IMPORTANT POINTS
(1) Scope of expression “charges” must be understood as intended by parties to contract – Process of interpretation, though exclusive domain of Court, inheres duty to decipher meaning attributed to contractual terms by parties to contract.
(2) Interpretation of contracts concerns discernment of true and correct intention of parties to it – Words and expressions used in contract are principal tools to ascertain such intention.

JUDGMENT :

PAMIDIGHANTAM SRI NARASIMHA, J.

1. Leave granted.

2. Food Corporation of India¹ [hereinafter referred to as ‘Corporation’] the Appellant herein, procures and distributes foodgrains across the length and breadth of the country as a part of its statutory duties. In the process, it enters into many contracts with transport contractors. In one such contract, the subject matter of present appeals, the Corporation empowered itself [under clause XII (a)] to recover damages, losses, charges, costs and other expenses suffered due to the contractors’ negligence from the sums payable to them. 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. In other words, does contractors’ liability for “charges” if any, include demurrages?

3. The Single Judge and the Division Bench of the High Court of Tripura have held that demurrages cannot be recovered as a charge by the Corporation. After examining the contract in its entirety, including its nature and scope, we conclude that the parties did not intend to include liability on account of demurrages as part and parcel of the expression “charges.” The liability of the contractors in the present contracts is clearly distinguishable from other contracts entered into by the FCI in 2010 and 2018, having a different scope and objective. Because of our conclusions, we have upheld the judgments of the High Court and dismissed the appeals filed by the Corporation. Before considering the submissions, analysis and the conclusions, we will refer to the necessary 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 tenderer² [hereinafter referred to as ‘contractor’]. He deposited an amount of Rs. 44,95,000/- towards the security deposit, leading to the execution of the contract³ [Contract No. Cont.9/NEFR/TC/CBZCDR/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 on it by the Railways. As this demand was bereft of any reason and rightly objected to, it was followed by another letter dated 27.06.2017 by the Corporation. In this letter, the Corporation explained that it had incurred heavy losses on account of demurrages due to the contractor’s inability to readily provide trucks at railway sidings, inhibiting the Corporation from unloading foodgrains from railway wagons within the “free time” specified by the Railways. The Corporation sought to recover the demurrages from the contractor by withholding the security deposit tendered under the Work Order.

6. The contractor objected to this unilateral action, contending that there was no power to recover demurrages under the Work Order. Being unsuccessful in pursuing the Corporation to withdraw the letters, demand and the unilateral action, the contractor filed a writ petition⁴ [W.P. No. 1351 of 2016] before the High Court of Tripura for quashing the illegal and arbitrary action.

7. This writ petition was allowed by the Single Judge of High Court. It clarified that the Corporation was only entitled to recover losses that were incur