Authority: High Court of Karnataka at Bengaluru

Order Date: 27 August 2026

Case Overview

  • Parties: Petitioner – COAF FZE (UAE company). Respondents – (1) Avanikailani Commodities LLC (UAE), (2) New Mangalore Port Authority, (3) JSW Mangalore Container Terminal Pvt. Ltd., (4) Office of the Commissioner of Customs, (5) Sindhu Cashew India Pvt. Ltd., (6) Mr. Deekshith Ananta Poojary (director of SR Agro & Logistics Ltd., Ghana), (7) Mrs. Likhitha (wife of respondent 6).
  • Nature of Proceeding: Application under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim measures pending arbitration on a dispute over 386.541 metric tonnes of raw cashew nuts in shell (undelivered cargo).
  • Contractual Background: COAF FZE entered into Contract No. 2026‑P0112 on 06‑04‑2026 with respondent 1 for purchase of 500 MT of raw cashew nuts. Two invoices were raised: Invoice 2026‑RCN‑004A (USD 266,282.57 for 386.541 MT) dated 28‑04‑2026 and Invoice 2026‑RCN‑004B (USD 164,185.48 for 112.072 MT) dated 04‑05‑2026. The second invoice was fully paid and the cargo delivered to Vietnam. The first invoice was also fully paid in advance; receipts dated 09‑04‑2026, 16‑04‑2026, 11‑05‑2026 and 26‑05‑2026 were acknowledged by respondent 1.
  • Alleged Fraud: The undelivered cargo was loaded at Tema, Ghana (gross weight 391,440 kg) into 15 × 40‑ft high‑cube containers (Bill of Lading No. MEDUTM439682 issued by MSC). Instead of sailing to Ho Chi Minh City, Vietnam, the cargo was diverted mid‑transit to New Mangalore Port, Karnataka, with transshipment stops at Vung Tau (Vietnam) and Colombo (Sri Lanka). The diversion was allegedly executed by respondent 6, who altered shipping documents and instructed the vessel to change destination.
  • Legal Contentions:
  • Petitioner: Claims ownership of the undelivered cargo, seeks a restraining order preventing any further transport, sale, or alienation of the cargo, and alternatively demands a bank guarantee of USD 566,282.57 (full commercial value).
  • Respondent 1: Admits receipt of full payment and acknowledges diversion by respondent 6; seeks dismissal of the petition, arguing that delivery of the cargo would resolve the dispute.
  • Respondent 5: Claims title over the cargo on the basis of a contract with Wincom Trading FZC LLC (19‑03‑2026) for 400 MT and alleges payment of 30 % (USD 132,000) on 21‑03‑2026. Seeks to vacate the interim order and questions the petition’s maintainability.
  • Respondents 6 & 7: Admit diversion but argue it was forced by non‑payment to SR Agro by respondent 1. Claim they are shareholders of respondent 1 and thus have an interest in the cargo.
  • Respondent 3 (JSW Mangalore Container Terminal): Holds the cargo in its custody.
  • Documentary Evidence: Draft Bill of Lading (petitioner) shows port of discharge Vung Tau, destination Ho Chi Minh City. Respondent 5’s “original” Bill of Lading shows port of discharge New Mangalore and lists multiple notify parties (Sindhu Cashew, Avanikailani, Multi‑Trade Africa, SR Agro). Discrepancies in seals, dates, and parties were highlighted. Tracking records (MSE) dated 26‑07‑2026 confirm unauthorized diversion.
  • Legal Analysis: The Court examined provisions of the newly enacted Bill of Lading Act, 2025, emphasizing that a bill of lading in the hands of a consignee/endosee is conclusive evidence of shipment, but that fraud by the shipper can defeat that presumption. The Court also considered case law on the primacy of the original bill of lading versus a draft, and on the ability of a non‑signatory to be impleaded in Section 9 proceedings.
  • Key Findings:
  • Consensus among petitioner, respondent 1 and respondent 6 that the cargo was paid for, loaded in Ghana, and fraudulently diverted.
  • Respondent 5’s claim to title is undermined by inconsistencies in its documents (invoice dates, seal anomalies, lack of original bill of lading authenticity).
  • Respondent 6’s admission of diversion establishes prima‑facie fraud, supporting the need for preservation of the cargo.
  • The Court held that an interim order can be granted against parties even if they are strangers to the arbitration agreement, to protect the subject matter of the dispute.

Final Outcome

1. The Section 9 arbitration petition is partially allowed.

2. Respondents 1, 5, 6 and 7 (and their agents, employees, or any third parties acting on their behalf) are restrained from alienating, transferring, diverting, or disposing of the cargo contained in the listed containers (TRHU5067650, MSNU5601154, MSNU9590021, MSDU5675162, FFAU2353524, MSNU7956024, TLLU7659491, MSDU6005530, MEDU7406777, MSDU7035138, MEDU7984271, MSBU8768425, MEDU7010596, MSMU4840119, TRHU6220059).

3. Respondent 3 (JSW Mangalore Container Terminal Pvt. Ltd.) is directed to ensure the containers are preserved and not further moved, with appropriate measures to prevent deterioration.

4. All costs, expenses and charges incurred in preserving the cargo shall be borne by the party ultimately entitled to it after the dispute is resolved.

5. The interim order remains effective for the period prescribed under sub‑rule (4) of Rule 9 of the Arbitration (Proceedings before the Courts) Rules, 2001.

Topics: Arbitration, Bill of Lading, International Trade