The interpretation of a contract is best understood by the parties who have acted as per their interpretation, and subsequent actions can be considered as an expression of the meaning given to the terms of the contract previously made.

VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal filed under Section 96 of the Code of Civil Procedure, 1908 is to the impugned judgment of the Trial Court dated 30.9.2002. By the impugned judgment, the Trial Court decreed the suit filed by the respondent/plaintiff for recovery of advance tailoring charges which were paid to the appellant/defendant. By the impugned judgment the counter claim which was filed by the appellant/defendant was also dismissed.

2. The facts of the case are that parties entered into an agreement dated 30.7.1976 whereby the appellant/defendant was appointed as a tailoring contractor for executing the work as stated in the schedule annexed with the agreement. The original agreement was for one year from 2.8.1976 to 31.7.1977, and whereafter, it was firstly extended for a period of 6 months and thereafter there were two extensions of 2 months each. The last extension of one month expired on 30.4.1998. The terms and conditions for all the agreements remained the same as were found in the first agreement dated 30.7.1976. A total sum of Rs.14,70,459.08 was paid to the appellant/defendant by the respondent/plaintiff, and for which period, the respondent/defendant had submitted bills worth Rs.13,20,533/-. After giving credit of this amount as also for another bill for Rs.18,662/-, a sum of Rs.1,31,263.98 was found to be paid in excess to the appellant/defendant, and for recovery of which the subject suit was filed after a legal notice dated 7.8.1978 was served upon the appellant/defendant, but which failed to yield any result. The defence of the appellant/defendant in the Trial Court was that with respect to item nos. 22, 23, 40 and 41 which are found in the schedule of rates annexed with the agreement, Ex.P14, payments which were made by the respondent/defendant were made only length-wise whereas payments were to be made both length-wise and breadth-wise and for the entire cloth.

3. The relevant issue in this regard was issue no. 2 which was framed by the Trial Court and which was whether the bills which were prepared for the work done had been prepared in accordance with the agreement between the parties or not. While dealing with this issue, the Trial Court has noted that during the entire period of performance of the different contracts; which originally was for a period of one year, and 4 extensions thereafter for periods varying from 6 months to 2 months; payments which were made for the work done for the disputed items were only as per the length of the cloth. Accordingly, the Trial Court held that once for the entire period of the contract, parties understood the schedule of rates annexed to a contract in a particular manner, payments were received in the manner understood by the parties, i.e. only length-wise, therefore, it was not permissible for the appellant/defendant to claim that payments should also be made breadth-wise for the cloth as also other charges. The Trial Court has also noted that during the entire period of performance of the contract, the appellant/defendant raised bills on the basis of the length of the cloth only and therefore when the recovery of excess amount paid was asked, it was not permissible for the appellant/defendant to claim that he was an illiterate person and he did not know how the bills were issued.

4. I may state that the Supreme Court in the case of Godhra Electricity Company Ltd. & Anr. vs. State of Gujarat & Anr.,( 1975) 1 SCC 199 has held that the meaning of the contract is best understood by the parties who have entered into the contract, and have acted as per what they think is the interpretation of the contract. The Supreme Court has observed that even if the acting upon by the parties on such written contract may be possibly against wording of the contract, however, that would not mean that the contract can be interpreted differently later, inasmuch as, when the parties act as per particular interpr