Holding

Clause 18 confers on the Union the power to appropriate sums due under other contracts for a claim, but Section 41(b) of the Arbitration Act allows injunctions only for matters directly related to arbitration, thus an injunction restraining withholding of payments is impermissible.

Summary

The Directorate General of Supplies & Disposals (DGS&D) entered into a standard form contract with Kamaluddin for timber supply, which contained Clause 18 allowing the Government to recover any claimed sum by appropriating amounts due under other contracts, and Clause 24 providing for arbitration. Kamaluddin failed to deliver timber, the contract was cancelled, and the Government sought to withhold Rs. 92,364 from payments due under the contractor's other pending bills, invoking Clause 18. Kamaluddin filed a petition under Section 33 of the Arbitration Act seeking a declaration that no arbitration agreement existed and an injunction restraining the Union from appropriating or withholding those amounts. The High Courts allowed an injunction restraining appropriation of the claimed sum but refused to restrain withholding of payments, leading to an appeal to the Supreme Court. The Supreme Court held that Clause 18 gives the Union power to appropriate sums due under other contracts for a claim, but Section 41(b) of the Arbitration Act permits injunctions only for purposes directly related to arbitration proceedings, so an injunction restraining withholding of payments is beyond the Court's jurisdiction. Consequently, the appeals were dismissed.

Issues considered

The scope and interpretation of Clause 18 of the standard form contract regarding recovery of sums due.
Whether Section 41(b) of the Arbitration Act, 1940 authorises an interim injunction restraining the Union from withholding payments under other contracts.
Whether an injunction can be granted under Section 33 proceedings when the existence of an arbitration agreement is contested.

Legislation cited

Arbitration Act, 1940s. 33, s. 41
Code of Civil Procedure, 1908s. Order 39

Subjects

ArbitrationSection 41(b)Interim injunctionContract interpretationClause 18Government contractsRecovery of sumsStandard form contract

Judgment

607

KAMALUD,PIN ANSARI & CO.
A
v.
UNION OF INDIA

Augus/ 12, 1983
B
(D.A. DESAI, V. BALAKRISHNA ERADI AND R. B MISRA, JJ.].

Arbitration Act, 1941!-'-cls. (a) and (b) off- 41-Interpretation [of- Court
has power under cl. (b) to issue interim injunctions only for the purpose .of and in
relation to the arbitration proceedings before the Court.

Contracts with Government oflndia-cl.18 of Standard Form of Contract
c
-Interpretation of- Whether for fulfilment of a claim for payment of a sum of
money arising under a contract the Government has power to withhold sum due
under other contracts ? ·

lnterpretation-'Headings' cannot be used ~o give different 'effect to clear D
words in the section. ~.

'
The DGS&D) representing the Government of India, had entered into a
contract with the appellent firm for supply of some timber. Clause 18 of the
standard form of contract, uqder the head "Recovery of sums due", provided
inter alia that whenever any claim for payment of a sum of money arose out of
or under the contract against the contractor, the purchaser shall be entitled
to recover such sum by appropriatina: any sum then due or which at any time B
thereafter may become due to the contractor under any other contract with
the pUrchaSer. Clause 24 thereof provided for arbitration in the event of any
dispute arising J:>etween the parties. The appellant failed to supply th~ timber.
The [ GS&D cancelled the contract, made ·risk purchases at extra cost and
issued notice ca11ing upon the appellant to pay the extra .cost incuried and
threatening to withhold the amount from the payments due under the pending F
bills of other contracts. The appellant moved a petition under s. 33 of the
Arbitration Act, 1940 alleging that there was no concluded contract in exis-
tenc.e between the parties, con.taining any arbitration clause and praying for an
injunction restraining the Union of India frotn appropriating, withhokfins or
recovering the amount claimed from its other bills. The High Court held that
under s. 41 of the Act it could only grant an injunction restraining the Union -G
of India from appropriating or recovering the amount of damages claimed
from the other pending bills of the appellant, and rejetted the prayer for
grant of injunction restraining the Union of India from witholding payi:uents of
the other pending bills.

