Interpretation of documents: Contractual interpretation – It depends upon the intentions expressed by parties. Evidence Act, 1872: s.92 – Contract between parties – Reading of the contract showed that the appellant had intended to transfer business to respondent during the contractual period and the agreement was not meant as a lease or license for the respondent to conduct business – Respondent contended that the meaning of the document should not be culled solely with reference to the language used in the document, rather extrinsic evidence needs to be utilized before adducing proper meaning to the contract – Such contention is not accepted – s.92 specifically prohibits evidence of any oral agreement or statement which would contradict, vary, add to or subtract from its terms – If oral evidence could be received to show that the terms of the document were really different from those expressed therein, it would amount to according permission to give evidence to contradict or vary those terms and as such it comes within the inhibitions of s.92 – It could not be postulated that the legislature intended to nullify the object of s.92 by enacting exceptions to that section – Once the recitals and the contract were accepted, the respondent could not have adduced contrary extrinsic parole evidence, unless he portrayed ambiguity in the language – The evidence pointed that the license was created for continuation of existing business, rather than license/lease of shop premises – Once it is determined that the impugned agreement was a license for continuing existing business, Bombay Rent Act does not cover such arrangements – The jurisdiction of the trial court is accordingly not ousted – Rent Control and eviction.
Allowing the appeal, the Court
HELD: 1. Unlike a statutory interpretation, which is even more difficult due to assimilation of individual intention of law makers, contractual interpretation depends on the intentions expressed by the parties and dredging out the true meaning is an ‘iterative process’ for the Courts. In any case, the first tool for interpreting, whether it be a law or contract is to read the same. [Para 9][239-B-C]
2. It is usual that businessmen often do not sit over nittygritty in a contract. In a document the language used by the parties may have more than one meaning. It is ultimately the responsibility of the Courts to decipher the meaning of the words used in a contract, having regards to a meaning reasonable in the line of trade as understood by parties. It may not be out of context to state that the development of rules of contractual interpretation has been gradual and has taken place over century. [Para 10] [239-C-E]
3.1 It is clear from the reading of the contract that the parties had intended to transfer business from appellant to respondent during the contractual period. This agreement was not meant as a lease or license for the respondent to conduct business. However, the respondent contends that the meaning of the document should not be culled solely with reference to the language used in the document, rather extrinsic evidence needs to be utilized before adducing proper meaning to the contract. In this regard he submits that on consideration of all the extrinsic evidence, the contract should be read as a leave and license agreement, which is covered under the Bombay Rent Act. He draws his support from Section 95 of the Indian evidence Act to state that the document needs to be interpreted having regard to external evidence such as receipts of payment under the contract addressed as rent receipts etc. It is manifest from Section
92 and Section 95 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. [Paras 11, 14][239-E-G; 240-A, H; 241-A]
3.2 Section 92 specifically prohibits evidence of any oral agreement or statement which would contradict, vary, add to or subtract from its terms. If oral evidence could be received to show that the terms of the document were really different from those expressed therein, it would amount to according permission to give evidence to contradict or vary those terms and as such it comes within the inhibitions of Section 92. It could not be postulated that the legislature intended to nullify the object of Section 92 by enacting exceptions to that section. [Para 15] [241-B-D]
4. 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. It may not be out of context to note that the extension of the contract was on same conditions. [Para 16][241-D-E]
5. The High Court erred in appreciating the ambit of Section 95, which led to consideration of evidence which only indicates breach rather than ambiguity in the language of contract. The evidence also points that the license was created for continuation of existing business, rather than license/lease of shop premises. If the meaning provided by the High Court is accepted, then it would amount to Courts substituting the bargain by the parties. Once it is determined that the impugned agreement was a license for continuing existing business, Bombay Rent Act does not cover such arrangements. Therefore, the jurisdiction of the trial court is accordingly not ousted. [Paras 17, 18][241-F; 242-A] Rohitash Kumar v. Om Prakash Sharma (2013) 11 SCC
451 : [ 2012] 13 SCR 47 – relied on.
Investors Compensation Scheme v. West Bromwich Building Society [1998] 1 WLR 896; Wigmore JH, “Wigmore on Evidence, Vol. 4” (1915) 25 The Yale Law Journal 163 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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