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TMI Blog1974 (3) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, be sufficient if we set out the facts relating to civil appeals Nos. 1221 and 1225 of 1973. They bring out clearly the point which arises for consideration in all the three appeals. The respondent tendered for supply of certain quantity of foam compound to the appellant and its tender was accepted by the appellant by acceptance of Tender dated 16th July, 1968. The Acceptance of Tender was subject to the General Conditions of Contract contained in the Standard Form of Contract No. D.G.S. & D. 68. The only clauses of the General Conditions of Contract which are material for our purpose are cls. 18 and 24 and they read as follows: "18. RECOVERY OF SUMS DUE Whenever any claim for the payment of a sum of money arises out of or under the contrat against the contractor, the purchaser shall be entitled to recover such sum by appropriating in whole or in part, the security, if any, deposited by the contractor, and for the purpose aforesaid, shall be entitled to sell and/or realise securities forming the whole or part of any such security deposit. In the event of the security being insufficient, the balance and if no security has been taken from the contractor, the entire sum recovera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding bills of the respondent in respect of other contracts. This dispute between the parties being a dispute arising out of the contract was liable to be settled by arbitration under cl. 24 of the General Conditions of Contract and the respondent, therefore, filed an application. in the Delhi High Court under s. 20 of the Indian Arbitration Act for filing the Arbitration Agreement contained in that clause. The respondent also, at the same time, made an application to the Delhi High Court for an interim injunction restraining the appellant from recovering the amount of damages claimed by it from the pending bills of the respondent. This application was, however, rejected by the Delhi High Court on the ground that it was not shown that there were any pending bills of the respondent at that time out of which the threatened recovery could be made by the appellant. The application under s. 20 of the Indian Arbitration Act was thereafter heard by the Delhi High Court and by an order dated 5th May, 1972 the Delhi High Court allowed that application and ordered the arbitration agreement contained in cl. 24 to be filed and made an order of reference to arbitration in accordance with the arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 15th November, 1972 allowed both the interim applications and issued an interim injunction restraining the appellant "from effecting recovery of the amounts claimed to be due from- the other pending bills" of the respondent. The appellant thereupon, with certificates obtained from the Delhi High Court, preferred Civil Appeals Nos. 1224 and 1225 of 1973 in this Court. One appeal was directed against' the impugned order in so far it related to Interim Application No. 119 of 1972 and the other in so far as it related to Interim Application No. 846 of 1972. The appellant also preferred Civil Appeal No. 1330 of 1973 against a similar order passed by the learned Judge in Interim Application No. 854 of 1972 in the other case. There are in the main two grounds on which the learned Solicitor General, appearing on behalf of the appellant, challenged the order of Interim injunction made by Mr. Justice Avadh Bihari A. The impugned order amounted in effect and substance to an order directing the appellant to pay the amounts of the pending bills of the respondent: in respect of the other contracts and since the question of payment of the amounts of such pending bills did not form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) read with the Second Schedule to the Indian Arbitration Act, 1940. Now s. 41(b) says that the court shall have, for the purpose of and in relation to arbitration proceedings, the same , power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of and in relation to any proceedings before the Court and one of the matters set out in the Second Schedule is "interim injunction". The Court has, therefore, power under s.41 (b) read with the Second Schedule to issue interim injunction, but such interim injunction can only be "for the purpose of and in relation to arbitration proceedings". , The arbitration proceedings in the present case were for determination of the mutual claims of the appellant and the respondent arising out of the contract contained in the acceptance of Tender dated 16th July, 1968. The question whether any amounts were payable by the appellant to the respondent under other contracts was not the subject matter of the arbitration proceedings. The Court obviously could not, therefore, make an interim order which, though ostensibly in form an order of interim injunction, in substance amounted to a direction to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the purchaser has a claim for payment of a sum of money against the contractor, he would be entitled to exercise the right given under cl. 18, even though such claim may not be for a sum due and payable but pay be for damages and it may be disputed by the contractor and may not have been adjudicated upon in a court of law or by arbitration. The purchaser can in such a case recover the amount of his claim, without resort to a court of law or arbitration, by appropriating sums due to the contractor under the same contract or under other contracts, if the claim of the purchaser is not well founded and the appropriation made by him is, therefore, unjustified, the contractor can always institute a suit or arbitration for recovering the sums due to him which have been wrongly appropriated by the purchaser and in such suit or arbitration,the court or the arbitrator, as the case may be, would examine theclaim against