demurrage ultimately charges against the cargo owner. Port Trust must exercise its discretion under sections 61-62 reasonably and within reasonable time (ordinarily four months) as required by Article 14 of the Constitution.
On this section: General lien of wharfinger; Port Trust as wharfinger may retain goods as security for past dues through suit mechanism
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Chairman, Board of Trustees, C. P. T vs Arebee Star Maritime Agen. Pvt. L
Court's Decision & Legal Precedent
The statutory scheme of the Major Port Trusts Act 1963 establishes a clear demarcation of liability for port charges at the critical juncture of Port Trust taking custody of goods and issuing receipt thereof. Prior to this point steamer agents may be liable for rates payable by vessel for services performed to the vessel including charges for landing and removal of goods to storage point. Subsequent to this point and for the entire period goods are stored in Port premises the only parties liable for demurrage and storage charges are the owner of the goods or other persons entitled to the goods whether beneficially entitled or not including importers consignees and consignors or their agents. The steamer agent is absolved of all liability for goods once Port Trust assumes custody as the master or owner of vessel stands relieved of responsibility for loss or damage to goods under section 42(7) of the Act. The passing of title to goods under general law or whether bill of lading is endorsed or delivery order issued are matters wholly irrelevant to determining post-custody liability as Port Trust takes charge from ship-owner becoming bailee to ship-owner as bailor not to consignee. Containers are merely receptacles in which goods are imported and must be distinguished from the goods themselves. Containers do not become part of the mass of goods within India for import duty purposes and must be returned to their owners once destuffing occurs. Accordingly containers themselves are not subject to demurrage or storage charges once destuffed. While sections 61 and 62 of the Act confer discretion on Port Trust to sell goods marked by word 'may' not mandatory word 'shall' the Port Trust as State under Article 12 Constitution is subject to Article 14 equality constraint and must exercise this discretion reasonably including implicit constitutional duty to sell goods within reasonable time ordinarily not exceeding four months from date of landing unless strong reasons exist justifying continued detention which must be capable of judicial review.
On this section: General lien of wharfinger. Court held Port Trust as wharfinger may exercise general lien over past imports as per this section.
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Chairman, Cochin Port Trust vs A. P. Industries
Court's Decision & Legal Precedent
After the Port Trust takes charge of imported goods and issues a receipt therefor, the steamer agent or vessel owner shall not be liable for demurrage, storage charges, or other dues to the Port Trust. Such liability passes exclusively to the importer, owner, consignee, or their agents. The point of time at which title to goods passes to the consignee is irrelevant in determining this liability. The Port Trust's duty is to recover such charges from persons beneficially entitled to the goods, which may be determined through the legal framework of the Customs Act (importer) or the Indian Bills of Lading Act (consignee). Containers fit for repetitive use are not 'imported goods' but mere receptacles and the Port Trust bears the duty to destuff such containers and return them within reasonable time. The discretion granted to Port Trust under Sections 61-62 of the MPT Act cannot be construed as a mandatory duty but must be exercised reasonably within approximately four months from the date of landing goods, subject to the constraints of Article 14 of the Constitution.
On this section: Court noted Port Trust as 'wharfinger' may exercise general lien under this section, but lien is for particular goods, not past imports
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Board of Trustees Cochin Port Trust vs P and O Nedlloyd (india) Pvt. LTD
Court's Decision & Legal Precedent
Post-Landing Of Goods And After Port Trust Takes Charge And Issues Receipt Therefore, Storage Charges, Demurrage, And Ground Rent Are Payable By The Importer, Owner, Consignee, Or Their Agent, And Not By The Steamer Agent Or Vessel Owner. The Steamer Agent's Liability For Port Dues Extends Only Up To The Point When Port Trust Takes Custody Of The Goods. Title To Goods Is Irrelevant In Determining Liability For Storage Charges. Containers Are Receptacles For Goods, Not Goods Themselves, And Cannot Be Classified As Goods For Purpose Of Demurrage Charging. Port Trust Must Exercise Its Discretion To Sell Uncleared Goods Within A Reasonable Period, Ordinarily Not Exceeding Four Months From Date Of Custody, As Required Under Article 14 Of The Constitution.
