THE WAREHOUSING (DEVELOPMENT AND REGULATION) ACT, 2007
[Act No. 37 of 2007]
[19th September, 2007]
An Act to make provisions for the development and regulation of warehouses, negotiability of warehouse receipts, establishment of a Warehousing Development and Regulatory Authority and for matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Fifty-eighth Year of the Republic of India as follows:--
Section 1. Short title, extent and commencement
(1) This Act may be called the Warehousing (Development and Regulation) Act, 2007.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
Section 2. Definitions
In this Act, unless the context otherwise requires,--
(a) "accreditation agency" means an agency, whatever be its constitution, registered with the Authority under section 5;
(b) "actionable claim" shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882(4 of 1982);
(c) "Authority" means the Warehousing Development and Regulatory Authority established under sub-section (1) of section 24;
(d) "depositor" means a person who delivers goods to the warehouseman for storage;
(e) "endorsee" means the person to whom the warehouse receipt is negotiated;
(f) "endorsement" means signing on the warehouse receipt by the depositor or holder of the warehouse receipt for the purpose of its negotiation;
(g) "electronic form", with reference to information, means any information generated, sent, received or stored in media, magnetic, optical, computer memory, microfilm, computer generated micro fiche or similar device;
(h) "fungible goods" means any goods of which any unit is, by nature or usage of trade, the equivalent of any other like unit and are received by a warehouseman as fungible goods;
(i) "goods" means all tangible movable goods (other than actionable claims, money and securities), whether fungible or not;
(j) "grade" means the quality standard of any goods as notified as grade designation by the Central Government under the Agricultural Produce (Grading and Marking) Act, 1937(1 of 1937) or any other law for the time being in force;
(k) "holder" means,--
(i) in relation to a negotiable warehouse receipt, a person who is in possession of such receipt and a right to goods endorsed on it; and
(ii) in relation to a non-negotiable warehouse receipt, a person named in it as the person to whom the goods are to be delivered or the assignee of that person; .
(l) "member" means a member of the Authority and includes its Chairperson;
(m) "negotiable warehouse receipt" means a warehouse receipt under which the goods represented therein are deliverable to the depositor or order, the endorsement of which has the effect of transfer of goods represented thereby and the endorsee for which takes a good title;
(n) "non-negotiable warehouse receipt" means a warehouse receipt other than a negotiable warehouse receipt;
(o) "notification" means a notification published in the Official Gazette;
(p) "person" includes a firm, co-operative society or any association or body of persons, whether incorporated or not;
(q) "prescribed" means prescribed by rules made under this Act;
(r) "regulation" means a regulation made under this Act;
(s) "warehouse" means any premises (including any protected place) conforming to all the requirements including manpower specified by the Authority by regulations wherein the warehouseman takes custody of the goods deposited by the depositor and includes a place of storage of goods under controlled conditions of temperature and humidity;
(t) "warehousing business" means the Business of maintaining warehouses in storage of goods and issuing negotiable warehouse receipts;
(u) "warehouse receipt" means an acknowledgement in writing or in electronic form issued by a warehouseman or his duly authorised representative (including depository by whatever name called) of the receipt for storage of goods not owned by the warehouseman;
(v) "warehouseman" means any person who is granted a certificate of registration in respect of any warehouse or warehouses by the Authority or an accreditation agency for carrying on the business of warehousing.
Section 3. Requirement of registration for warehouses issuing negotiable warehouse receipts
(1) No person shall commence or carry on the warehousing business unless he has obtained a registration certificate in respect of the concerned warehouse or warehouses granted by the Authority under this Act:
Provided that a person carrying on the warehousing business immediately before the commencement of this Act shall be allowed to carry on such business, in case he has made an application for registration within thirty days from the date of such commencement:
Provided further that no such registration shall be required for warehouses which do not propose to issue negotiable warehouse receipt.
Explanation.--For the removal of doubts, it is hereby clarified that a warehouse registered under this Act shall also be eligible to issue non-negotiable warehouse receipts.
(2) Notwithstanding anything contained in sub-section (1), the Authority may, subject to such regulations and guidelines issued by it, authorise any person registered under section 5 as an accreditation agency to issue certificate of accreditation to any person for carrying on the business of warehousing issuing negotiable warehouse receipts.
