MANGALA WAMAN KARANDIKAR (D) TR. LRSversusPRAKASH DAMODAR RANADE

232                       [2021]
               SUPREME COURT     5 S.C.R. 232
                              REPORTS                      [2021] 5 S.C.R.


A            MANGALA WAMAN KARANDIKAR (D) TR. LRS.
                                        v.
                      PRAKASH DAMODAR RANADE
                        (Civil Appeal No. 10827 of 2010)
B                              MAY 07, 2021
                [N.V. RAMANA, CJI., SURYA KANT AND
                         ANIRUDDHA BOSE, JJ.]
           Interpretation of documents: Contractual interpretation – It
      depends upon the intentions expressed by parties.
C
            Evidence Act, 1872: s.92 – Contract between parties – Reading
      of the contract showed that the appellant had intended to transfer
      business to respondent during the contractual period and the
      agreement was not meant as a lease or license for the respondent to
      conduct business – Respondent contended that the meaning of the
D     document should not be culled solely with reference to the language
      used in the document, rather extrinsic evidence needs to be utilized
      before adducing proper meaning to the contract – Such contention
      is not accepted – s.92 specifically prohibits evidence of any oral
      agreement or statement which would contradict, vary, add to or
      subtract from its terms – If oral evidence could be received to show
E
      that the terms of the document were really different from those
      expressed therein, it would amount to according permission to give
      evidence to contradict or vary those terms and as such it comes
      within the inhibitions of s.92 – It could not be postulated that the
      legislature intended to nullify the object of s.92 by enacting
F     exceptions to that section – Once the recitals and the contract were
      accepted, the respondent could not have adduced contrary extrinsic
      parole evidence, unless he portrayed ambiguity in the language –
      The evidence pointed that the license was created for continuation
      of existing business, rather than license/lease of shop premises –
      Once it is determined that the impugned agreement was a license
G
      for continuing existing business, Bombay Rent Act does not cover
      such arrangements – The jurisdiction of the trial court is accordingly
      not ousted – Rent Control and eviction.


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                                       232
      MANGALA WAMAN KARANDIKAR (D) TR. LRS. v.                             233
            PRAKASH DAMODAR RANADE

      Allowing the appeal, the Court                                       A
      HELD: 1. Unlike a statutory interpretation, which is even
more difficult due to assimilation of individual intention of law
makers, contractual interpretation depends on the intentions
expressed by the parties and dredging out the true meaning is
an ‘iterative process’ for the Courts. In any case, the first tool         B
for interpreting, whether it be a law or contract is to read the
same. [Para 9][239-B-C]
       2. It is usual that businessmen often do not sit over nitty-
gritty in a contract. In a document the language used by the parties
may have more than one meaning. It is ultimately the responsibility
                                                                           C
of the Courts to decipher the meaning of the words used in a
contract, having regards to a meaning reasonable in the line of
trade as understood by parties. It may not be out of context to
state that the development of rules of contractual interpretation
has been gradual and has taken place over century. [Para 10]
[239-C-E]                                                                  D
       3.1 It is clear from the reading of the contract that the parties
had intended to transfer business from appellant to respondent
during the contractual period. This agreement was not meant as
a lease or license for the respondent to conduct business.
However, the respondent contends that the meaning of the                   E
document should not be culled solely with reference to the
language used in the document, rather extrinsic evidence needs
to be utilized before adducing proper meaning to the contract. In
this regard he submits that on consideration of all the extrinsic
evidence, the contract should be read as a leave and license
agreement, which is covered under the Bombay Rent Act. He                  F
draws his support from Section 95 of the Indian evidence Act to
state that the document needs to be interpreted having regard
to external evidence such as receipts of payment under the
contract addressed as rent receipts etc. It is manifest from Section
92 and Section 95 that it is only in cases where the terms of the
document leave the question in doubt, then resort could be had             G
to the proviso. But when a document is a straightforward one and
presents no difficulty in construing it, the proviso does not apply.
[Paras 11, 14][239-E-G; 240-A, H; 241-A]
     3.2 Section 92 specifically prohibits evidence of any oral
agreement or statement which would contradict, vary, add to or             H
234           SUPREME COURT REPORTS                     [2021] 5 S.C.R.


