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Section 221: Agent's lien on principal's property

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 220 All 266 Sections of Indian Contract Act Section 222

Legal Commentary & Landmark Judgments: Section 221

Section 221 establishes the agent's particular possessory lien, entitling him, in the absence of a contract to the contrary, to retain goods, papers, and property of the principal until all commission, disbursements, and service expenses in respect thereof are satisfied.

  • Particular Possessory Lien: The lien is particular and not general; it attaches strictly to goods, documents of title, and properties received by the agent in respect of which commission, advances, or services remain unpaid.
  • Lawful Possession qua Agent as Prerequisite: The property must have come into the actual or constructive lawful custody of the agent in his capacity as an agent, not for a special restrictive custody or trust incompatible with a lien.
  • Extinguishment by Voluntary Parting: Being purely possessory, the lien is extinguished if the agent voluntarily parts with physical possession without reserving his lien rights.
Key Landmark Precedents:
  • R.D. Saxena v. Balaram Prasad Sharma (2000) 7 SCC 264: A 3-Judge Bench of the Supreme Court held that an advocate cannot retain client files or litigation papers under Section 221 for unpaid professional fees; professional advocacy is governed by the Advocates Act, 1961, and case files are not 'goods'.
  • Syndicate Bank v. Vijay Kumar (1992) 2 SCC 330: The Supreme Court distinguished the general banker's lien under Section 171 from an agent's particular lien under Section 221, reaffirming that the latter requires a direct nexus to services rendered on the retained assets.
  • Kallu Babu Lal Chand v. C.I.T. AIR 1962 SC 1472: The Supreme Court recognized that an agent's possessory lien ceases the moment possession is lost or transferred in accordance with the principal's directions.
Courtroom Practice & Strategic Litigation Guidance:

When asserting a lien under Section 221, ensure physical custody is maintained and immediately issue a formal notice specifying the exact invoices, commission dues, and storage disbursements attached to the specific goods. In defending against a wrongful retention, demonstrate that the assets were delivered for a specific earmarked destination incompatible with a lien.

Section 220 All 266 Sections of Indian Contract Act Section 222