On this section: Port Trust As Wharfinger May Have General Lien On Goods For Past Dues But Must Resort To Legal Proceedings For Realization
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Rasiklal Kantilal & CO vs Board of Trustee of Port of Bombay
Court's Decision & Legal Precedent
Liability to pay demurrage charges to a port authority is not dependent on or determined by the ownership or title to goods. The liability flows from the statutory bailment relationship between the port authority and goods placed in its custody, through the steamer agent (representing the shipowner/consignor). Any person claiming delivery of goods, whether the original consignee or a third party who acquired goods subsequently, can be held liable by the port authority for demurrage and other charges under section 59 of the Major Port Trusts Act, 1963. The inquiry into title to goods and the point of time at which title passes is wholly irrelevant for determining the authority of a port authority to recover its statutory dues. However, the port authority's discretion to grant or deny remission of demurrage charges under section 53 of the Act must be exercised based on rational consideration, sound policy, and with recorded reasons, and cannot be exercised arbitrarily or without justification.
On this section: Restricts statutory lien to specific categories of bailees (bankers, factors, wharfingers, attorneys); Board qualifies as wharfinger
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Chairman Cochin Port Trust vs Cma Cgm Agencies India Pvt. LTD
Court's Decision & Legal Precedent
After a Port Trust takes charge of imported goods from a vessel and issues a receipt therefor, the Port Trust becomes the bailee of those goods. Demurrage and storage charges accruing thereafter for goods stored in the Port's premises are payable by the importer, owner, consignee or other person beneficially entitled to the goods, and NOT by the steamer agent or ship-owner. However, charges for services rendered at the time of landing of goods or their removal from the vessel to the Port's storage premises (such as unloading charges and labour dues) may be charged against the steamer agent as services rendered to the vessel. The time at which title in goods passes to the consignee is irrelevant in determining such liability. The Port Trust must act reasonably in exercising its discretion to sell goods under Sections 61-62 of the MPT Act and must attempt to sell goods within reasonable time from when it assumes custody, with four months from landing being the outer limit, failing which it must provide written explanation justifiable by the courts. Containers are receptacles for goods, not imported goods themselves, and must be destuffed and returned to the steamer agent or container owner within a short feasible period.
On this section: Port Trust qualifies as wharfinger with general lien over goods for dues; can retain goods as security for past dues; must have recourse to legal proceedings to recover amounts due
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Chairman, Cochin Port Trust vs Hanjin Shipping India Pvt. LTD
Court's Decision & Legal Precedent
After the Port Trust takes charge of imported goods and issues a receipt therefor, liability for payment of storage charges and demurrage vests in the owner of the goods or other persons beneficially entitled to the goods, including the importer and consignee, and not in the steamer agent or vessel. The point at which title passes to the consignee is irrelevant to determining this liability. Steamer agents may be liable for Port Trust dues only for services rendered at the unloading stage (pre-landing), but not for storage and demurrage charges incurred after goods are placed in Port Trust custody. The Port Trust has a constitutional duty to exercise its discretion to sell stored goods reasonably, ordinarily within four months from the date of assuming custody, as Port Trust is State under Article 12 of the Constitution bound by Article 14 equality principles. Containers are not goods imported and must be destuffed and returned by Port Trust to the shipping agent within a reasonable feasible period when the owner does not collect goods.
