TMI Blog1974 (3) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... e the scope of his power under s. 41 (b) read with the Second Schedule. A claim for damages for breach of contract is, therefore, not a claim for a sum presently due and payable and the purchaser is not entitled, in exercise of the right conferred upon it under cl. 18, to recover the amount of such claim by appropriating other sums due to the contractor. Thus the appellant had no right or authority under cl. 18 to appropriate the amounts of other pending bills of the respondent in or towards satisfaction of its claim for damages against the respondent and the learned Judge was justified in issuing an interim Injunction restraining the appellant from doing so. Appeal dismissed. - Civil Appeal No. 1330 of 1973 and Civil Appeals Nos. 1224 & 1225 of 1973 - - - Dated:- 12-3-1974 - BHAGWATI, P.N. AND GOSWAMI, P.K., JJ. L. N. Sinha, Solicitor General of India Shyamala pappu S. P. Nayar for the Appellant D. G. Singhania, M. K. Garg and Shiv Khurana, D. D. Sharma for the Respondent JUDGMENT BHAGWATI, J.- These appeals, raise an interesting question relating to the interpretation of cl. 18 of the General Conditions of Contract contained in the Standard Form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special conditions) the same shall be referred to the sole arbitration of an Officer in the Ministry of Law, appointed to be the arbitrator by the Director General of Supplies Disposals. It will be no objection that the arbitrator is a Government Servant, that he had to deal with the matters to which the contract relates or that in the course of his duties as a Government servant he has expressed views on all or any of the matters in dispute or difference. The award of the arbitrator shall be final and binding on the parties to this contract. Work under the contract shag, if reasonably possible, continue' during the arbitration proceedings and no payment due to or payable by the purchaser shall-be withheld on account of such proceedings. The performance of this contract ran into difficulties and a dispute arose between the parties giving rise to claims by either party against the other. The respondent contended that the appellant had committed a breach of the contract and was, therefore, liable to pay to the respondent a sum of Rs. 2,35,800/- by way of damages. suffered by the respondent by reason of the breach of the contract. The appellant, on the other hand, said th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication before the arbitrator. The respondent, therefore, made interim Application No. 119 of 1972 to the Delhi High Court on 17th January, 1972 under s. 41 read with the Second Schedule to the Indian Arbitration Act, 1940 praying that the status quo should be maintained and the appellant should be restrained from recovering its claim for damages from the amounts due and payable by the appellant to the respondent in respect of the pending bills. How it appears that this Interim Application No. 119 of 1972 was made in the Original Application under s. 20 of the Indian Arbitration Act, 1940 and the appellant, therefore, raised a technical objection that the Original Application under s. 20 having been disposed of, Interim Application No. 119 of 1972, as filed, could not be maintained. The respondent, in view of this technical objection raised on behalf of the appellant, filed another Interim Application No. 746 of 1972 as an independent application under s. 41 read with the Second Schedule to the Indian Arbitration Act, 1940 on 16th May, 1972 praying for the same interim relief as was claimed in the earlier Interim Application No. 119 of 1972. Both these interim applications we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any time thereafter may become due to the contractor under the contract or under any other contract. The appellant was, therefore, en- titled to recover the amount of its claim for damages against the respondent by appropriating the sums which subsequently became due to the respondent under other contracts, even though the claim for damages was contested by the respondent and was pending adjudication before the arbitrator. No interim injunction could be granted to prevent the exercise of such right. If interim injunction were to be granted in a case of this kind as of course merely on the ground, without anything more, that the claim for damages is pending adjudication and until it is determined in favour of the purchaser,' it should not be allowed to be recovered by the purchaser out of other sums due to the contractor, it would render cl. 18 meaningless and ineffectual and the tight to the purchaser under that clause would become illusory. of course, it would be open to the court even in such a case to grant interim injunction, if it is satisfied that the claim for damages is prima facie not well founded and the balance of convenience requires that, Pending adjudication, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to the respondent. It does not direct that the appellant shall pay such amounts to the respondents. The appellant can still refuse to pay such amounts if it thinks it has a valid defence and if the appellant.does so, the only remedy open to the respondent would be to take measures in an appropriate forum for recovery of such amounts where it would be decided whether the appellant is liable to pay such amounts to the respondent or not. No breach of the order of interim injunction as such would be involved in non-payment of such amounts by the appellant to the respondent. The only thing which the appellant,is interdicted from doing is to make recovery of its claim for damages by appropriating such amounts in satisfaction of the claim. 