A     subtract from its terms. If oral evidence could be received to
      show that the terms of the document were really different from
      those expressed therein, it would amount to according permission
      to give evidence to contradict or vary those terms and as such it
      comes within the inhibitions of Section 92. It could not be
      postulated that the legislature intended to nullify the object of
B
      Section 92 by enacting exceptions to that section. [Para 15]
      [241-B-D]
            4. The contract mandated continuation of the business in
      the name of ‘Karandikar Brothers’ by paying royalties of Rs. 90
      per month. Once the parties have accepted the recitals and the
C     contract, the respondent could not have adduced contrary
      extrinsic parole evidence, unless he portrayed ambiguity in the
      language. It may not be out of context to note that the extension
      of the contract was on same conditions. [Para 16][241-D-E]
            5. The High Court erred in appreciating the ambit of Section
D     95, which led to consideration of evidence which only indicates
      breach rather than ambiguity in the language of contract. The
      evidence also points that the license was created for continuation
      of existing business, rather than license/lease of shop premises.
      If the meaning provided by the High Court is accepted, then it
E     would amount to Courts substituting the bargain by the parties.
      Once it is determined that the impugned agreement was a license
      for continuing existing business, Bombay Rent Act does not cover
      such arrangements. Therefore, the jurisdiction of the trial court
      is accordingly not ousted. [Paras 17, 18][241-F; 242-A]

F          Rohitash Kumar v. Om Prakash Sharma (2013) 11 SCC
           451 : [ 2012] 13 SCR 47 – relied on.
           Investors Compensation Scheme v. West Bromwich
           Building Society [1998] 1 WLR 896; Wigmore JH,
           “Wigmore on Evidence, Vol. 4” (1915) 25 The Yale Law
G          Journal 163 – referred to.
                            Case Law Reference
      [2012] 13 SCR 47              relied on              Para 15


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      MANGALA WAMAN KARANDIKAR (D) TR. LRS. v.                                235
            PRAKASH DAMODAR RANADE

       CIVIL APPELLATE JURISDICTION : Civil Appeal No. 10827                  A
of 2010.
       From the Judgment and Order dated 07.11.2009 of the High Court
of Judicature at Bombay in Second Appeal No.537 of 1991.
       Ms. Abha R. Sharma, Ms. Gwen Karthika, Advs. for the Appellants.
       Rajendra V. Pai, Sr. Adv., Ms. Bina R. Pai, Aloukik R. Pai, Akshay     B
R. Pai, Ms. Nikita K. Dharamshi, Vitthal Devkhile, Anand Dilip Landge
, Advs. for the Respondent.
       The Judgment of the Court was delivered by
       N. V. RAMANA, CJI
       1. This appeal is filed against the judgment of the Bombay High        C
Court, in Second Appeal No. 537 of 1991, wherein the second appeal
was allowed in favour of the respondent and the decree in favour of the
appellant herein was set aside.
       2. This case arises out of a contract entered into between the
Appellant (since deceased represented through Legal Heirs) and the            D
Respondent. Initially Appellant’s husband was running a business of
stationary in the name of “Karandikar Brothers” before his untimely
demise in the year 1962. After his demise, she continued the business
for some time. After a while, she was unable to run the business and
accordingly decided to let the Respondent run the same for some time.
                                                                              E
She entered into an agreement dated 07.02.1963, wherein following terms
were reduced in writing:
       “2. For the last about 24 to 25 years, a stationary shop by the
       name Karandikar Brothers belonging to you of the stationary, note
       books and books is being run in the premises situated in City Survey
       no. 196/66 (New House No. 1643) at Sadashiv Peth, Pune. I              F
       request to you to give the said shop to me for running the same.
       Accordingly, you agreed for the same. Accordingly, an agreement
       was reached between us. The terms and conditions whereof are
       as follows:
      A. The stationary shop ꞏ by name “Karandikar Brothers”                  G
      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 l(b) above belonging to you is
      existing is being taken by me for conducting by an agreement for
      a period of two years beginning from 1st February 1963 to 31st
      January 1965.                                                           H
236             SUPREME COURT REPORTS                           [2021] 5 S.C.R.