Dismissing the appeal, B
HELD: I. Clause 18 of the standard form of contract confers ample
power upon th(( Union, Qf lndia tq \Vithholcl the .._mount and nQ injunction
608 SUPll.BME COURT ll.EPORTS [1983] 3 s.c.ll..
order could ·be passed restraining: the UniCjl of India from withholding tl!ie
A amount. [623 BJ

(i) The golden rule of c_onstruction is that when the words of a statiite
are cle~r. plain and unambiguous, that is, they are reasonably susceptible to
only one meaning, the Courts a·re bound to give effect to that meaning irres..
pective of the consequences. 'The dory of a judge_ is to expound and not to
legislate a is 'rundamental rule. If this principle is applied to the interpretation
8 of cl. 18 of the standard form of contract it would be clear that the clause j
unequivoCally contemplates a claim for payment. It does not contemplate
the amount due and, therefore, the heading of this clause which talks of only
'Recovery of sums due' will not control cl. 18. Headings cannot be used to
give a different Cffect to clear words in the section where there cannot be any
doubt as to the ordinary meaning of the words. The clause gives wide pow:rs
c to the Union of India to recovei: the amount ciaimed by approprialing any
sum then due or which at af:1.y time ·thereafter may recorne due to thc- contractor
under other contracts. [620 A-G]

(li) Clau~ 18 was slightly differently worded earlier when it read
'whenever under this contract any sum of money is recoverable from and pay-
able by the contractor'. _But this formUla was deliberately and advisedly
D altered when the present standard form was introduced by substituting the
words .~whenever any claim for payment of a sum of money arises' and this
change in phraseology indicated that in order to attract the applicability.of
ihe present cl. 18, it was not necessary that there should be a sum of money
due and payable by the contractor to the purchaser, but it Was enough if there
was a mere claim on the part of the purchaser for payment of a sum of money
E by the contractor irrespective of the fact whether such sum of money
was presently due and payable or not. Even after the change in the language
of cl. 18 the Union of India cannot b"e injuncted fro~ withholding the amount
under other bills oft he contractor. But it can certainly be injuncted from
recovering or appropriating it to the damages claimed. [620 H~621A, Gj

Union of India v. Raman Iron Foundry, (1974] 3 S.C.R. 556 overruled.
F
2. An injunction order restraining the Union of India from withholdina
the amount due to the contractor under other pending bills virtually amounts
to a direction to pay the amount to the contractor-appellant. Such an order
was beyond the purview of cl. (b) of s. 41 of the Arbitration Act. [621 H-622 A]

G (i) ·Clause (b) of s. 41 confers power on the court to pass orders in
respect of any of the· matters set out in the Second Schedule which inter alia
includes 'interim injunction'. But this power to pass an order of injunction
can onlY be exercised 'for the purpose ·of and in relation to arbitration
proceedings• before the Court. [615H]

H In the instant case the proceedings before the Court were. pursuant
to an application made under s. 33 of the Act in which the appellant had
taken the stand that there was no concluded contract between the parties
~qntainin9 an arbitratio~ 'flause. Th<;:r~fore, H j$ difficult to say that the
11 ~·, l l l f J} 1. UNION 609

application for injunction moved by the appellant was for the purpose of
and in relation to arbitration proceedings. That apart, the amount due to
the appellant under the pending bills was not the subject-matter of the present
A
proceedings and, therefore, the injuncti~n order restraining the respondent
from withholding the amount due to the appellant under the pending bills in
respect of other contracts could not be said to be for the purpose of and ih
· relation to the present arbitration proceedings. [616 A, C, 617 A-BJ

Union of India v. Raman Iron Foundry, (1974] 3 S.C.R. 556, referred to. 8
Mohan Meakefl Bre.weries v. Union of India, A.LR. 1975 Delhi 248,
approved.

(ii) The contention that cl. (a) ·of s. 41 makes the Code of Civil
Procedure applicable to all proceedings before the Court and to all appeals
under the Act and, therefore, the appellant was entitled to .. invoke 0. 39 of c
the Code to get an injunction order even if the conditions of cl. (b) of s. 41
were not satisfied cannot te accepted. Clause (a) of s. 41 makes only the
procedural rules of the Code applicable to the proceedings in court under the
Arbitration Act. This clause does not authorise the court to pass an order of
injunction. If the above contention is accepted, appeals would lie under
ss. 96, 100 or 104 of the Code. But the Act itself provides for appeal under
s. 39. Besides, if cl, (a) of s. 41 gave wide powers to pass an order of
D
injunction, c1. (b) of s. 41 would become otiose. 616 D-FJ

(iii) Jf an order injuncted a party from withholding the amount due
to the other side under pending bills in _other contracts, the order necessarily
means that the amount must be paid. It will be a contradiction in terms to
say that a party is injuncted from withholding the amount and yet it can E
withhold the amount as of right. In any case if the· injunction order is one
which a party was not bound to comply with, the Court would be loath and
reluctant to pass such an ineffective injunction order. An injunction order is
passed only for the purpose of being carried out. (618 D-E:.J

Union of India v. Raman Iron Foundry, [1974] 3 S.C.R. 556; Observations F
to the contrary held inconsistent with the law laid down in the case.

CIVIL APPELLATE JtiRtSDJCT!ON: Civil Appeal Nos. 2853 and
2863 of 1982.

