Introduction
Recently, an interesting matter, namely, Mangala Waman Karandikar (D) TR. LRS. v. Prakash Damodar Ranade, Civil Appeal
No. 10827 of 2010, relating to the law of contract, came up before the Hon’ble
Supreme Court of India, wherein the moot question to be decided was that whether
the meaning of a Contract could be culled out solely with reference to the
language used in the Contract or could the extrinsic evidence be utilized
before adducing proper meaning to the Contract?
Facts in Brief
The facts in brief are that an Agreement was
executed between two parties relating to a Business of the stationery in the
name of “Karandikar Brothers” in which the two main clauses were: -
“A. The Stationery Shop by name “Karandikar
Brothers” belonging to you of the stationary materials which is situated in the
premises described in Para 1 (a) above and in which the furniture etc. as
described in Para 1 (b) above belonging to is existing is being taken by me for
conducting by an agreement for a period of two years beginning from 01.02.1963
to 31st January 1965.
B. The rent of the shop described in Para 1
(a) above is to be given by you only to the owner and I am not responsible
therefor. I am to pay a royalty amount of Rs. 90 for taking the said shop for
conducting, for every month which is to be paid before the 5th day
of every month.”
This Contract was novated and extended from time
to time till 1980 whence a Legal Notice to vacate the above-stated premises of
land was given by the Appellant to the Respondent to conduct her own business.
The Respondent replied by stating that the Contract was a Rent Agreement, and
the sale of business was incidental. It was contended by the Respondent that
the receipt of payment that was made by him to the Appellant mentioned the term
“rent received” and therefore, the Contract was, primarily, a
Rent Agreement and not a Contract to conduct business for a specified period
and therefore, all the laws and procedures relating to Tenancy Law would be
applicable rather than the general principles of Contract. Thereafter the
matter traversed to the Trial Court and then to the various Appellate Courts
reaching ultimately to the Hon’ble Supreme Court of India.
Important Provisions of Law
“Section 92 of the Indian Evidence Act, 1872
–. Exclusion of evidence of oral agreement — When the terms of any such
contract, grant or other disposition of property, or any matter required by law
to be reduced to the form of a document, have been proved according to the last
section, no evidence of any oral agreement or statement shall be admitted, as
between the parties to any such instrument or their representatives in
interest, for the purpose of contradicting, varying, adding to, or subtracting
from, its terms:
Proviso 6 – Any fact may be proved which
shows in what manner the language of a document is related to existing facts.”
“Section 95 of the Indian Evidence Act, 1872
– Evidence as to document unmeaning in reference to existing facts — When
language used in a document is plain in itself, but is unmeaning in reference
to existing facts, evidence may be given to show that it was used in a peculiar
sense.”
Observations by the Court
According to the Hon’ble Court, it is usual that
businessmen often do not sit over the nitty-gritty in a Contract and in any
Contract, the language used by the parties is susceptible to have more than one
meaning thereby making it the responsibility of the Court to decipher the
meaning of the words used in a Contract, “having regards to a meaning
reasonable in the line of trade understood by parties.” Interestingly,
the Court also observed that “the path and the development of the law of
interpretation has been a progress from a stiff formulism to a strict
rationalism.”
With respect to the above-stated Sections 92
and 95 of the Indian Evidence Act, it was, thusly, observed by the
Court that: -
“14. It is manifest from these two sections
that it is only in cases where the terms of the document leave the question in
doubt, then resort could be had to the proviso. But when a document is a
straightforward one and presents no difficulty in construing it, the proviso
does not apply. In this regard, we may state that Section 95 only builds on the
proviso 6 of Section 92.”
It was further observed by the Court that “Section
92 specifically prohibits evidence of any oral agreement or statement which
would contradict, vary, add to or subtract from its terms.” Thus,
according to the Court: -
“In line with the law laid down, it is clear
that the contract mandated continuation of the business in the name of
‘Karandikar Brothers’ by paying royalties of Rs. 90 per month. Once the parties
have accepted the recitals and the contract, the respondent could not have
adduced contrary extrinsic parole evidence, unless he portrayed ambiguity in
the language.”
