judgement:
Appeals Nos.
1186 1188 of 1972.
Appeals by special leave from the Judgment and Order (fated 12/ 13/15th October, 1971 of the Bombay High Court in Special Civil Application Nos. 555, 556 of 1967 and 72 of 1968.
K. section Cooper, M. K. Shah, P. H. Parekh and Sunanda Bhandare, for the appellants.
B. N. Lokur, Rameshwar Nath, for respondent No. 1.
Subodh Markendeya, for Respondent No. 2.
The Judgment of the Court was delivered by SARKARIA, J.
Whether the principle of apportionment is applicable to the fixation of standard rent of a premises under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (for short, the Act); if so whether on the facts of the case, the principle has been rightly invoked is the two fold question that falls for decision in these three appeals by special leave directed against the judgment of the High Court of Judicature at Bombay.
The material facts are as under A big compound, measuring 11,150 sq.
yards, at 156 Tardeo Road, Bombay, belonged to Raja Bahadur Moti Lal Mills, Ltd., Bombay, appellant No.1.
The Mills were shifted from these premises in the year 1930.
In 1932, the whole of this estate including the structures standing on.
a part of it, was let out to Sound Studios Ltd. Between the years 1932 and 1940, some part of it was sub let by Sound Studios to Sheraj Ali, who was the proprietor of M/s. Famous 579 Cine Laboratory and another part to Neon Signs (India) Ltd., and the rest of the estate continued to be with Sound Studios.
Thereafter, Sound Studios went out of the picture and the whole estate was let out to National Studios Ltd. on October 23, 1940 at a monthly rent of Rs. 1700/ for a period of two years.
In July 1941, National Studios surrendered their lease and Sheraj Ali became a direct tenant under appellant 1 in respect of the premises in his possession, called for the sake of identification, 983/1 (whole) and 983/2 (Ground floor).
On December 1, 1941 and again in November 1942, Sheraj Ali took on rent additional portions of this estate so that his original rent, which was Rs. 400/ , was first increased to Rs. 600/and then to Rs. 700/ and thereafter in November 1942 to Rs. 875/ .
By November 1947, Sheraj Ali was paying Rs. 1200/ per month as rent for the premises demised to him including some new structures which had been built.
Sheraj Ali had taken a loan from M/s. Govind Ram Bros. Ltd., Respondent 1 on the security of his Film Studio Equipments.
He failed to repay the loan.
Thereupon, Respondent 1 instituted a suit for recovery of the amount and obtained a decree from the High Court,.
on February 27,1948.
As a result of the High Court 's decree, the right, title and interest of Sheraj Ali in the mortgaged property were assigned to Respondent 1.
Respondent 1, in consequence, took a fresh lease on March 19,1948 from appellant No. 1 of the, properties (called for identification) 983/1 to 983/12, which were in the tenancy of Sheraj Ali ', at a contractual rent of Rs. 1228/ p.m.
On the same date, Respondent 1 executed another lease in respect of three rooms in the same premises (marked for identification as) 984, in favour of appellant 1, on a monthly rent of Rs. 750/ Respondent 1 failed to pay the contractual rent, regularly, which fell into arrears which were not cleared despite the pressing demands made by the Receiver.
On March 13, 1954 the Receiver wrote to Respondent 1 threatening to take legal proceedings for the recovery of the rent.
This Receiver, who is now appellant No. 2, had been appointed by the High Court in Suit No. 454 of 1949 instituted by appellant 1 against the Insurance Company On April 14, 1954, two applications were filed in the Court of Small Causes by Respondent 1 for fixation of standard rent in respect of the premises comprised in the said two leases one application, R.A.N. 983/54, relates to properties 983/1 to 983/12, and the other (R.A.N. 984) to premises 984.
It was alleged in the applications that since on September, 1, 1940, the entire estate, including the properties in question.
had been let out on a monthly rent of Rs. 1700/ , standard rent of the premises it question should be fixed on the basis of apportionment In particular, it was pleaded that fair rent of Rs. 983/1 to 983/12 should be 1/8th of Rs. 1200/ which was later corrected as 1700/ .