From the Judgment and Order dated the- 24th January, 1980 G
of the Allahabad High Court in Civil Revision No. 3452 of 1978.

D.C. Singhania, Raju Ramachandran, Muhul Mudgal, JP Gupta
for th~ appellant in C.A. No. 2854/82.
H
S.N. Kacker, D.C. Singhania, Raju Ramachandran, Mukul
Mudgal J.P. Gupta for the appellant in C.A. No. 2863/82.
610 SUPREME COURT REPORTS (19831 3 s.c.R.
y-
K.G. Bhagat Addi. Solicitor General for the respondent in C.A.
No. 2853/82. . .
A
Girlsh Chandra, • C. V. Subba Rao and R.N. Poddar for
respondent.in C.A. No. 2863/82.

The Judgment of the Court was delivered by
B
MISRA J. These two corinec.ted appeals by special leave are
directed against the judgment and order of the Allahabad High Court
and Pelhi. High Court dated 24th January, 1980 and I 3th November,
1979 respectively. The first one arises out of proceedings under s 20
c of the Arbitration Act while the other arises out of proceedings under
s. 33 of the Arbitration Act.

These appeals raise a common. question regarding the inter-
pretation of cl. 18 of the general conditions of contract contained· ·in.
the .standard from of contract entered into by the parties and the
D ambit and scope of s. 41 'of the Arbitration Act. The facts giving
rise to these appeals follow a common pattern and it would, therefore,
be sufficient if we set out the facts relating to. Civil Appeal No. 2863
of 1982 to bring out clearly the points which arise for consideration
in these appeals.
E
The appellant in this appeal is a registered firm and carries on
the business of manufacturing and selling timber. The Directorate
General of Supplies and Disposals (for short, DGS&D) functions as
a purchase organisation for the Government of India and makes
F purchases for various departments. In response to <1n invitation for
tender by the DGS&D for the sµpply of Bijasal logs first class the
appellant firn'l made an offer to supply 1016 cubic metres at a flat
rate of Rs. 669 per cubic metre. The DGS&D accepted the tender
on 24th of December, 1973. Pursuant to the acceptance of the tender
a standard form of contract was drawn up containing various clauses.
G Two important clauses of that standard from of contract with which
. we are mainly concerned are els. 18 and 24, which read :

"18. Recovery of Sums Due : Whenever any claim for
H the payment of a sum of money arises out of or under the
contract against the contractor, the purchaser shall be
entitled to recover such sum by appropriating in whole
. in part,
or . the. security,' if any,. deposited by tl:\e contrac-
·,
kAMALlJDDIN v. UNION (Misra, J.) 6ii

r tor, and for the pnrpose aforesaid, shall be entitled to sell
and/or realise securities forming the whole or part of any A
such security deposit. In the event of the security being

• insufficient, the balance and if no security has been taken
from the contractor, the entire sum recoverable shall be
recovered by appropriating any sum. then due or which at
any time thereafter may become due to the contractor
under the contract or any other contract with the pur- B
chaser or the Government or . any person contracting
through the Secretary. If such'.,Sum even be not SHfficient
to cover the full amount recoverable, the contractor shall
on demand pay to the purchaser the balance remaining
due ..... ... ". c
"24. Arbitration : In the event of any question,
dispute or difference arising under these conditions or any
special conditions of contract, or in connections· with
this contract (except as to any matters the decision of
which is specially provided for by these or the special D
conditions) the same shall be referred to the sole atbitra- ·
tion of any officer in the Ministry of Law, appointed to
'( be the arbitrator by the Director General of Supplies and
Disrosals. It will be no objection that the arbitrator is
a Government servant, that he had to deal with the
matters to which the contract relates or that in the course E
of his duties as a Government servent he has expressed
views on all or any of the matters in dispute or difference.
The award of the arbitrator shall be final aQ.d binding on
the parties.to this contract."

The appellant, however, I ailed to supply the goods. The contract
F
was cancelled on 28th of August, 1974 at the risk and cost of the
appellant. The DGS&D claims tp have made risk purchases incurr-
ing an extra cost of Rs. 92,364. By notice dated ·27th December,
1974 the DGS&D called upon the appellants to pay that amount
failing which alternating arrangements would be made to recover G_
the same.