Held by the Court
Hence, according to the Court, any emphasis on the
term “rent received” was misplaced as the language of the
Contract was clear and unambiguous and the impugned Contract was a license for
continuing existing business and there could be no question of applicability of
the Bombay Rent Act. The Learned Trial Court in the present case had ordered
the Respondent to hand over the suit-property to the Appellant herein and such
Order/Judgment was upheld by the Hon’ble Supreme Court of India.
Concluding Remarks
Whenever I see any judgment that deals with arrangements
or contracts that are decades old, it truly fascinates me. Deciding age-old
disputes and bringing them to their logical conclusion is one task that is
often neglected. New cases keep coming up and the old casefiles are just kept
in the record room for rotting. The parties too become wary and start losing
interest in such matters. It brings immense joy to my heart when I see the Apex
Court taking up such old disputes and setting a good precedent for the Courts
of this country to follow their suit in deciding the old cases. This is
especially relevant in today’s times as in the garb of Covid-19 pandemic, it is
my considered opinion that the civil cases have been unduly neglected by the
Courts all over. In most of the Courts, only criminal matters and that too,
only bail matters are being heard. Bail matters are no doubt important and
deserve priority over other matters but that does not mean that the other
matters cannot be devoted time.
An unsolicited suggestion perhaps but when the
Health Professionals and the Police are clocking in extra hours these days for
the well-being of the citizens of this country, then in a similar manner, I
think that the Courts could extend their work-timings (virtual mode) and start
devoting, at least, some time to civil cases as well, especially the old ones.
It is pertinent to note that in ignoring the old cases, the collateral damage
is suffered by the senior citizens of this country since mostly and invariably,
it is their disputes who are treated as coldly as possible by the Judiciary. By
stating this, I do not mean to lower the majesty of the Courts in any manner
and in fact, I respect the Courts so much that I not only think that they are
capable of clocking in extra hours (through virtual mode) for old civil cases
but also despite all the difficulties, the bail matters in this country are
being heard unfettered all over. It is a welcome move and I salute the sincerity
and commitment of the Judicial Officers as well the persons involved in the
Judicial Registries of this country in this regard.
Coming back to the present case, I am happy to say
that the Hon’ble Supreme Court of India evinced exemplary interpretational
virtuoso in this case. The case looks simple at first blush but the argument of
the Respondent relating to the “rent received” has the capability
of confusing any Judge and anyone not well-versed with the canons of the law of
the evidence would not be able to fathom the depths to which the interpretative
process was involved in the present case. Section 92 and Section 95 complicated
as well as simplified the matter in my opinion. Proviso 6 of Section 92 categorically
provides that “Any fact may be proved which shows in what manner the
language of a document is related to existing facts” and this provided
a potent tool in the hand of the Respondent to sway the opinion of the Court as
to the importance of the term “rent received” in the secondary
documents that were not per se part of the Contract between the parties.
In my humble opinion, the Court very rightly interpreted that when the wordings
of the Contracts are themselves unambiguous, then the interpretational
propriety demands that such document ought not to be given any credence at all.
Such is the mandate of Sections 92 and 95. For the purposes of interpretation
in this particular case, it is as if such a document containing the term “rent
received” never existed. It is these simple yet delicate interpretative
processes that make reading the Judgments of the Hon’ble Supreme Court of India
a true delight. The Contract clearly suffused the intention of the parties in
an unequivocal manner that the Contract was, primarily, one of “a license
for continuing existing business” and nothing more or nothing less. That is
the level of exactitude that a well-conducted interpretative exercise is
capable of. I also hope that this Judgment by the Hon’ble Supreme Court of
India would prove to be a beacon of light for all such old and subsisting
Contracts in the times to come.
In conclusion, the answer to the question put
forth in the beginning that whether the meaning of a Contract could be
culled out solely with reference to the language used in the Contract or could
the extrinsic evidence be utilized before adducing proper meaning to the
Contract is that the wordings of the Contract are to be looked into and if
the meaning of the words is exact, then there is no need to utilize any
extrinsic evidence to ascertain the proper meaning to the terms of the
Contract.
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