TMI Blog2022 (11) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... n, statutorily obligated to procure and distribute foodgrains across the nation, enters into contracts depending on the services it requires. These contracts naturally vary depending on the needs and purposes of the Corporation. With the aid of the provisions in the Handling and Transport Contract from 2010, we are able to understand the intention of the parties while entering into the present Road Transport Contracts. As the present contracts do not involve the task of loading and unloading of foodgrains from the railway wagons as a part of the contractors' responsibility, there is no Clause enabling the recovery of demurrages from them by the Corporation. Thus, our interpretation of the expression charges , as exclusive of liability for demurrages, stands confirmed. The Handling and Transport Contract from 2018, similarly involved loading and unloading of foodgrains from the railway wagons within the scope of contractors' duties, thereby necessitating the inclusion of demurrages as a penalty for non-performance of contractual duties. Thus, the present Road Transport Contract is distinct from the Handling and Transport Contract from 2018, as the responsibility of loading a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary facts and contractual provisions. 4. There are three appeals. In the first set of appeals arising out of Special Leave Petition Nos. 16009-16010 of 2019, the Corporation notified a Tender inviting a bid from road transport contractors for transporting foodgrains from railway siding, Churaibari in Assam, to Food Security Depot Chandrapur in Tripura, on a regular basis for a period of two years. The Respondent - Mr. Abhijit Paul, was selected as the successful tenderer [hereinafter referred to as 'contractor'] . He deposited an amount of Rs. 44,95,000/- towards the security deposit, leading to the execution of the contract [Contract No. Cont.9/NEFR/TC/CBZ-CDR/2011 dated 25.04.2012, hereinafter referred to as 'Work Order' or the 'contract'] . The Corporation awarded several such Work Orders to the Respondent and also to other contractors for transportation of foodgrains between its multiple Food Security Depots. 5. The contract was discharged by performance by July 2014. More than a year thereafter, by a letter dated 22.12.2015 followed by a Notice dated 29.11.2016, the Corporation called upon the contractor to reimburse the amount of demurrages imposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrages from contractors under the clauses of the contract therein. 9. The third set of civil appeals, arising out of Special Leave Petition Nos. 4045-4046 of 2021, are filed by the contractors. They have challenged the orders of the Division Bench of the High Court of Tripura dismissing their writ appeals [Writ Appeals Nos. 186 of 2020 dated 04.01.2021 and 187 of 2020 dated 18.01.2021] and upholding the decision of the Single Judge of the High Court dated 25.11.2019, directing the contractors to avail alternative remedies. 10. Submission of Parties: Shri Neeraj Kishan Kaul, learned Senior Counsel appearing on behalf of the Appellant started his submissions preempting a preliminary objection about the dismissal of a Special Leave Petition against an adverse order of the High Court on the same issue [ SLP No. 3391 of 2018, dismissed in limine on 26.03.2018] , and relatedly, about not appealing another adverse decision of the High Court of Tripura on identical issues [Writ Appeal Nos. 25-27 of 2016 (Tripura High Court)] . Relying on State of Maharashtra v. Digambar (1995) 4 SCC 683, he submitted that the dismissal of a Special Leave Petition at the admission stage did not operate as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the event which leads to the incurrence of demurrages, i.e., delayed unloading of foodgrains from railway wagons, was not within the scope of contractor's responsibilities. He took us through the contracts that were executed in 2010 and 2018 by the Corporation, which delegated the task of loading and unloading the foodgrains to contractors, and therefore the relevant expression demurrages was present in the liability clauses in those contracts. 15. Supplementing the above submissions, Shri Shoeb Alam, Advocate, submitted that the Corporation was not entitled to be a judge in their own cause and to unilaterally determine the liability with respect to demurrages. He placed reliance on State of Karnataka v. Shree Rameshwara Rice Mills (1987) 2 SCC 160, BSNL and Anr. v. Motorola India (P) Ltd. (2009) 2 SCC 337 and J.G. Engineers (P) Ltd. v. Union of India (2011) 5 SCC 758. Analysis: 16. The core question arising for our consideration is whether the contractual Clause enabling the Corporation to recover charges includes the recovery of demurrages. It is pertinent to extract the relevant clauses of the road transport contract, i.e., Work Order. The clauses detailing the description ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression charges . 18. There are certain basic principles evolved by courts of law for deciphering the true and correct meaning of expressions in a contract. In Bihar State Electricity Board, Patna and Ors. v. M/s. Green Rubber Industries and Ors. (1990) 1 SCC 731, p. 23, this Court observed that, Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavouring to collect the intention of the parties, even though the immediate object of enquiry is the meaning of an isolated clause. 