It appears that there were some. other cpntracts between the
appellant and the respondent whereunder the appellant has supplied
goods and payments were due to it under pending bills. H
The appellant firm moved a petition under s. 33 of the
Arbitration Act before the court a1leging that there was no conclude\)
612 SUPREME COURT REPORTS lt983I ~ s.c.R..
contract in existence between the parties containing any arbitration
A clause and prayed inter a/ia for determining the e~istencc, validity
and effect of the alleged arbitration agreement. The stand of the
Union of India on the other hand is that there-was a concluded cont-
ract between the parties and the appellant firm was hound by the
acceptance of the tender.
B As the Union of India threatened to withhold the amount . of
Rs. 92, 364 from the payments due under the pending bills of other
contracts, the.appellant firm sought for an injunction. Under s. 41
read with Second Schedule of the Arbitration Act, and 0. 39, rr. 1
and 2 read with s. 151 of the Code of Civil Procedure, restrainicg the
c respondents from appropriating, withholding or recoverin~ the
amount claimed from its other bills in any manner whatsoever.

As there was cleavage of opinion between the Judges of the
same High Court on the question whether such an injunction as
prayed for could be issued under s. ~I of the Arbitration Act, the
D learned Single Judge referred the matter to a larger Bench. The
learned Single Judge's own view was that such an injunction could be
issued under s: 41. The Division Bench on reference, however, held
that the Court. could grant an injunction restraining the respondent
from apporpriating or recovering the amont of damages claimed from
E appellant's other pending bills, but no order restraining the Union of
India from withholding payments of the other pending bills could be
issued under s. 41 of the Arbitration Act in as much as it would
amount to a direction to pay the amount due under other bills and
such a prayer would virtually amount to seeking a relief for decreeing
F the claim of the appellant in those contracts. The appellant has come ).
up before this Court against this order by special leave, .as stated
earlier.

It appears that a large number of applications under s. 33 Of
the Arbitration Act had been moved in Delhi High Court in similar
G matters. ' In some of the cases injunctions were also issued by the
learned Single Judge restraining the respondents from recovering,
appropriating or withholding the amount from other bills of the
contractors. One of thes'e matters Union. of India v. Air Foam
Industries was taken to this Court, which was decided by the Court
H along with Union of India v. Raman Iron Foundry.(') In that case

(l) A.l.R. 1974 S.C. 1265.
KAMALUDDIN Y. UNION (Misra, J.) 613
the Union of India put forward the extreme claim that by virtue of
cl. 18 of General Conditions of Contract it ·was entitled to recover A
damages claimed by appropriating any sum which 'may become due
to the contractor under ot~er pending bills from the Union of India.
This Court, however, negatived the plea on the ground that the
amount of damages claimed by the Union was only a claim and
unless there was adjudication of the claim by Court or admission by
the contractor the Union of India had no authority to appropriate
n
the· amount due under pending biJls of the contractor towards the
satisfaction of its claim for damages.

While construing the scope of s. 41 (b).of the Arbitration Act
this Court held : c
"The Court has, therefore, power under s. 41 (b)
read with Second Schedule to issue interim injunction, but
such interim injunction can only be "for the purpose of ·
and in relation to arbitration proceedings". The arbitration D
proceediugs in the present case were for determination of
the mutual claims of the appellant and the respondent
• arising out of the contract coutaill_ed in the acceptance of
tender dated 16th July, 1968. The question whether any
amounts were payabl~ by the appellant to the respondent
under other contracts was not the subject matter of the E
arbitration proceedings. The Court obviously could not,
therefore, make au interim order which, though ostensibly
in form an order of interim injunction, in substance
amounted to a direction to the appellant to pay the
amounts due to the respondent under other contracts.
F
Such an interim order would clearly not be for the purpose
of or in relation to the arbitration proceedings as required
by s. 41 (b)." .

Having laid down the above dictum on the interpretation of
s. 41 of the Arbitration Act this Court· proceeded tp analyse the G
impugned order of injunction in that case. In its opinion the order · '
of injunction did nof expressly or by necessary implication carry any
direction to the· Union cif India to pay the arrnunts due to the
respondent under other contracts. It is not only in forrn but (liso in
substance a negative injunction. It has no positive content. What H
it does is merely to injunct the appellant from recovering suo motu
the damages claimed by it from out of the pending bills of the
614 SUPRE.Mll COURT REPORTS .(1983] 3 S.C.R,
respondent. It does not direct that the appellant shall pay such
A amounts to the responden\. The appellant Union of India can still
refuse to pay such amounts if it thinks it has a valid defence and if
the appellant does so, the only remedy to the respondent would be
to take measures in an appropriate forum for recovery of such
amounts, where it would be. decided whether the appellant· is liable
8 to pay such amounts to the respondent or not. No breach of the
order of interim injunction as such would be Involved in non-
payment ·of such amounts by the respondent to the appellant. The
only thing which the appellant is interdicted from doing ·is to make
recovery of its claim for damages b'y appropriating such ·amounts in
satisfaction of the claim. That is clearly within the power of the
c Court under s. 41 (b) because the claim for damages forms· the
subject matter of the arbitration proceedings and the Court can
always say that until such claim is adjudicated upon, the. appellant
shall be restrained from recovering it by appropriating other amounts
due to the respondent. The order of interim injunction made by
D the learned Judge cannot, therefore, be said to be outside the
scope of his power under s. 41 (b) read with the Secorid Scl~_edule.