On the same basis it was alleged in the second application, that fair rent of premises 984 should be Rs. 75/ p. m. 580 The appellants resisted these applications and averred in R. A. N. 983/54, that several entirely new structures had been built and substantial alterations made in most of these structures between the years 1940 and 1948, as a result whereof the property had lost its identity, and consequently, fair rent could not be fixed on apportionment basis.
On June 11, 1958, Respondent 1 made an application for amendment of the Standard Rent Application (R.A. N. 983154) for adding an alternative ground based on the value of the land and cost of construction so that in the event of the court holding on the preliminary issue in favour of the appellants, the standard rent could be fixed on the basis of the valuation of the land and the construction.
This application was disallowed.
On July 30,1958 Respondent 1 made an application for amendment of his R. A. N. 984 of 1954 on lines similar to that in R. A. N. 983/54.
It was also dismissed by an order, dated July 31, 1958.
At the stage of arguments on December 4, 1958, Respondent 1 moved another application for amendment and addition of the plea that they were the owners of the structures in premises 983/10, 983/1] and 983/12.
The second amendment was not sought to be made in the other application R. A. N. 98411954 relating to property 984.
This prayer was also declined.
The trial court (Samson J.) by its judgment dated April 2, 1959, found that the premises in question on account of structural alterations had undergone such a change that they could no longer be identified with the property that existed in September 1940 and that the mode of ,determining rent by apportionment was not available to the tenants.
In the result he dismissed the applications, adding "there is no sufficient ,material to ascertain the standard rent in any other way '.
Against those orders, Respondent 1 filed a revision petition under section 129 (3) of the Act before the Revisional Court of Small Causes, Bombay, which accepted, the same set aside the order of the trial judge, allowed the amendment and remanded both the applications for fixation of fair rent to the trial court.
Against this remand order, dated August 8, 1960, of the Revisional Court, the appellants preferred two Civil Revisions to the High Court of Bombay.
During the pendency of those Revisions, the trial court allowed the amendment and proceeded to decide the entire matter afresh.
These facts were brought to the notice of the High Court, which, however, ,dismissed the revision petitions by a judgment dated February 3, 1961 holding that the first Revisional Court had, in fact, remanded the entire matter for trial de novo, after rightly allowing both the amendments.
After the remand, the trial court by its judgment, dated April 25, 1961 held that except 983/10, 983/11 and 983/12, which were new structures there was no change of identity in the rest of the properties 581 i. e. 983/1 to 983/9; that new structures 983/10, 983/11 and 983/12 belonged to Respondent 1 who was consequently, liable to pay rent only for the land underneath; that the cost of repairs of the properties, 983/8 and 983/9 after they had been destroyed by fire, was mainly borne by Respondent 1, the landlord 's contribution being Rs. 8,500/ only.
Applying the principle of apportionment, it fixed the standard rent of the properties 983/1 to 983/12 at Rs. 400/ p.m. subject to permitted increases after 1954.
Regarding the premises 984(in R.A.N.984/54), the trial court gave are turn on the investment of Rs.40,000/ made by the landlord inclusive of the cost of structure and the value of land underneath at Rs. 30/ per sq. yard (as that of 1940) and fixed the standard rent at Rs. 386/ p. m. subject to permitted increases after 1946.
Aggrieved by these orders of the trial court, appellants and Respondent 2 filed two revision applications under section 129 (3) to the Revisional Court of Small Causes which by its judgment, dated September 30, 1964, substantially upheld the findings of the trial court, inter alia with the exceptions : (i) that the ownership of the new structures 983/10, 983/11 and 983/12 vested in Appellant 1, who was entitled to get a fair return on that investment; (ii) that the value of the land "married" to the new structures 983/10, 983/11 and 983/12, and 984/54, should be taken at Rs. 50/ per sq.
yd., i. e. as of 1948 and not as of 1940 as had been done by the trial court on remand.
In the result, the standard rent in R.A.N. 983 was raised to Rs. 981 / and in R.A.N. 984 to Rs.411/ p.m.
To impugn the decision, dated September, 30, 1964, of the Revisional Court, the parties preferred six Special Civil Applications under article 226/227 of the Constitution to the High Court.
By a common order, a learned single Judge of the High Court dismissed these applications except that he corrected some arithmetical errors and, in consequence, fixed the standard rent of properties 983/1 to 983/12 at Rs. 841.07 and that of premises 984/54 at Rs. 462/11 p. m.