which appropriation has been made bypurchaser and if the claim is found to be unsustainable, set at naught the appropriation and pass a decree or award for the sums due to the contractor. But the court cannot and should not restrain the purchaserfrom exercising his right of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Judge was right in restraining the appellant from doing so by issuing an interim injunction. These were broadly the contentions of the parties under this head of challenge and the question is which of these rival contentions is correct. It is true that the Words "any claim for the payment of a sum of money" occurring in the opening part of, cl. 18 are words of great amplitude, wide enough to cover even a claim for damages, but it is a well settled rule of interpretation applicable alike to instruments as to statutes that the meaning of ordinary words is to be found not. so much in strict etymological propriety of language nor even in popular use as in the subject or occasion on which they are used and the object which is intended to be attained. The context and collocation of a particular expression may show that it was not intended to be used in the sense which it ordinarily bears. Language is at best an imperfect medium of expression and a variety of meanings may often lie in a word or expression. The exact colour and shape of the meaning of any word or expression should not be ascertained by reading it in isolation, but it should be read structurally and in its contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh to distinguish between the two, we say of the former that it is. a debt 'owing, and of the latter that it is debt due." This passage indicates, that when there is an obligation to pay a sum of money at a future date, it is a debt owing but when the obligation, is to pay a sum of money in praesenti, it is a debt due. A sum due would, therefore, mean a sum for which there is an existing obligation to pay in praesenti or in other words, which is presently payable. Recovery-of such sums is the subject matter of cl. 18 according to the heading. That is the dominant idea running through the entire cl.18. The language used in the body of cl. 18 also supports the view that it is with recovery of sums presently due and payable by the ,contractor to the purchaser that this clause deals. It may be noted that cl. 18 does not lay down the substantive rights and obligations of the parties under the contract. It is merely intended to provide a mode of recovery of ' a claim for payment of a sum of money arising out of or under the contract". It, therefore, postulates a claim for a sum which is due and payable, that is. presently recoverable and may be recovered by the mode therein pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide an additional mode of recovery to the purchaser, and the purchaser is entitled to exercise the right conferred, under that clause only where there is a claim for a sum which is presently due and payable by the contractor. This view, indeed, becomes irresistible when we consider the last words of cl. 18, namely, "the contractor shall on demand pa to the purchaser the balance remaining due", which clearly postulate that the reference in the clause is to a sum presently due and payable by the contractor to the purchaser, so that, if any balance remains unrecovered after adopting the special mode of recovery provided in the clause, such balance must be paid by the contractor to the purchaser on demand. The appellant laid great emphasis on the use of the word 'claim' in the opening part of cl. 18 and contended that the Standard Form of Contract which was in use prior to the adoption of the present Standard Form of Contract, cl. 14, and which corresponded to the present cl. 18, opened with the words " whenever under this contract any sum of money is recoverable from and payable by the contractor", but this formula was deliberately and advisedly altered when the present Standa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der cl. 14, but so far as the law in India is concerned, there is no qualitative difference in the nature of the claim whether it be for liquidated damages or for unliquidated damages. Sec. 74 of the Indian Contract Act eliminates the some-what elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages 'and stipulations in the nature of penalty. Under the common law a genuine preestimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties a stipulation in a contract in terrors is a penalty and the Court refuses to enforce it, awarding to aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty, and according to this principle, even if there is a stipulation by way of liquidated damages, a party complaining of breach of contract can recover only reasonable compensation for the injury sustained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party. As already stated, the only right which he has is the right to go to a Court of law and recover damages. Now, damages are the compensation which a Court of law gives to a party for the injury which he has sustained. But, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach. He gets compensation as a result of the fiat of the Court. Therefore, no pecuniary liability arises till the Court has determined that the party complaining of the breach is entitled to damages. Therefore, when damages are assessed, it would not be true to say that what the Court is doing is ascertaining a pecuniary liability which already existed. The Court in the first place must decide that the defendant is liable and then it proceeds to assess what that liability is. But till that determination there is no liability at all upon the defendant." This statement in our view represents the correct legal position and has our full concurrence. A claim for damages fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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