19. In Union of India v. Raman Iron Foundry (1974) 2 SCC 231, this Court held that contractual terms cannot be interpreted in isolation, following strict etymological Rules or be guided by popular connotation of terms, at variance with the contractual context. It observed: 8. It is true that the words any claim for the payment of a sum of money occurring in the opening part of Clause 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is very little the court can do about it. In the construction of a written instrument it is legitimate in order to ascertain the true meaning of the words used and if that be doubtful it is legitimate to have regard to the circumstances surrounding their creation and the subject matter to which it was designed and intended they should apply. (emphasis supplied) 21. In BESCOM v. E.S. Solar Power Pvt. Ltd. and Ors. 2021) 6 SCC 718, this Court held that in case of two possible interpretations of a contractual term, the court must accord primacy to the one that is consistent with the underlying purpose of the contract. It noted: 17.... In seeking to construe a Clause in a contract, there is no scope for adopting either a liberal or a narrow approach, whatever that may mean. The exercise which has to be undertaken is to determine what the words used mean. It can happen that in doing so one is driven to the conclusion that Clause is ambiguous, and that it has two possible meanings. In those circumstances, the court has to prefer one above the other in accordance with the settled principles. If one meaning is more in accord with what the court considers to be the underlined purpose an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to enable the Corporation to promptly hand over the foodgrains to them to commence transportation. The relevant portion is extracted as under: 10. The reason why demurrage charges get levied during the performance of an RTC contract is on account of the failure of the contractor to supply required number of trucks even after prior intimation about the placing of the railway rakes due to which the Petitioner is unable to empty the wagons as the foodgrains are liable to get spoiled if they are unloaded onto the siding due to rain etc. Even after unloading unless they are removed from the railway premises within the free time available wharfage is charged by the Railways. The failure to prove trucks leads to detention of wagons beyond the free time allowed by the Railways... 25. We may note that there is a dispute about the availability of trucks for the transportation of foodgrains by the contractor. While the Corporation asserts that trucks were not made available in numbers as well as in time, the contractor denies the same stating that their trucks were kept waiting at the Corporation's Food Security Depots. 26. Irrespective of the disputed fact, the real question is whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, we will juxtapose the present contracts with similar but not identical contracts entered into by the Corporation, to confirm our interpretation that the word charges in the contract is exclusive of liability for demurrages. Pursuantly, we will examine certain contracts entered into by the Corporation with other transporters. For example, we will refer to a contract entered into by the Corporation in 2010, which is prior in time to the present contract. The relevant clauses read as under: B. Brief description of work I. Unloading/Loading of foodgrain bags from/into railway wagons, trucks etc. stacking...and transporting of foodgrains from Railway Station to Corporation's Godown or vice-versa... XII. Liability of Contractors for losses etc. suffered by Corporation a) The contractor shall be liable for all costs, damages, demurrages, wharfage, forfeiture of wagon, registration fees, charges and expenses...due to...their failure to carry out the work with a view to avoid incurrence of demurrage etc... b) The Corporation shall be at liberty to reimburse themselves of any damages, losses, charges, costs, or expenses suffered or incurred by them due to contractors negligence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or his failure to carry out the work with a view to avoid incurrence of demurrage etc. under this contract or breach of any terms thereof or his failure to carry out the work with a view to avoid incurrence of demurrage; etc. and for all damages or losses occasioned to the Corporation due to any act whether negligent or otherwise of the contractor themselves or his employees. The decision of the General Manager regarding such failure of the contractor and their liability for the losses, etc. suffered by the Corporation, and the quantification of such losses, shall be final and binding on the contractor... (emphasis supplied) 32. It is evident from the above that the Handling and Transport Contract from 2018, similarly involved loading and unloading of foodgrains from the railway wagons within the scope of contractors' duties, thereby necessitating the inclusion of demurrages as a penalty for non-performance of contractual duties. Thus, the present Road Transport Contract is distinct from the Handling and Transport Contract from 2018, as the responsibility of loading and unloading of foodgrains from railway wagons is absent in the present contract. For this reason, the Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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