High Court Of Delhi
Pradeep Nandrajog
OIL AND NATURAL GAS CORPORATION LTD. - Appellant
Versus
SCHLUMBERGER ASIA SERVICES LTD. - Respondents
O. M. P. 189 Of 1998
Decided On : 09/13/2006
Section 34 — Arbitral award — Dispute arose out of an action of ONGC in releasing hired equipments before contract period came to end and contractor raising a claim for demobilization charges — Question involved the interpretation of certain clauses of the contract — The court taken view the majority arbitrators have ignored the most vital principle of interpretation of contract while minority arbitrator has applied correct principles of interpretation of contract — Hence, majority award set aside and minority award upheld.
PRADEEP NANDRAJOG, J.
( 1 ) "when I use a word" Humpty Dumpty said, in rather a scornful tone, "it means just what I chose it to mean " nothing more nor less" " Lewis Carrol: through the Looking Glass.
( 2 ) TO assimilate the way in which documents are interpreted by applying common sense principles to interpret serious utterances as would be understood in ordinary life is a fairly complex process, though at first blush any person would say, after all, language is a means of communication; language evolved thousands of years ago; surely, humankind must have perfected the art of communication and therefore where is the difficulty in understanding what parties meant by their utterances.
( 3 ) BUT since the word "ambiguity" is itself not precise and itself is flexible, removing ambiguity in words, to clarify the meaning, becomes a fairly complex task. Ambiguity may arise from doubts as to the meaning of a word used in totality of the ordinary well understood meaning. It may arise from the diversity of subjects to which a word may in the circumstances be applied. It may arise from obscurity as to the full expression in arriving at its conclusion.
( 4 ) CONSTRUCTION of a document as explained by Lindley L. J. in Chatenay Vs. Brazilian Submarine Telegraph Co. Ltd. (1891) 1 QB 79 means:-"the expression "construction", as applied to a document, at all events as used by English Lawyers, includes two things: first the meaning of the words; and secondly their legal effect, or the effect which has to be given to them. "
( 5 ) IN the report published as (1976) 1 WLR 989 Reardon " Smithline Ltd. Vs. Hansen " Tangen, Lord Wilberforce commented:-"when one speaks of the intention of the parties to the contract, one speaks objectively and the parties cannot themselves give direct evidence of what their intention was " and what must be ascertained is what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties. "
( 6 ) SIMILAR view was expressed by Lord Reid in the report published as (1964) 1 WLR 125 Mccutcheon Vs. David Macbrayne Ltd. when under noted quotation from Gloag on Contract was approved:-"the judicial task is not to discover the actual intentions of each party. It is to decide what each was reasonably entitled to conclude from the attitude of the other. "
( 7 ) SIR John Donaldson M. R. gave a rather cynical explanation of the unimportance of the actual intentions of the parties in his opinion published as (1987) 1 Lawyers Lloyd"s Report 230 Summit Investment Inc. Vs. British Steel corpn. :-"their actual intentions are happily irrelevant, since, were it otherwise, many, and perhaps most, disputes upon points of construction would be resolved by holding that the parties were not ad idem. "
( 8 ) LAW AND FACT : The proper construction of a contract is always a question of law. However, the ascertainment of the meaning of a particular word is a question of fact. The origin of this principle i. e. that it is the duty of the judge to interpret the contract is in the early days of methodology adopted in the dispensation of justice where a judge would assist the jury, verdict being of the jury. The jury was bound to accept the judge"s direction upon the construction of the contract. Thus, construction of a contract was classified as a question of law. As Lord Diplock pointed out in Pioneer Shipping Ltd. Vs. B. T. P. Tioxide Ltd. (1982) AC 724:-"in English jurisprudence as a legacy of the system of trial by juries who might not all be literate, the construction of a written agreement, even between private parties, become classified as a question of law. " The lawyer nurtured in a jurisdiction which did not owe its origin to the common law of England would not record it as a question of law at all. " nevertheless despite the disappearance of juries, literate or illiterate, in civil cases in England, it is far too late to change the technical classification of the ascertainment of the
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