Source: RTP,Dec2022, 4)a)6m,MTP2,June2022, 4)a)6m,MTP2,Dec2021, ICAI Module6 Marks
Back to Law List

Question Scenario

When can an unpaid seller of goods exercise his right of lien over the goods under the Sale of Goods Act? Can he exercise his right of lien even if the property in goods has passed to the buyer? When such a right is terminated? Can he exercise his right even after he has obtained a decree for the price of goods from the court?

Estimated Writing Time: 10 mins Try in Practice Mode

Suggested Answer

A lien is a right to retain possession of goods until the payment of the price. It is available to the unpaid seller of the goods who is in possession of them where-\n(i) the goods have been sold without any stipulation as to credit;\n(ii) the goods have been sold on credit, but the term of credit has expired; \n(iii) the buyer becomes insolvent. \nThe unpaid seller can exercise ‘his right of lien even if the property in goods has passed on to the buyer. He can exercise his right even if he is in possession of the goods as agent or bailee for the buyer. \nTermination of lien: An unpaid seller losses his right of lien thereon-\n(i) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods;\n(ii) When the buyer or his agent lawfully obtains possession of the goods; \n(c) by waiver thereof. \nThe unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has obtained a decree for the price of the goods. [Sub-section (2)]\nYes, he can exercise his right of lien even after he has obtained a decree for the price of goods from the court.

Exam Strategy Tip

When answering law questions in the CA Foundation exam, follow the "Provision -> Facts -> Conclusion" structure for maximum marks. Ensure to state the relevant sections where applicable to earn bonus marks from the evaluator.

Ready to Practice More Law Cases?

Test your knowledge under timed conditions in our dedicated Writing Practice Mode. Get a feel for the real exam pressure.

Enter Writing Practice