· Following this judgment. of the Supreme Court the Delhi High •
Court started modulating its injunctions accordingly and refused to
include the word "withholding" in the order of injunction on the
E ground that the order in those terms really would mean an order to
make the payment which was specifically forbidden in terms of the
above judgment of this Court. •

As some doubt was raised in the Delhi High Court as to the
exact scope of the ratio of the Union of India v. Raman Iron Foundry
F
(supra) the matter was referred to a full Bench apparently to reconsi•
der the earlier Division Bench judgments in Marwar Teni Factory v.
Union of India(') and Air Foam Industries v. Union of India.('! The
full Bench Mohan Meakin Breweries v. Union of India(') took the view
that though an injunction could be granted in those matters restrain-
G ing the Union of India from adjusting or recovering any damages
claimed by it from other pending bills of the contractor no order of
injunction restraining the Union of India from withholding the pay-
ments due to the· contractor under other pending bills could be
issued.
H
(I) A.I.R .. 1975 Delhi 27 .•
(2) A.I.R. 1973 Delhi 253.
(3 1 A.I.R, 1975 Delhi 248.
KAMALUDDJN v. UNION (Misra, 1.) 61S
Following the Full Bench decision the Division Bench in the
present case held that the Court in arbitration proceedings was not A
competent to issue an injunction restraining the Union of India
from withholding the amount due to the appellan-contractor under
·other pending bills. jie only remedy of the appellant is to proceed
outside the arbitration proceedings for the payments due under the
pending bills, from the respondent. Th.e Court can, however, restrain B
the Union of India from recovering or appropriating the amount due
to the appellant-contractor under pending bills towards the damages .
claimed by the Union, unless it has been adjudicated upon or
admitted by the other side. '

The first question that falls for consideration in this appeal is
c
about the exact scope and ambit of s. 41 of the Arbitration Act. It
will be appropriate at this stage to read s. 41 in order to appreciate
the contention raised on behalf of the appellant.: .

"4Y. Procedure and powers of Court :- Subject to D
the provisions of this Act and of rules made thereunder-

(a) the provisions of the Code of Civil Procedure,
1908 shall apply to all proceedings before the
Court, and to all appeals, under this Act, and
E
(b) the Court shall have, for the purpose "of, and in
relation to, arbitration proceeding, the same
power of making orders in respect of any of the
matters set out in the Second Schedule as it has
for the purpose of, and in relation to, any pro- F
ceedings before the Court :.:... ...
provided that nothing in clause (b) shall bC taken to
prejudice any power which may•be vested in an arbitrator
or umpire for making orders with respect to any of such
matters." G

In view of cl. (b) of s. 41 the Court has been given power of passing
orders in respect of any of the matters set out in second Schedule for
the purpose of and in relation to · any proceedings before the Court.
The Second Schedule of the Arbitration Act inter alia includes H
·interim injunction' and the 'appointment of receiver'. But the Court
has got the power to pass an order of injunction only 'for the purpose
of and in relation to arbitration proceedi~gs' before the Court.
616 SUPRilMi COURT REPoRTS t1~83) 3 s.c.R.

The proceedings before the Court in the instant case was an
A application under s. 33 of the Arbitration Act. Section 33 of the
Arbitration Act in so far as material for the case, provides :

"33. Any party to an arbitration agreement or any
person claiming under him desiring to challenge the exis-
tence or validity of an arbitration agreement or an award
B or to have the effect of either determined shall apply to
the Conrt and the Court shall decide the question on
affidavits."

The appellant in the instant case took the stand that there was
c no concluded contract between the parties incl~ding arbitration.
'.l'her~fore, the order of injunction passed in the instant case could
not be for the purpose of and in relation to arbitration proceedings.
Faced with this difficulty Shri S. N. Kacker, learned counsel for the
appellant, fell back upon cl. (a) of s. 41 to contend that cl. (a) makes
the Code of Civil Procedure applicable to all proceedings before the
D Court and to all appeals under the Act and, therefore, the appellant
was entitled to invoke Order 39 of the Code to get an. injunction
order even if the conditions of cl. (b) of s. 41 were not satisfied. We
are afraid this contention cannot be accepted. )

