The short question arising for consideration is whether the demurrages imposed on the Corporation by the Railways can be, in turn, recovered by the Corporation from the contractors as “charges” recoverable under clause XII (a) of the contract.
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Because of our conclusions, we have upheld the judgments of the High Court and dismissed the appeals filed by the Corporation. 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 on it by the Railways. Being unsuccessful in pursuing the Corporation to withdraw the letters, demand and the unilateral action, the contractor filed a writ petition before the High Court of Tripura for quashing the illegal and arbitrary action.
The Corporation filed a writ appeal and the Division Bench of the High Court by its order dated 07.09.2018 dismissed the same on the ground of delay. 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, and relatedly, about not appealing another adverse decision of the High Court of Tripura on identical issues. Referring to and relying on the contractual clauses, Shri Kaul submitted that the expression “charges” in clause XII (a) of the Work Order clearly includes demurrages, and the Corporation is empowered to recover the same. He further submitted that the action of the Corporation is unexceptionable as it merely followed the directions of the High Court in an earlier round of litigation where the court directed it to issue notice before taking a decision on the contractors’ liability.
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. The clauses detailing the description of work, liability of the contractors, and the power to recover losses, which are identical in the three appeals before us, read as under: “ (B) Brief description of work : i) Transportation of foodgrains from Depots/Mandis/Rail Heads of Churaibari to various destinations as per Appendix-I… In the event of the sum which may be due from the Contractor as aforesaid being insufficient, the balance of the total sum claimed and recoverable from the Contractors as aforesaid shall be deducted from the Security Deposit, furnished by the contractor as specified in Clause IX… ” (emphasis supplied) 17. , 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.
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. We must, therefore, read the words ‘any claim for the payment of a sum of money’ occurring in the opening part of Clause 18 not in isolation but in the context of the whole clause, for the intention of the parties is to be gathered not from one part of the clause or the other but from the clause taken as a whole. It is an accepted principle of construction that the sense and meaning of the parties in any particular part of instrument may be collected ‘ex antecedentibus et consequentibus;’ every part of it may be brought into action in order to collect from the whole uniform and consistent sense, if that is possible. Solar Power Pvt Ltd and Ors, 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. Keeping in mind the above referred principles we have to examine the expression “charges” in the context of its related words in the contract, which are costs, damages, registration fees, and expenses. … (f) The Contractor shall be responsible for the safety of the goods from the time they are loaded on their truck from godowns/mandis/rail heads until they have been unloaded from the trucks at godowns or at other destinations as specified in the Contract or as directed by the General Manager/Area Manager or any other officer acting on his behalf… 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. 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.
While interpreting the words, courts look at the expressions falling for interpretation in the context of other provisions of the contract and also in the context of the contract as a whole. Latent ambiguity exists when words in a contract appear to be free from ambiguity; however, when they are sought to be applied to a particular context or question, they are amenable to multiple outcomes. ” Extrinsic evidence, in cases of latent ambiguity, is admissible both to ascertain where necessary, the meaning of the words used, and to identify the objects to which they are to be applied. suffered by Corporation a)
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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 and un-workmanlike performance of service under the contract or breach of any terms thereof… ” (emphasis supplied) 29.
Evidently, the liability clause in these contracts, termed the Handling and Transport Contracts, is starkly distinct from 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. suffered by Corporation a) The contractor shall be liable for all costs, damages, demurrages, wharfage, forfeiture of wagon, registration fees, charges and expenses suffered or incurred by the Corporation due to the contractor’s negligence and un workmanlike performance of any services 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.
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. The decisions of the High Court of Tripura in Writ Appeal
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No 56 of 2018 dated 07.09.2018 and Review Petition No 02 of 2019 dated 22.01.2019 are upheld.
Case Title: FOOD CORPORATION OF INDIA Vs. ABHIJIT PAUL (2022 INSC 1216)
Case Number: C.A. No.-008572-008573 / 2022