A           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 /-(Rupees Ninety only) for
            taking the said shop for conducting, for every month which is to
            be paid before the 5th day of every month.”
B            3.Time after time, the contract was duly extended. In 1980s,
      desiring to start her husband’s business again, appellant herein issued a
      notice dated 20.12.1980 requesting the Respondent herein to vacate the
      suit premises by 31.01.1981. The Respondent replied to the aforesaid
      notice claiming that the sale of business was incidental rather the contract
      was a rent agreement stricto sensu. Aggrieved by the Respondent’s
C     reply, the appellant herein filed a civil suit being RCS. No. 764 of 1981
      before the Court of Joint Civil Judge, Junior Division, Pune. During the
      course of the trial, one of the important questions that the Trial Court
      framed, which is relevant for our purpose can be observed hereunder:
            “Does the Defendant prove that from the year 1963 he is licensee
D           in the said suit premises as contended in para 7 of the plaint? And
            thereby on the date of suit he became tenant of the suit premises
            under Section 15A of the Bombay Rent Act?”
             The Trial Court by Judgment dated 30.08.1988, decreed the Suit
      in favor of the appellant herein and held that the purport of the Agreement
E     was to create a transaction for sale of business rather than to rent the
      aforesaid premises to the Respondent herein. The Court while negating
      the contention of the Respondent, that the shop premises was given to
      him on license basis held as under:
            “8. The defendant does not deny the fact that originally the husband
F           of deceased Mangala Karandikar namely Waman Karandikar used
            to conduct the business of the suit shop. The business of stationary,
            books and notebooks was being run by him. Same business has
            been handed over to him. … The suit shop and the said business
            came to deceased Mangala Karandikar after the death of her
G           husband. It has come in the evidence 50 that because of death of
            her husband and after the death of her husband, she was unable
            to continue the business. In the meantime, the defendant
            approached to her. Thereupon she agreed to hand over the running
            business to the defendant. This fact has been denied by the
            defendant. The defendant raises the contention that the plaintiff
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 MANGALA WAMAN KARANDIKAR (D) TR. LRS. v.                                237
PRAKASH DAMODAR RANADE [N. V. RAMANA, CJI]

 never had the shop of stationary, but she had the grocery shop.         A
 After the death of her husband, it was lying closed for years
 together. In the year 1963 the defendant approached the plaintiff
 and thereupon the plaintiff agreed to give the suit shop. On licence
 basis to him. This plea of the defendant is negativated by the
 terms and conditions of the agreement deed itself. The heavy
                                                                         B
 burden was lying on the defendant to prove that there was licence
 agreement. He has not discharged the same. Therefore, the
 document became much relevant, and it has got material
 importance. If the conditions as enumerated in this document
 Exh.33 are carefully scrutinized, it will become significant that
 the deceased plaintiff had the sole intention to hand over’ the         C
 running business of the suit shop to the defendant. There had
 been no intention to create the leave and licence in respect
 of the suit premises. The deceased plaintiff had very specifically
 and by taking at most case and precaution excluded the word
 premises of shop in the agreement. But all the while the word ꞏ
                                                                         D
 “shop” was used with reference to business only. Nextly she
 has also excluded the word rent to be used. She had
 specifically made the recital of imposing the royalty on the
 defendant. The word licence, for the purpose of Bombay Rent
 Act always refers to premises. The defendant has to seek the
 benefit under the provisions of Bombay Rent Act. Here the plaintiff     E
 had never intended to create the leave and licence in respect of
 the suit shop. The defendant has relied upon the receipt Exhibit-
 40. This is the document produced by the plaintiff. It discloses
 that the word “rent” has been shown in this respect. The defendant
 is taking benefit of this fact and alleging that the rent was being
                                                                         F
 recovered and not the royalty. Here it is worth to be noted that
 the plaintiff had at all no intention to recover the rent. All the
 while, it has been the case of the plaintiff that the royalty was
 being recovered. Therefore, I am unable to hold that the rent was
 being recovered by the plaintiff. …
 “14. Issue Nos. 5 and 6. - The defendant has alleged that he is the     G
 tenant in the suit shop. Initially, the premises were given to him on
 licence basis but by virtue of amendment to Bombay Rent Act
 and by virtue of insertion of section 15(A) all the licensees have
 become the tenants. Learned advocate appearing on behalf of
 the defendant places his reliance on Case Law reported in A.I.R.        H
238             SUPREME COURT REPORTS                            [2021] 5 S.C.R.