Clause (a) of s. 41 makes only the procedural rules of the Code
of Civil Procedure applicable to the proceedings in Court under the
Arbitration Act. This clause does not ·authoritse the Court to pass
an order of injunction. The power is conferred by cl. (b) of s. 41.
The source of power, therefore, cannot be traced to cl. (a). If the
contention of Shri Kac1cer is accepted, the appeals would lie under
ss. 96, 1.00 or 104 of .the C.P.C. but the Arbitration Act itself provides
for appeal 1mder s. 39. Besides, if cl.( a) of s.41 gave wide powers to
pass an order of injunction, cl. (b) of s.41 would become otiose .
•
The learned counsel for the appellant, however, contends that
the arbitration proceedings relate to the claim for damages by the
Union of India. Any act of the Union of India which purports to
·enforce the said claim for damages, before it has been duly
adjudicated upon in arbitration proceedings is an act which relates
to such arbitration proceedings. ·

On the own case of the appellant that there was no concluded
·contract between the parties containing an arbitration clause it will
KAMALUDDIN v. UNION {Misra, J.) 617
be difficult to say that the· application for injunction moved by the
appellant was for the purpose of and in relation to arbitration pro· A
ceedings. This apart, the amount due under the pending bills to the

• appellant was not the subject matter of the present proceedings and,
therefore, the injunction order restraining the respondents from
withholding the amount due to the appellant under the pending bills
in respect of other ·contracts could not be said to be for the purpose B
of and in relation to the present arbitration proceedings. In this
.view of the matter it was not open to the Court to pass the interim.
injunction restraining the respondents from withholding the amount
1
due to the appellant under pending bills in respect of other contracts.

The learned counsel Shri Kacker, however, strongly relied on
c
the following observations of the Court in Union of India v. Raman
Iron Foundry (supra) :

"But here the order of interim injunction made by
the learned Judge does not, expressly or by necessary D
implication. carry any direction to the appellant to pay the·
amounts due to the respondent under other contracts. It
is not only in form but also in substance a negative in-
junction. It has no positive content. What it does is
merely to injunct the appellant from recovering, suo moto,
the damages claimed by it from out of other amounts due
E
to the respondent. It docs not direct that the appellant
shall pay such amounts to the respondents. The
appellant can still refuse to pay such amounts if it
thinks it has a valid defence and if the appellant
does so, the only remedy open to the respondent would F
be to take measures in an appropriate forum for
recovery of such amounts where it would be decided
whether the appellant is liable to pay such amounts to the
respondent 'or not. No breach of the order of interim
injunction as such would be involved in non-payment of
such amounts by the appellant to the respondent. The
G
only thing which the appellant is interdicted from doing
is to inake recovery of. its claim for damages by appro-
. priating such amounts in satisfaction of the claim. That
is clearly within the power of the Court under s. 41 (b) H
)
because the claim for damages forms the subject matter of
the arbitration proceedings and the Court can always ysay .
that until such claim is adjudicated upon, the appellant
6i8 SUPREME COURT REPORTS It 9ibj 3 s.c:R.
shall be restrained from recovering it by appropriating
A other amounts due to the respondent. The order of
interim injunction made by the learned judge cannot,
therefore,. be said to be outside the scope of his power
under s.41 (b) read with the Second Schedule".

With profound respect we find that the aforesaid observation is in-
B
congrous with the proposition of law laid down by this Court just
before this observation. · We find it difficult to agree with the.
oliservation of the Court that the impugned order in form and
substance being the negative the respondent could refuse to pay such
amounts if it thinks it has a valid defence, and if it chooses to do so
c there would be no breach of the injunction order.

It is true t_hat the order of injunction in that case was in
negative form. But if an order injuncted a party from withholding
the amount due to the other side under pending bills in other
contracts, the order necessarily means that the amount must be paid.
D If the amount h withheld there will be a defiance of the injunction
ord_er and that party could be hauled up for infringing the injunction
order. It will be a contradiction in terms to say that a party is
injuncted from withholding the amount and yet it can withhold the
amount as of right. In any case if the injunction order is one which
a party was not bound to comply with, the Court would be loath
•
E
· and reluctant tO pass such an ineffective injunction order. The court
never passes an order for the fun of passing it. It is passed only for
. the purpose of being carried· out. Once this Court came to the
conclusion that the Court has power under s.41 (b) read with Second
Schedule to issue interim injunction but such interim injunction can
F only be for the purpose of and in relation to arbitration proceedings )

and further that the question. whether any amounfs were payable by
the appellant to the respondent '!nder other contracts, was not the
subject matter of the arbitration proceedings and, therefore, the
Court obviously could not make any interim order which, though
O'stensibly in form an order of interim injunction, in substance amount
G to a direction to the appellant to pay the amounts due to the respon·
dent under other contracts, ·and such. an order would clearly be not·
for the purpose of and in relation to the arbitration proceedings; the
subsequent obs~rvation of the Court that the order of injunction
being negative in form and substance, there was no direction to the
H respondent to pay the amount due to the appellant under pending ).__
bills of oth_er contracts, is manifestly inconsistent with the proposition
of Ja~ laid down by this Court in the same case.
KAMALUDPJN v. UNION (Misra, J.) 619
··(
This leads us to the question of interpretation of cl. 18 of th•
) standard contract. Clause 18 has been quoted in extenso in the A

• earlier part of the judgment.