Section 4. Registration of warehouses
(1) Any person desirous of commencing or carrying on the business of maintaining a warehouse issuing negotiable warehouse receipts may make an application to the Authority for registration in respect of one or more warehouses owned or occupied by him.
(2) Every application for registration under sub-section (1) shall be in such form and manner and shall be accompanied by such fees as may be prescribed.
(3) The Authority may, after such enquiry and subject to such terms and conditions as it thinks fit, grant a certificate of registration of the warehouse in the prescribed form and bearing a registration number to the applicant authorising him to carry on the business of maintaining a warehouse or warehouses and to issue negotiable warehouse receipts.
(4) The Authority may not grant a certificate of registration under this section unless it is satisfied that the warehouse in respect of which the application has been made has adequate facilities and safeguards required to warehouse the goods of the nature specified in the application and the applicant satisfies the financial, managerial and other eligibility criteria and competence as may be prescribed:
Provided that no certificate of registration shall be refused to any applicant under this section unless the applicant has been given an opportunity of being heard.
Section 5. Registration of accreditation agencies
(1) The Authority shall, from time to time, determine the number of accreditation agencies as it may authorise to issue certificate of accreditation to warehouses issuing negotiable warehouse receipts.
(2) Any person fulfilling the qualifications and other requirements as may be prescribed and desirous of functioning as an accreditation agency under this Act may make an application to the Authority seeking its registration as such under this Act.
(3) Every application under sub-section (2) shall be in such form and manner and shall be accompanied by such fees and security deposit as may be prescribed.
(4) The form in which and the terms and conditions subject to which a certificate of registration as an accreditation agency may be issued under this section shall be such as may be prescribed.
Section 6. Liabilities of warehousemen
(1) A warehouseman is liable for loss of, or injury to, goods caused by his failure to exercise such care and diligence in regard to the goods as a careful and vigilant owner of the goods of the same bulk, quality and value would exercise in the custody of them in similar conditions.
(2) In case the goods are damaged or lost in spite of taking all care and precautions by the warehouseman due to unavoidable circumstances, the compensation equal to the value of goods at the time of deposit of the goods shall be payable by the warehouseman.
(3) In case the goods are damaged or lost due to the negligence of the warehouseman, then, the compensation shall be equal to value of goods plus the loss of profit to the holder of the receipt.
(4) The warehouseman shall not be responsible for any loss, destruction, damage or deterioration of the goods delivered to him for storage attributable to circumstances such as force majeure, act of war, act of public enemies and the like.
Section 7. Duties of warehousemen
(1) In the absence of a lawful excuse, a warehouseman shall deliver the goods referred to in a negotiable receipt, to the holder of the receipt on demand made by the holder and on the holder fulfilling all the following conditions, namely:-
(a) satisfying the warehouse lien;
(b) surrendering the receipt in case of non-negotiable receipt and surrendering ' the receipt with endorsements in case of negotiable receipt; and
(c) acknowledging in writing the receipt of the goods.-
(2) If a warehouseman refuses or fails to deliver the goods in compliance with the provisions of this section, the burden of proof shall lie on the warehouseman to establish the existence of a lawful excuse for the refusal or failure.
Section 8. Duties of warehouseman to keep records and account of warehouse business
(1) Every warehouseman shall keep in a place of safety a complete and accurate set of records and accounts of all transactions pertaining to the operation of a warehouse including records and accounts of all goods received in the warehouse and withdrawn therefrom, of all unissued receipts in his possession, of all receipts issued, returned to, or cancelled, by him.
(2) Subject to the provisions of sub-section (1), the warehouseman shall keep all the records and accounts of the warehouse business in numerical sequence separate and distinct from the records and accounts of any other business in such form and in such manner and for such period as the Authority may, by regulations, specify.
(3) The warehouseman shall make available to the Authority for inspection the records and accounts of the warehouse business at any time as may be desired by the Authority.