It is against this decision dated 12/13th October 1971 of the High Court that these appeals have been filed by special leave.
The first contention of Mr. Cooper, learned Counsel for the appellants is that there is no provision in the Act which requires standard rent to be fixed on apportionment basis; rather, the definition of "premises" in section 5(8) (b) which speaks of "part of a building let separately," read with clause (i) of section 5(10) and clause (c) of section 11 (1) with due emphasis on the article 'the ' immediately preceding the, word 'premises ' in the said clauses, indicates that the standard rent would be the rent for which the suit premises were first let separately on or, after the basic date i.e. September 1, 1940.
If on the basic date proceeds the argument the premises in question did not form the subject of a separate, single ,demise but had been let out together with other portions of larger premises, its standard rent could not be determined on the footing of the rent payable for those different portions.
Reliance 582 has been placed on Dhanrajgirji Naraingirji vs W. G. Ward;(1) and Bata Shoe Co ' Ltd. vs Narayan Das Mullick and Ors.(2) Counsel had further tried to distinguish Capital and Provincial Property Trust Ltd. vs Rice(3) and Bhikaji Ramchandra Paranjpe vs Vishnu Ramchandra Paranjpe(4), referred to in the judgment of the High Court.
On the other hand, Mr. Lokur, learned Counsel for Respondent maintains that the principle of apportionment has always been accepted by the Bombay High Court as an appropriate guide in fixing standard rent under the Act of premises which on the basic date had been let out as part of a larger entity.
It is pointed out that in Narayanlal Bansilal vs Venkatrao Anant Rai(5); a Bench of the High Court while considering the question of standard rent in respect of another portion of the very property of the appellant Mills, had invoked this principle.
Before we deal with the contentions canvassed, it will be proper to make a brief survey of the relevant provisions of the Act: The material part of the definition of "premises" in s.5(8) reads: "Premises" means: (a) any land not being used for agricultural purposes; (b) any building or part of a building let separately.
" (emphasis supplied) Sub section (10) of the same Section defines "standard rent", in relation to any premises, to mean (a) where the standard rent fixed by the court and the Controller respectively under the Bombay ]tent Restrictions Act, 1939 or the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944, such standard rent; or (b) Where the standard rent is not so fixed/subject to the provisions of section 11, (i) the rent at which the premises were let on the first day of September 1940, or (ii) where they were not let on the first day of September 1940, the rent at which they were last let before that day, or (iii) where they were first let after the first day of September 1940, the rent at which they were first let, or (iv) in any of the cases specified in section 11, the rent fixed by the Court; (1) (2) A.I.R. 1953 Cal.
(3) [1952] Appeal Cases 142.
(4) (5) 583 Section 1 1 empowers the Rent Court to fix the standard rent at such amount, as having regard to the provisions of this Act and the circumstances of the case, the court deems just (a) where any premises are first let after the first day of September 1940, and the rent at which they are so let is in the opinion of the Court excessive; or (b) where the Court is satisfied that there is no sufficient evidence to ascertain the rent at which the premises were let in anyone of the cases mentioned in sub clause (i) to (iii) of clause (4) of sub section (10) of section 5; or (c) Where by reason of the premises having been let at one time as a whole or in part and another time in parts or a whole, or for any other reasons, any difficulty arises in giving effect to this part; or (d) Where any premises have been or are let rent free or at a nominal rent or for some consideration in addition to rent; or (e) Where there is any dispute between the land lord and the tenant regarding the amount of standard rent.
" Clause (c) read with the opening part of section 11(1) is crucial for our purpose.
One of the primary objects of the Act is to curb exaction of extortionate rents and to stabilise the same at prewar level.
In achieving that object, however, it avoids a Procrustean or mechanical approach.
While pegging the basic line to September 1, 1940, it significantly subordinates "standard rent" by its very definition in section 5 (10) (b) to the benignant jurisdiction of the Court under s.11.
And the key words of the latter provision, into which the conscience of this anti rack renting statute is compressed, are "the circumstances of the case, the Court deems just".
These words inhibit a rigid and ossified determination of "standard rent".
They leave sufficient "play at the joints", investing the court with a wide discretion in the matter.
According to the scheme of the Act, while "rent" recoverable by the landlord, may owing to permitted increases, fluctuate, the 'standard rent ' always remains fixed or stationary.