The argument by Shri K.. G. Bhagat, Addi. Solicitor General
on behalf of the Union of India is' that what is required for attracting
the appJicqbility of cl. 18 is a mere claim for payment of" a· sum of B
money arising out of or under the contract against the contractor
and ·it is not necessary that a sum of money must be actually due
and payable from the contractor to the purchaser. According to him,
if the purchaser has a claim for payment of a sum of money against
the contractor, he would be entitled to exercise the right given under
cl. 18, even though such a claim may not be for a sum due and pay- c
able but may be for damages and it may be disputed by the contrac-
tor· and may , not have been adjudicated upon in a Court of I.aw or
by arbitration. Shri Bhagat further submits that if the cla!l!l of the
purchaser is not well founded and the appropriation made by the
Union of India is unjustified, the contractor· can always institute a D
suit or start arbitration proceedings for recovering the sums due to
him which have been wrongly appfopriated by the purchaser and_in
such suit or arbitration proceedings, the court or tbe arbitrator, as
the case may be, would examine the validity of the claim against
which appropriation bas been made by the purchaser and if the claim
is found to be unstist.oinable, set at naught the appropriation and E
pass a decree or award for the sums due to the contractor. But the
court cannot and should not restrain the Union of India from exer- ·
cising its right of appropriation merely becanse Jbe claim against
which appropriation is sought to be made by the purchaser is
disputed by the contractor and is pending adjudication before a F
court of law or arbitrator.

Sbri Kacker on the other hand contends that though the words
used in the opening part of cl. 18 are "any claim for the payment
of a sum of money", which are general words of apparently wide . · G
amplitude sufficient to cover even a claim for damages arising out of .
the contract, a proper construction of the clause read as a whole
clearly suggests that these words are intended to refer only to a claim
for a snm due and payable .and do not take in a claim for damages
which is disputed by the contractor. It is only when a claim for H
damages is adjudicated upon by a civil court or an arbitrator ·and the
breach of the contract is established and the amount of damages
i:\Scertained and de9ree<;1 that a debt <;lue and payable comes into
620 SUPREME COURT REPORTS (1983} 3 s.c;R.

existence ; till then it is nothing more than a mere right to sue for
A damages, and it does not fall within the words of cl. 18. ·Moreover,
cl. 18 merely provides a mode of recovery and it can h~ve no appli-
cation where a claim, even though it be for a sum due and payable,
is disputed by the contractor and has to be established in a court of
law or by arbitration. Clause 18 applies only where a claim is either
B admitted, or in case of dispute, substantiated by resort to the judicial t
process. Therefore, when a purchaser has a claim for damages
which is disputed by the contractor, the purchaser is not entitled
under cl. 18 to recover the amount of its claim for damages by
appropriating other sums due to the contractor until the claim for
damages is adjudicateu upon and culminates in a decree. The
c respondent had consequently no right under cl. 18 to appropriate
sums due to the appellant under other contracts in satisfaction of its
claim for damages against the appellant, when the claim for damages
was pending adjudication.

This Court in Union v. Raman Iron Foundry (supra) while
D construing cl. 18 of the standard contract observed :

"It is true that the words "any claim for the payment ,
of a sum of money" occurring in the opening part of
cl. 18 are words of great amplitude, wide ·enough to
E cover even a claim for damages, but it is a well settled
rule of interpretation applicable alike to instruments as
to statutes that the meaning of ordinary words is to be
found not so much in strict etymological propriety of
language nor even in popular use as in the subject or
occasion on which they are used and the object which is
F intended to be attained. The context and collocation
of a particular expression may show that it was not
intended to be used in the sense which it ordinarily
bears. Language is at best an imperfect medium of
expression and a variety of meanings may often lie in a
G word or expression. The exact colour and shape of the
meaning of any word or expression should not be ascer-
tained by reading it in isolation, but it should be read
structurally and in its context; for its meaning may vary
with its contextual setting. We must, therefore, read
H the words 'any claim for the payment of a sum of money'
occurring in the opening. part of cl. 18 not in isolation
but in the context of the whole clause, for the intention
Qf the parties is to be gathered not from one part of the
.KAMALUDDIN v. UNION (Misra, J.) 621

clause or the other but from the clause taken as a whole.
It is in the light of this principle of interpretation that
we must determine whether the words 'any claim for the
payment of a sum of money' refer only to a claim for
a sum due and payable which is admitted or in case of
disputes, established in court of a Jaw or by arbitration
or they also include a claim for damages which is
disputed by the contractor."
B
\

