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SUPREME COURT OF INDIA
N.V. RAMANA, CJI., SURYA KANT, ANIRUDDHA BOSE, JJ.
MANGALA WAMAN KARANDIKAR (D) TR. LRS. - APPELLANT
VERSUS
PRAKASH DAMODAR RANADE - RESPONDENT)
CIVIL APPEAL NO.10827 OF 2010
Decided on : 07-05-2021
(A) Interpretation of Contract – Contractual interpretation depends on intentions expressed by parties and dredging out true meaning is an ‘iterative process’ for Courts – Businessmen often do not sit over nitty-gritty in a contract – In a document language used by parties may have more than one meaning – It is ultimately responsibility of Courts to decipher meaning of words used in a contract, having regards to a meaning reasonable in line of trade as understood by parties – Development of rules of contractual interpretation has been gradual and has taken place over century – Path and development of law of interpretation has been a progress from a stiff formulism to a strict rationalism – It is only in cases where terms of document leave the question in doubt, then resort could be had to proviso – But when a document is a straightforward one and presents no difficulty in construing it, proviso does not apply. (Paras 9, 10 and 14)
(B) Rent and Eviction – Reversal of eviction decree by High Court in second appeal – Parties had intended to transfer business from appellant to respondent during contractual period – This agreement was not meant as a lease or license for respondent to conduct business – Contract mandated continuation of business by paying royalties of Rs. 90 per month – Once parties have accepted recitals and contract, respondent could not have adduced contrary extrinsic parole evidence, unless he portrayed ambiguity in language – Extension of contract was on same conditions – High Court erred in appreciating ambit of Section 95, which led to consideration of evidence which only indicates breach rather than ambiguity in language of contract – As impugned agreement was a license for continuing existing business, Bombay Rent Act does not cover such arrangements – Jurisdiction of trial court is accordingly not ousted – Impugned order of High Court cannot be sustained and accordingly, set aside – Decree of trial court restored.(Paras 11, 16, 17, 18 and 19)
Facts of the case:
Instant case arises out of a contract entered into between Appellant (since deceased represented through Legal Heirs) and Respondent. This appeal is filed against the judgment of the Bombay High Court, in Second Appeal No. 537 of 1991, wherein the second appeal was allowed in favour of the respondent and the decree in favour of appellant herein was set aside.
Findings of Court:
On consideration of the matter, 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.
Result : Appeal allowed.
JUDGMENT :
N.V. RAMANA, CJI.
1. This appeal is filed against the judgment of the Bombay High Court, in Second Appeal No. 537 of 1991, wherein the second appeal was allowed in favour of the respondent and the decree in favour of the appellant herein was set aside.
2. This case arises out of a contract entered into between the Appellant (since deceased represented through Legal Heirs) and the Respondent. Initially Appellant’s husband was running a business of stationary in the name of “Karandikar Brothers” before his untimely demise in the year 1962. After his demise, she continued the business for some time. After a while, she was unable to run the business and accordingly decided to let the Respondent run the same for some time. She entered into an agreement dated 07.02.1963, wherein following terms were reduced in writing:
A. The stationary shop · by name "Karandikar Brothers" belonging to you of the stationary materials which is situated in the premises described in Para 1 (a) above and in which the furniture etc. as described in Para l(b) above belonging to you is existing is being taken by me for conducting by an agreement for a period of two years beginning from 1st February 1963 to 31st January 1965.
B. The rent of the shop described in Para 1 (a) above is to be given by you only to the owner and I am not responsible therefore. I am to pay a royalty amount of Rs. 90 /(Rupees Ninety only) for taking the said shop for conducting, for every month which is to be paid before the 5th day of every month.”
3. Time after time, the contract was duly extended. In 1980s, desiring to start her husband’s business again, appellant herein issued a notice dated 20.12.1980 requesting the Respondent herein to vacate the suit premises by 31.01.1981. The Respondent replied to the aforesaid notice claiming that the sale of business was incidental rather the contract was a rent agreement stricto sensu. Aggrieved by the Respondent’s reply, the appellant herein filed a civil suit being RCS. No. 764 of 1981 before the Court of Joint Civil Judge, Junior Division, Pune. During the course of the trial, one of the important questions that the Trial Court framed, which is relevant for our purpose can be observed hereunder:
The Trial Court by Judgment dated 30.08.1988, decreed the Suit in favor of the appellant herein and held that the purport of the Agreement was to create a transaction for sale of business rather than to rent the aforesaid premises to the Respondent herein. The Court while negating the contention of the Respondent, that the shop premises was given to him on license basis held as under:
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