If on the basic date, the suit premises were not let out separately but were a part of the subject matter of a larger demise as in the instant case difficulty arises in giving effect to the statute.
Clause (c) of section II (1) then comes into operation.
To resolve the difficulty this clause and the related provisions are not to be construed in a narrow technical sense which would stultify or defeat their object.
It is to be interpreted liberally in a manner which would 'advance the remedy ', 'suppress the 584 mischief, and foil 'subtle inventions and evasions ' of the Act.
Construed in accordance with this socially relevant rule in Hayden 's case the meaning of 'the premises ' having been let at one time as a whole, spoken of in this clause, can legitimately be deemed to cover ' the larger premises which, on the basic date, had been let as a: whole and of which the suit premises was a part let out subsequently.
In any event, the amplitude of the phrase "or any other reason" in the latter part of the clause, is wide enough to embrace cases of this kind and confers a plenary curative power on the Court.
True, that unlike the English Rent Control Act of 1920 or the later English Acts, the (Bombay) Act does not expressly speak of apportionment.
But the language of its relevant provisions construed consistently with the scheme and in built policy of the Act, is elastic enough to permit the fixation of standard rent on apportionment basis.
As noticed already, section II (1) gives a discretion to the Court to fix such amount as standard rent as it "deems just".
However, in exercising this discretion the Court has to pay due regard to (i) the provisions of the.
Act and (ii) the circumstances of the case.
Apportionment or equal distribution of the burden of rent on every portion is a rule of justice and good sense.
If the standard rent of a whole was a specific amount, it stands to reason that the standard rent of a part or sub division of that whole should not ordinarily exceed that amount.
Therefore, if in the circumstances of a given case the Court feels that for securing the ends of justice and giving effect to the provisions and policy of the Act, it is reasonably necessary and feasible to work out the standard rent by apportionment, it can legitimately do so.
This principle, however, is applicable where on the basic date, that portion of which the standard rent is to be determined, had not been let separately as on unit, but the whole, of which it is a part, had been let on that date.
Apportionment postulates that on account of its having been let on the basic date, the whole had acquired a standard rent which has to be allocated to smaller units subsequently carved out of it.
It is thus clear that the principle of apportionment is not alien to the spirit of the Act, and has indeed been often invoked by the courts in fixing standard rent under this Act.
In Narayanlal Bansilal 's case (supra), a Division Bench of the Bombay High Court determined standard rent of another part of this very estate of the Mills in accordance with that principle.
However, while conceding that apportionment is not foreign to the scheme, purpose and policy of the Act, we will like to emphasise the need for caution and circumspection in invoking it.
It is not to be rigidly and indiscriminately applied as a cast iron rule of law regardless of time and circumstances or the equities of the case.
A doctrinaire approach, not consistent with a just and fair determination, stultifies the whole salutary purpose of justice to both, the landlord and the tenant.
If necessary, it can be adjusted, adapted and attuned in the light of the particular circumstances of the case, to satisfy the statutory requirement of 585 fixing the standard rent as at a "just amount.
Thus if after the material date, the landlord has made investments and improvements in the promises, it will be just and reasonable to take that factor also into account and to give him a fair return on such investments.
Further, in appor tioning the rant, the Court must consider other relevant circumstances, such as "size, accessibility, aspect, and other 'Physical advantage enjoyed by the tenant of the premises of which the standard rent is in question, as compared with those of the rent of the property in which it is comprised [see Bainbridge vs Contdon(1)].
Where after the basic date, the premises completely change their identity, apportionment as a method of determining just standard rent, loses its efficacy and may be abandoned altogether.
We have only illustrated, not exhaustively enumerated the relevant circumstances and their implications.
At this stage, we may notice the decisions in Danrajgirji vs W.C. Ward (supra) and Bata Shoe and Co. vs Narayan Dass (supra) relied upon by Mr. Cooper.
In the first, a learned single Judge of the Bombay High Court was considering sections 2(1)(a) and 13(1)(a) of the Bombay Rent (War Restriction Act II of 1918), which were, to an extent, similar to sections 5(8)(b) and (10) and 11(1)(c) of the 1947 Act.
