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Supreme Court on How to Interpret a Contract
Supreme Court on How to Interpret a Contract
ratings:
Length:
11 minutes
Released:
May 29, 2021
Format:
Podcast episode
Description
Facts in Brief The facts in brief are that an Agreement was executed between two parties relating to a Business of the stationery in the name of “Karandikar Brothers” in which the two main clauses were: - “A. The Stationery 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 1 (b) above belonging to is existing is being taken by me for conducting by an agreement for a period of two years beginning from 01.02.1963 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 therefor. I am to pay a royalty amount of Rs. 90 for taking the said shop for conducting, for every month which is to be paid before the 5th day of every month.” This Contract was novated and extended from time to time till 1980 whence a Legal Notice to vacate the above-stated premises of land was given by the Appellant to the Respondent to conduct her own business. The Respondent replied by stating that the Contract was a Rent Agreement, and the sale of business was incidental. It was contended by the Respondent that the receipt of payment that was made by him to the Appellant mentioned the term “rent received” and therefore, the Contract was, primarily, a Rent Agreement and not a Contract to conduct business for a specified period and therefore, all the laws and procedures relating to Tenancy Law would be applicable rather than the general principles of Contract. Thereafter the matter traversed to the Trial Court and then to the various Appellate Courts reaching ultimately to the Hon’ble Supreme Court of India. Important Provisions of Law “Section 92 of the Indian Evidence Act, 1872 –. Exclusion of evidence of oral agreement — When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms: Proviso 6 – Any fact may be proved which shows in what manner the language of a document is related to existing facts.” “Section 95 of the Indian Evidence Act, 1872 – Evidence as to document unmeaning in reference to existing facts — When language used in a document is plain in itself, but is unmeaning in reference to existing facts, evidence may be given to show that it was used in a peculiar sense.” Observations by the Court According to the Hon’ble Court, it is usual that businessmen often do not sit over the nitty-gritty in a Contract and in any Contract, the language used by the parties is susceptible to have more than one meaning thereby making it the responsibility of the Court to decipher the meaning of the words used in a Contract, “having regards to a meaning reasonable in the line of trade understood by parties.” Interestingly, the Court also observed that “the path and the development of the law of interpretation has been a progress from a stiff formulism to a strict rationalism.” With respect to the above-stated Sections 92 and 95 of the Indian Evidence Act, it was, thusly, observed by the Court that: - “14. It is manifest from these two sections 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. In this regard, we may state that Section 95 only builds on the proviso 6 of Section 92.” It was further observed by the Court that “Section 92 specifically prohibits evidence of any oral agreement or statement which would contradict, vary, add to or subtract from its terms.” Thus, accor
Released:
May 29, 2021
Format:
Podcast episode
Titles in the series (100)
Supreme Court of India on Arbitrability of Fraud: In the case of N.N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. and Others, 2021 SCC OnLine SC 13, the Supreme Court dealt with the following question: - Whether an arbitration agreement would be non-existent in law, invalid or un-enforceable, if the underlying contract was not stamped as per the relevant Stamp Act; and, whether allegations of fraudulent invocation of the bank guarantee furnished under the substantive contract, would be an arbitrable dispute. Thus, there are following sub-issues involved in this case: - What is the validity of an unstamped Arbitration Agreement? Whether allegation of a fraud is an arbitrable dispute? What is the maintainability of Writ Petition under Articles 226 and 227 of Constitution of India to challenge an Order rejecting an application for reference to arbitration under Section 8 of the Arbitration Act? Please subscribe and follow us on YouTube, Instagram, iTunes, Twitter, LinkedIn, by Legal Talks by Desikanoon