A Critical Analysis of Schenker India Pvt. Ltd. v/s SKAPS Industries Pvt. Ltd.
01 August 2025
Commercial Suit >> Civil & Consumer Law
This article examines the decision in Schenker India Pvt. Ltd. v/s SKAPS Industries Pvt. Ltd., an appeal case heard at the High Court of Judicature at Bombay on August 1, 2025. The judgment, delivered by Justices Alok Aradhe and Sandeep V. Marne, upholds the learned Single Judge's dismissal of a temporary injunction application. This analysis delves into the key aspects of the case, focusing on the court's reasoning regarding the nature of the claim, the use of Order XXXIX Rule 2 of the Code of Civil Procedure, 1908 (CPC), and the impact of the plaintiff's delays.
Background of the Dispute:
Schenker India Pvt. Ltd. (the appellant/plaintiff) and SKAPS Industries Pvt. Ltd. (the respondent/defendant) entered into a Transportation Services Agreement (TSA) on January 5, 2022. The agreement, valid from May 1, 2022, to April 30, 2025, stipulated that Schenker would provide freight forwarding services for SKAPS' geo-textiles to the USA. A critical component of the TSA was Clause 4.5, which mandated a guaranteed volume commitment of 10 containers per week from SKAPS. The clause further stipulated that if SKAPS failed to provide the agreed-upon cargo volume, it would be liable to pay Compensatory Freight Charges (CFC) for the shortfall.
Beginning in December 2022, SKAPS was unable to supply the agreed-upon cargo volume, leading Schenker to issue invoices for CFC. SKAPS responded on April 8, 2023, invoking a force majeure clause (Clause 4.3) based on the "Build America Buy America Act" (BABA Act), which they claimed made shipments to the USA impossible. Schenker disputed this claim, and ultimately filed a commercial suit seeking specific performance of the TSA and recovery of CFC.
In the suit, Schenker also filed an interim application for a temporary injunction, seeking to:
- Restrain SKAPS from using other carriers for cargo export and breaching the TSA.
- Force SKAPS to render accounts.
- Order SKAPS to secure a payment of USD 3,445,470.00, along with monthly CFC from the date the suit was filed until April 30, 2025.
The Single Judge's Decision and the Appeal:
The Single Judge dismissed Schenker's application for a temporary injunction on March 26, 2025. The Single Judge, while acknowledging that Schenker had presented a "compelling case" that Clause 4.5 was a "take or pay" clause and that the termination of the TSA was "prima-facie unjustified," still refused to grant the injunction. The dismissal was based on several factors:
- The plaintiff's own admissions in the plaint characterized their claim as one for liquidated damages, contradicting the argument for specific performance.
- The application for an injunction was pressed at the "fag end" of the TSA's tenure, which was set to expire on April 30, 2025.
- An alternate remedy of compensation/damages was available.
- There was a significant delay in seeking the injunction, as the plaintiff did not approach the court immediately after the defendant stopped exporting cargo in December 2022.
Schenker filed an appeal against this order, but by the time of the appeal hearing, the TSA had already expired. Consequently, the appeal focused solely on the request for a temporary injunction directing SKAPS to provide security for the amounts allegedly owed.
Analysis of the Appellate Court's Reasoning:
The appellate court's decision hinged on a few critical points, primarily centered on the interpretation of Order XXXIX Rule 2 of the CPC and the plaintiff's own pleadings.
1. Order XXXIX Rule 2 and the Requirement of an Injunction:
The court clarified that the power to order security under Order XXXIX Rule 2(2) is not a standalone provision. It is entirely dependent on the court's decision to grant an injunction under Order XXXIX Rule 2(1). Since the TSA had already expired, there was no longer a basis to restrain the defendant from breaching the contract. Therefore, without a valid injunction under sub-rule (1), the court could not issue an order for security under sub-rule (2). The court pointed out that the appropriate provision for a standalone security request would have been Order XXXVIII Rule 5, but Schenker had not filed an application under that provision.
2. Plaintiff's "Judicial Admissions" and the Nature of the Claim:
The court emphasized that Schenker's own pleadings in the plaint characterized the claim for CFC as "liquidated damages" and a "genuine pre-estimate of the loss and damages". The court noted that these were "judicial admissions," which stand on a higher footing than evidentiary admissions and waive the need for proof. The court rejected the plaintiff's attempt to distinguish between pre-suit and post-suit claims, as the pleadings referred to the entire claim period (from May 2022 to April 2025) as damages. The court concluded that if the claim was for liquidated damages, it would not crystallize into a debt until a decree was passed, and it would require the plaintiff to prove the actual loss suffered. This made an injunction under Order XXXIX Rule 2 impermissible.
3. The Impact of Delay:
The court also upheld the Single Judge's finding regarding delay. The defendant stopped exporting cargo in December 2022, but the plaintiff did not file the suit until March 2024 and pressed the injunction application even later. The court reasoned that even if the claim was for specific performance, the lack of urgency in approaching the court was a sufficient reason to deny injunctive relief, especially given that the TSA's tenure was coming to an end.
Conclusion:
The appellate court found the Single Judge's decision to be "well-considered" and not "arbitrary, capricious or perverse". The appeal was dismissed, reinforcing the principle that a court will not interfere with a lower court's exercise of discretion unless it is clearly flawed. The case serves as a crucial reminder for litigants about the importance of consistent pleadings and the timely pursuit of legal remedies, especially when seeking injunctive relief based on a contract with a defined term. The court's meticulous breakdown of the relationship between Order XXXIX Rule 2(1) and (2) provides a clear precedent for future cases involving similar requests for security.