The headings prefixed to a section or a group of sections in
some modern statutes are regarded as preambles to those sections.
They cannot control the plain words of the statutes but they may
explain ambiguous words. The view· is now well settled that the c
' . ·headings or titles prefixed to a section or a group of sections can be
referred to in determining .the meaning of doubtful- expressions. It
is true that the court is entitled to look at the headings in an Act
of Parliament to resolve any doubt they may have as to ambi·
guous words. The law is clear that those headings cannot be used
to give a different effect to clear words in the section where there D
cannot be any doubt as to the ordinary meaning of the words. The
golden rule is that when the words of a statute are clear, plain and
unambiguous, that is, they are reasonably susceptible to only one
meaning, the courts are bound to give effect to that meaning irres·
pective of the consequences. The duty of a Judge is to expound E
and not to legislate, is a fundamental rule. If we apply the same
principle to the intrepretation of cl. 18 of the standard form of
contract, it would be clear that the clause unequivocally contemp·
!ates a claill:\ for the payment and it/ is open to the Union of India
to appropriate any amount due to th(contractor under other pending
-· bills. It does not contemplate the amount due and, therefore, the F
heading of this clause which talks \lf only· 'Recovery of sum due'
will not control cl. 18. The clause in our opinion gives wide powers
to the Union of India to recover the amount claimed by appropri-
ating any sum then due or which at any time thereafter may become
due to the contractor under other contracts.
G
Clause 18 of the standard form of contract earlier was slightly
differently_ worded and it read 'whenever under this contract any
sum of money is recoverable from and payable by the contractor'.
But this formula was deliberately and advisedly· altered when the H
present standard form was introduced and instead the words
'whenever any claim for payment of a sum of money arises' were
~ubstituted an_d this change in phraseology indicate<;! that in or<;l~r
622 SUPREME·COURT REPORTS . fl983) 3 S.C.R.

to attract the applicability of the present cl. 18, it was not necessary
that there should be a sum of money due aud payable by the
A
contractor to the purchaser, but it was enough if there was a mere
claim on the part of the purchaser for· payment of a sum of money
by the contractor irrespective of the fact whether such sum of mo_ney
was presently due and payable or not. This Court, however, did
not attach importance to this aspect of the matter by observing : ·
B
"We do nofthink it is legitimate to construe cl. 18 of
the contract between the parties by reference to a corres-
ponding clause which 'prevailed in an earlier standard
form of contract. This is not a statute enacted by the
c legislature where it can be said that if the legislature
has departed from the language used by it in an earlier
enactment, it .would be a fair presumption to make '· .
that the alteration in the language was deliberate and it
was intended.to convey a different .meaning. It is a
Clause in a contract which we are construing and there
D any reference to a similar or dissimilar · clause in another
contract would be irrelevant.

The Court itself while interpreting cl. l 8 of the contract has
observed:
E "It is true that the words "any claim for the pay-
ment of a sum of money" occurring in the opening part
of cl. 18 arc words of great· amplitude, wide enough to
cover even a claim for damages, but it is well settled
rule of interpretation applicable alike to instrunient.s as
F - to statutes ...... "

But while dealing with another aspect of cl. 18 observed to the
contrary that it should not be construed as a statute. It may, how-
ever, be pointed out that even after the change in the language of
cl. 18 of the standard agreement the Union of India cannot be
G injuncted from withholding the amount under other bills of the
contractor. ·But it can certainly be injuncted from recovering or
appropriating it to the damages claimed.
Shri D. C. Singhania appearing along with Shri Kack~r sub-
H stantially reiterated the same argument in his written note.
We are clearly of the view that an injunction order restraining
respondents from withholding the amount due under other pending
KAMALUDDIN v. UNION (Misra, J.) 623

bills to the· contractor virtually amounts to a direction to pay the
amount to the contractor-appellant. Such an order was clearly A
beyond the purview of cl. (b) of s. 41 of the Arbitration Act. The
Union of India has no objection · to the grant of an injunction
restraining it from recovering or appropriating the a01ount lying
with it in respect of other claims of the contractor towards its claim
for damages. · But certainly cl. 18 of the standard contract confers
ample power upon the Union of India to withhold the amount and
B
no injunction order could be passed restraining the Union of India
• from withholding the amount.

We find no error in the impugned order passed by the
Allahabad or the Delhi High Courts in the two cases. The appeals,, C
therefore, must fail and they are accordingly dismissed. In the
• j
circumstances of the case, however, we direct that the parties should
bear their own costs.

H.Lc. Appeals dismissed. D