'That is clearly Within the power of the Court under s. 41 (b) because the claim for damages forms the subject matter of the arbitration proceedings and the Court can always say that until such claim, is adjudicated upon, the appellant shall be restrained from recovering it by appropriating other amounts due to the respondent. The order of interim injunction made by the learned Judge cannot, therefore, be said to be outside the scope of his power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the words used in the opening part of cl. 18 are any claim for the payment of a sum of money , which are general words of apparently wide amplitude sufficient to cover even a claim for damages arising out the contract, a proper construction of the clause read as a whole clearly suggests that these words are intended to refer only to a claim for a sum due and payable and do not take in a claim for damages which is disputed by the contractor. It is only when a claim for damages is adjudicated upon by a civil court or an arbitrator and the breach of the contract is established and the amount of damages ascertained and decreed that a debt due and payable comes into existence; till then it is nothing more than a mere right to sue for damages and it does not fall within the words of cl. 18. Moreover, cl. 18 merely provides a mode of recovery and it can have no application where a claim, even though it be for a sum due and payable, is dis- puted by the contractor and has to be established in a court of law or by arbitration: cl. 18 applies only where a claim is either admitted,or in case of dispute, substantiated by resort to the judicial process. Therefore, when the purchaser has a cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by arbitration or they also include a claim for damages which is disputed by the contractor. The first thing that strikes one on looking at cl. 18 is its heading which reads: Recovery of Sums Due . It is true that a heading cannot control the interpretation of a clause if its meaning is other- wise plain and unambiguous, but it can certainly be referred to as indicating the general drift of the clauses and affording a key to a better understanding of its meaning. The heading of cl. 18 clearly suggests that this clause is intended to deal with the subject of recovery of sum due. Now a sum would be due to the purchaser when there is an existing obligation to pay it in present. It would be profitable in, this connection to refer to the concept of a 'debt', for a sum due is the same thing as a debt due. The classical definition of 'debt' is to be found in Webb v. Stenton ([1883] 11 Q.B.D. 518) where Lindley, L. J., said : a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation . There must be debitum in praesenti; solvendum maybe in praesenti or in future that is immaterial. There must be an existing obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. But here the right given to the purchaser under. cl. 18 is a right to recover the amount of his claim by appropriating other sums due to the contractor and, on the, interpretation of the appellant, this can be done even if the claim is for a sum which is not due or payable in praesenti and the purchaser is otherwise not entitled to recover it. That would indeed be a highly extra-ordinary result which we would be loathe to reach in the absence of clear and compelling language. This interpretation, if accepted, would mean that as soon as a claim is made by the purchaser, it would immediately become recoverable and the purchaser would be entitled to sell off the securities of the contractor and appropriate the sale proceeds in or towards satisfaction of such claim and in case that is insufficient, recover the balance by appropriating other sums due to the contractor and if there is even then a shortfall, recover it personally from the contractor, for the last words of cl. 18 provide that the contractor shall on demand pay to the purchaser the balance remaining due . And this consequence would ensue even if the claim is for a sum which the -contractor is under no existing obligati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to a corresponding clause which prevailed in an earlier Standard Form of Contract. This is not a statute enacted by the Legislature where it can be said that if the Legislature has departed from the language used by it in an earlier enactment, it would be a fair presumption to make that the alteration in the language was deliberate and it was intended to convey a different meaning. It is a clause in a contract which we are construing and there, any reference to a similar or dissimilar clause in another contract would be irrelevant. The only question before us is, what does cl. 18 mean and that depends on the plain interpretation of its language in the context in which it occurs. Moreover, on a question of construction of cl. 18, mere use of the word claim cannot be a decisive factor. Cl. 18 has to be read as a whole, each part throwing light on the other, without any undue emphasis on one word or the other. We cannot allow our interpretation of cl. 18 to be hijacked from its true course by the use of a solitary word such as claim , but we must arrive at the true meaning of the clause by construing it in all its parts and in its proper contextual setting. So viewed, it is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht which the party aggrieved by the breach of the contract has is the right to sue for damages. That is not in actionable claim and this position is made amply clear by the amendment in s. 6(e) of the Transfer of Property Act, which provides that a mere right to sue for damages cannot be transferred. This has always been the law in England and as far back as 1858 we, find it stated by Wightman, J., in Jones v. Thompson ([1858] 27 L. J. Q.B. 234) Exparte Charles and several other cases decide that the amount of a verdict in an action for unliquidated damages is not a debt till judgment has. been signed .. It was held in this case that a claim for damages dots not become a debt even after the jury has returned a verdict in favour of the plaintiff till the judgment is actually delivered. So also in O' Driscoll v. Manchester Insurance Committee,( [1915] 3 K. D. 499) Swinfen Eady, L. J., said in reference to cases where the claim was for unliquidated damages in such cases there is no debt at all until the verdict of the jury is pronounced assessing the damages and judgment is given. The same view has also been taken consistently by different High Courts in India. We may mention on ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