A           1987 Supreme Court page 117. No doubt there can be no dispute
            regarding the principles of law. In the instant suit, the defendant
            has utterly failed to prove that the shop premises were given
            to him on licence basis. Therefore, no question of his tenancy
            can arise at any time. …”
B                                                         (emphasis supplied)
             4. Accordingly, the Trial Court ordered the respondent to hand
      over the suit property to the appellant herein including the furniture and
      other articles.
            5. Aggrieved by the Trial Court judgment, the Respondent filed an
C     Appeal before the Court of Additional District Judge, Pune in Civil Appeal
      No. 979 of 1988. On 29.07.1991, the Additional District Judge rendered
      a judgment dismissing the appeal filed by the Respondent herein.
      Aggrieved by the dismissal the Respondent herein filed a Second Appeal
      before the High Court of Bombay in Second Appeal No. 537 of 1991.
D            6. By impugned order dated 07.11.2009 the High Court of Bombay
      allowed the Second Appeal and set aside the Trial Court’s Order as well
      as the First Appellate Court’s Order and held that the Respondent had
      entered into a license agreement which is covered under Section 15A of
      the Bombay Rent Act. Further the Court held that the Trial Court did not
E     have the Jurisdiction to try the cases under the Bombay Rent Act, the
      appropriate Court should have been Small Causes Court established under
      the Provincial Small Causes Court Act. The Second Appellate Court
      also observed on the merits of the case and held as under.
            “22. Thus, considering the entirety of the case, in my view, both
F           the Courts below have incorrectly interpreted the document and
            the surrounding circumstances which, in my view, indicate that
            the parties had in fact agreed that the premises were transferred
            to the appellant on a leave and license basis.”
            7. Aggrieved by the same, the appellant herein filed this appeal.
G            8. The counsel for the appellant contended that the impugned
      order of the High Court erred in appreciating the language of the contract,
      which clearly points towards the intention of the parties to create a license
      for continuing existing business, which was run by late husband of the
      appellant. On the other hand, the counsel for the respondent has supported
      the judgment by stating that there is extrinsic evidence which shows that
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     MANGALA WAMAN KARANDIKAR (D) TR. LRS. v.                                     239
    PRAKASH DAMODAR RANADE [N. V. RAMANA, CJI]

the contract entered into between the parties was a license to use the            A
shop, which is covered under Bombay Rent Act. In this light, he supports
the impugned order to state that the Trail Court did not have jurisdiction
in the first place.
       9. Having heard both the parties at some length, at the outset
before we analyse this case, we need to observe some principles on                B
contractual interpretation. Unlike a statutory interpretation, which is even
more difficult due to assimilation of individual intention of law makers,
contractual interpretation depends on the intentions expressed by the
parties and dredging out the true meaning is an ‘iterative process’ for
the Courts. In any case, the first tool for interpreting, whether it be a law
                                                                                  C
or contract is to read the same.
      10. It is usual that businessmen often do not sit over nitty-gritty in
a contract. In a document the language used by the parties may have
more than one meaning. It is ultimately the responsibility of the Courts to
decipher the meaning of the words used in a contract, having regards to           D
a meaning reasonable in the line of trade as understood by parties.1 It
may not be out of context to state that the development of rules of
contractual interpretation has been gradual and has taken place over
century. Without going into extensive study of precedents, in short, we
may only state that the path and development of law of interpretation
                                                                                  E
has been a progress from a stiff formulism to a strict rationalism.2
        11. It is clear from the reading of the contract that the parties had
intended to transfer business from appellant to respondent during the
contractual period. This agreement was not meant as a lease or license
for the respondent to conduct business. However, the respondent contends
                                                                                  F
that the meaning of the document should not be culled solely with reference
to the language used in the document, rather extrinsic evidence needs to
be utilized before adducing proper meaning to the contract. In this regard
he submits that on consideration of all the extrinsic evidence, the contract
should be read as a leave and license agreement, which is covered under
the Bombay Rent Act. He draws his support from Section 95 of the                  G
Indian evidence Act to state that the document needs to be interpreted

1
  Investors Compensation Scheme v. West Bromwich Building Society, [1998] 1 WLR
896
2
  Wigmore JH, “Wigmore on Evidence, Vol. 4” (1915) 25 The Yale Law Journal 163.   H
240            SUPREME COURT REPORTS                             [2021] 5 S.C.R.