Section 9. Special powers of warehouseman to deal with perishable and hazardous goods
(1) If the goods are of a perishable or hazardous nature, or their keeping shall deteriorate greatly in value or damage other property, the warehouseman may give notice that is reasonable and possible under the circumstances to the holder of the receipt for the goods, if the name and address of the holder is known to the warehouseman or if not known to the warehouseman, then, to the depositor, requiring that person to satisfy the lien on the goods and to remove them from the warehouse.
(2) If the person to whom a notice under sub-section (1) is given, fails to satisfy the lien and remove the goods within the time specified in the notice, the warehouseman may sell the goods at public or private sale without advertising.
(3) The notice referred to in sub-section (1) may be given by sending it by electronic mail, speed post or registered post or telegraphically addressed to the person to whom it is to be given at the last known address of the person and the notice is deemed to be given on the third day of the mailing.
(4) If the warehouseman after a reasonable effort is unable to sell the goods, the warehouseman may dispose of them in such other manner as he deems proper and shall incur no liability for that reason.
(5) From the proceeds of any sale or disposal of goods made under this section, the warehouseman shall, after satisfying his lien, hold the balance in trust for the holder of the receipt.
(6) No notice shall be necessary if the warehouseman is satisfied on reasonable grounds that in the circumstances of the case giving such notices is likely to cause further prejudice to the goods.
(7) If, at any time, the warehouseman is satisfied that the quality of any fungible goods or any part thereof has so deteriorated or is so deteriorating that it is necessary to do so, to protect the holders of negotiable warehouse receipts from loss and time is not sufficient for him to seek their instructions, he may, subject to the regulations in this behalf, dispose off the goods or any part thereof and keep the sale proceeds after satisfying his lien in an escrow account for the benefit of the holders of receipts.
(8) In case of disposal of fungible goods under sub-section (7), the warehouseman shall, at the choice of the holder of the receipt, either pay the sale proceeds or deliver equivalent goods of the same grade, quality and quantity to him. '
(9) Any endorsee shall have the right to intimate the address for service recorded with the warehouseman.
Section 10. Lien of warehouseman on good
(1) Every warehouseman has a lien on goods deposited with him for storage, whether deposited by the owner of the goods or by his authority, or by any person entrusted with the possession of the goods by the owner or by his agent.
(2) The lien of the warehouseman is for the amount of the storage and maintenance charges including --
(a) all lawful charges for storage and preservation of the goods;
(b) all reasonable charges for--
(i) any notice required to be given under the provisions of this Act;
(ii) notice and advertisement of sale;
(iii) sale of goods where default is made in satisfying the lien of the warehouseman; and
(iv) compliance of statutory provisions.
(3) In case of any endorsement on the face of a negotiable warehouse receipt, by a bank or the warehouseman, such endorsement shall be evidence of a pledge and the pledgee shall have priority over the interest of the holder of the receipt.
(4) In case of any pledge referred to in sub-section (3), the warehouseman shall not deliver the goods unless the endorsement of the pledge has been duly got cancelled.
(5) In case the goods are not taken back within the declared period of storage, the warehouseman shall have the right to recover his charges, selling the goods by public auction, or in any other manner provided in this section any goods upon which he has a lien.
(6) The warehouseman shall give a notice in writing of his intention to sell the goods to the person liable as debtor for the charges for which the lien exists or to the owner or person owning the right of property of the goods.
(7) The notice under sub-section (5) shall--
(a) contain all the details about the goods, the location of warehouse, date of deposit, the name of depositor and a statement of lien claimed by the warehouseman for the goods stored in the warehouse; and
(b) state that unless the charges are paid within the stipulated time mentioned in the notice, the goods shall be advertised for sale and sold by public auction at a time and place as specified in the notice.
(8) If the charges are not paid on or before the day mentioned in the notice, then, unless any other mode of sale is specified by the Authority, by regulations, an advertisement of the sale shall be published in a leading newspaper having circulation in the locality where, the sale is to be held as well as where the owner of the goods is located and the sale shall be held not less than fourteen days from the date of first publication of the advertisement.
(9) The warehouseman shall, from the proceeds of the sale, satisfy his lien and shall pay over the surplus, if any, to the person entitled thereto.
(10) If the surplus is not demanded by the person entitled thereto within ten days after the sale of goods or if there are different claims, the warehouseman shall seek instructions from the Authority and act as per the orders of the Authority.