On this section: Port Trust as wharfinger has general lien under Contract Act; relevant to Port Trust's enforcement rights
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Chairman, Cochin Port Trust vs Hanjin Shipping India Pvt. LTD
Court's Decision & Legal Precedent
Upon the Major Port Trusts Act, 1963: (1) The point of time at which title to goods passes to the consignee is not relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust. (2) Once the Port Trust takes charge of goods and issues receipt therefor, the steamer agent may be held liable for Port Trust dues in connection with services rendered qua unloading of goods, but thereafter, the importer, owner, consignee or their agent is liable to pay demurrage charges for storage of goods. (3) The Port Trust, as 'State' under Article 12 of the Constitution, is bound by Article 14 constraints and must ordinarily sell goods within four months from the date of landing, unless reasonably justified otherwise. (4) Containers are receptacles for imported goods, not imported goods themselves; containers must be returned to steamer agents, and carrying goods in containers makes no difference to the principle that only the owner of goods or person entitled to goods is liable to pay demurrage. (5) The Port Trust is under a duty to destuff every container entrusted to it and return destuffed containers to appropriate persons within as short a period as is feasible where the owner/person entitled to goods does not come forward to take delivery. (6) The statutory scheme of the MPT Act allocates liability for storage charges post-custody exclusively to the owner/beneficial owner of goods, whether consignor, consignee, importer, or their agents, and never to the steamer agent post-custody.
On this section: General lien of wharfinger; Court held Port Trust as wharfinger may have general lien for past dues under this section
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Sudip Lodh v. State Bank of India
Court's Decision & Legal Precedent
HC Final Order order-3.pdf 2018-10-04 DATE VERIFIED. Ujjal Bhuyan J. WP(C) 4737/2018. Banker's general lien under Contract Act 171 cannot retain title deeds mortgaged for an independent asset-backed loan as collateral for a different NPA of a trust; right of redemption under TP Act 60 is not extinguished. Follows M. Shanthi v. Bank of Baroda. Map contract-act 171 only. Do not pad SARFAESI 13 or TP Act 60 (thin but not this pass's empty-famous list).
On this section: A bank cannot use Contract Act 171 to retain title deeds mortgaged for one loan as security for an independent loan of another borrower (Sudip Lodh).
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… The Court then went on to hold that the MPT Act is not a comprehensive code, and has to be read together with other Acts wherever the MPT Act is silent. It was then held that section 171 of the Indian Contract Act, 1872 speaks of a general lien which may be exercised by the Port Trust as it is a "wharfinger" within the meaning of said section. This being so, the Port Trust may continue to retain the goods bailed as security for past dues, but would have to have recourse to proceedings in accordance …
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… The Court then went on to hold that the MPT Act is not a comprehensive code, and has to be read together with other Acts wherever the MPT Act is silent. It was then held that section 171 of the Indian Contract Act, 1872 speaks of a general lien which may be exercised by the Port Trust as it is a "wharfinger" within the meaning of said section. This being so, the Port Trust may continue to retain the goods bailed as security for past dues, but would have to have recourse to proceedings in accordance …
Questions about Section 171
What have the courts held on Section 171 of the Indian Contract Act?
Axis Bank vs Sbs Organics Pvt. LTD (22 Apr 2016) is the leading judgment on this section among those set out below: Cited by the appellant-Bank to claim a right to retain the deposit as security, but rejected by the Court as inapplicable since the deposit is with a tribunal, not bailed with the bank. Another 9 judgments on this section are set out below, 9 of them from the Supreme Court. They run from 2016 to 2020.
How do I find court cases under Section 171 of the Indian Contract Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Contract Act 171, section 171 Contract Act, section 171 of the Indian Contract Act. People searching for it also type indian contract act 171. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 10 reported judgments on this section are set out on this page, beginning with Axis Bank vs Sbs Organics Pvt. LTD (22 Apr 2016).
When did Section 171 of the Indian Contract Act come into force?
Section 171 of the Indian Contract Act, cited as Contract Act 171, came into force on 01 Sep 1872, having been enacted on 25 Apr 1872. It is in force as at the date shown on this page.
Other sections of this Act
- 73. Compensation for loss or damage caused by breach of contract1822 words
- 23. What considerations and objects are lawful, and what not596 words
- 74. Compensation for breach of contract where penalty stipulated for577 words
- 28. Agreements in restraint of legal proceeding void512 words
- 25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law423 words
- 16. "Undue influence" defined397 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.