A     having regard to external evidence such as receipts of payment under
      the contract addressed as rent receipts etc.
             12. It may be noticed that the High Court had appropriately
      identified the question of law in the following manner:
            15. The debate therefore revolves around the question as to
B           whether the agreement of 7th February, 1963 was a license to
            conduct a business in the premises or was a license to run the
            existing business which was being run by the respondents in the
            suit premises. Does the document create an interest in the premises
            or in the business?
C            13. The High Court in order to answer the question utilized Section
      95 of the Evidence Act, which reads as under:
            95. 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
D           to show that it was used in a peculiar sense.
            Illustration A sells to B, by deed, “my house in Calcutta”. A had
            no house in Calcutta, but it appears that he had a house at Howrah,
            of which B had been in possession since the execution of the
            deed. These facts may be proved to show that the deed related to
E           the house of Howrah.
            Aforesaid Section is part of Chapter VI, which deals with ‘Of the
      exclusion of Oral by documentary evidence’ containing Section 91 to
      100. Section 92 reads as under:
            92. Exclusion of evidence of oral agreement.—When the terms
F
            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,
G           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.
            14. It is manifest from these two sections that it is only in cases
H     where the terms of the document leave the question in doubt, then resort
        MANGALA WAMAN KARANDIKAR (D) TR. LRS. v.                               241
       PRAKASH DAMODAR RANADE [N. V. RAMANA, CJI]

could be had to the proviso. But when a document is a straightforward          A
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.
       15. If the contrary view is adopted as correct it would render
Section 92 of the Evidence Act, otiose and also enlarge the ambit of           B
proviso 6 beyond the main Section itself. Such interpretation, provided
by the High Court violates basic tenants of legal interpretation.3 Section
92 specifically prohibits evidence of any oral agreement or statement
which would contradict, vary, add to or subtract from its terms. If, as
stated by the learned Judge, oral evidence could be received to show
that the terms of the document were really different from those expressed      C
therein, it would amount to according permission to give evidence to
contradict or vary those terms and as such it comes within the inhibitions
of Section 92. It could not be postulated that the legislature intended to
nullify the object of Section 92 by enacting exceptions to that section.
      16. In line with the law laid down, it is clear that the contract        D
mandated continuation of the business in the name of ‘Karandikar
Brothers’ by paying royalties of Rs. 90 per month. Once the parties
have accepted the recitals and the contract, the respondent could not
have adduced contrary extrinsic parole evidence, unless he portrayed
ambiguity in the language. It may not be out of context to note that the       E
extension of the contract was on same conditions.
      17. On consideration of the matter, the High Court erred in
appreciating the ambit of Section 95, which led to consideration of
evidence which only indicates breach rather than ambiguity in the language
of contract. The evidence also points that the license was created for         F
continuation of existing business, rather than license/lease of shop
premises. If the meaning provided by the High Court is accepted, then it
would amount to Courts substituting the bargain by the parties. The
counsel for respondent has emphasized much on the receipt of payment,
which mentions the term ‘rent received’. However, in line with the clear
unambiguous language of the contract, such evidence cannot be                  G
considered in the eyes of law.
      18. Moreover, the contention that the aforesaid situation is covered
by the Bombay Rent Act is misplaced. Once we have determined that
3
    Rohitash Kumar v. Om Prakash Sharma, (2013) 11 SCC 451 at pg. 459          H
242              SUPREME COURT REPORTS                         [2021] 5 S.C.R.


A     the impugned agreement was a license for continuing existing business,
      Bombay Rent Act does not cover such arrangements. Therefore, the
      jurisdiction of the trail court is accordingly not ousted.
             19. In light of the above, the impugned order of the High Court
      cannot be sustained, and is accordingly, set aside. The decree of the trial
B     court is restored. The appeal is allowed in the above terms and there
      shall be no order as to costs.

      Devika Gujral                                                Appeal allowed.


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