There, the Port Trust had in March 24,1915, leased the building known as Watson 's Annexe to one Dr. Billimoria at a rental of Rs. 2,850, besides ground rent and taxes.
Dr. Billimoria sublet the premises in different flats to different tenants.
The premises in the occupation of the defendant were sublet to him at a rental of Rs. 75/ in September, 1915, i.e. before September 1, 1916 which was the basic date under the 1918 Act.
The tenancy of Dr. Billimoria was terminated by a consent decree on July 31, 1923 and thereafter, the defendant held directly under the plaintiff.
The question arose as to whether standard rental of the flat should be calculated on the basis of the actual rent of Rs. 75/ , on the basis of the subletting or whether it should be determined by apportionment of the rent which Dr. Billimoria was paying to the Port Trust on the basis of the first letting.
Pratt J answered this question thus: "The Rent Act itself in the definition of the premises refers to a part of the building separately let as premises of which the standard rent has to be determined and such standard rent must be determined with reference to those premises in the manner spe cified by s 2(1)(a) of the Act.
The standard rent, therefore, must be ascertained on the admitted basic rent of Rs. 75./. .
Again, if the head lease instead of being as here the lease of one building consisting of flats had been a lease of a large number of buildings constituting a large estate, it would be almost impossible to make a correct apportionment of the rent.
I do not think it was the intention of the Rent Act that landlords and tenants should be driven to do a difficult and expensive process of valuation.
and calculation before their rent could be ascertained.
" (1) M45Sup.
CI/75 586 We see force in the argument as also textual and pragmatic support.
But these considerations do not preclude the Court from importing the flexible factors of fairness suggested by the circumstances of the case.
Indeed, section 11, as explained earlier, obliges the Court to do it.
Moreover, the interpretation of "premises" adopted by the learned judge was a little too literal, narrow and divorced from the purpose and content of the provisions relating to fixation of standard rent.
Nor was it in accord with the scheme and object of the 1918 Act.
The court 's jurisdiction to consider, as a strong circumstance, proper apportionment of rent is not taken away, in our view.
It may be noted that just like the opening clause of section 5 of the 1947Act, which defines "premises" "standard rent" etc., the corresponding section 2(1) of the 1918 Act, also, started with the qualifying words "In this Act, unless there is anything repugnant in the subject or context".
While applying these definitions to particular cases and provisions of the Acts, these words should not be lost sight of.
The argument in favour of adopting the restricted interpretation, ignores this rider to the definitions, provided by the Legislature in these statutes.
We do not intend to over burden this judgment with a discussion the decision in Bata Shoe & Co 's case (supra).
Suffice it to say that is a decision under the West Bengal Premises Rent Control Act (17 of 1950) which stands on its own facts.
It cannot be accepted as laying down a rule of universal application.
It is vulnerable, more or less on the same grounds, on which the decision in Dhanrajgirji 's case can be assailed.
We reject the narrow interpretation of the relevant provisions of Ss. 2 and II, canvassed for by the appellants, for two reasons: Firstly, it will leave the door wide open for evasion of this statute by what Abbot C. J. in Fox vs Bishop of Chester(1) called "shift or contrivance" All that a greedy landlord, need do to squeeze out more rent would be to divide his premises into several parts and let them out separately on exorbitant rents.
Such an evasion may amount to a fraud upon the statute.
Secondly, such a construction so manifestly subversive of one of the primary objects of the Act would be wholly beyond the intendment of the Legislature.
For reasons aforesaid we would negative the first contention of Mr. Cooper, as an inflexible proposition and answer the first part of the question posed in the affirmative to the extent indicated.
it takes us to the second part of that question namely whether the principle of apportionment was correctly applied to the fact, of the case ? Mr. Cooper contends that the first trial court (Samson J.) had rightly found that the premises in question on account of extensive alterations and constructions undergone a complete change after the basic date, and therefore standard rent could not be determined by apporoining the rent of the whole among the parts.
It is maintained that (1) (824) ; at 655.
587 this finding of Samson J. was wrongly set aside by the High Court and must be deemed to be still holding the field.
Objection is also taken to the amendments allowed by the trial court on remand.
In the alternative, it is argued that even the courts below found that properties 983/10, 983/11, 983/12 and 984/54 were admittedly new structures and extensive repairs and replacements had been made in the remaining suit premises which had been destroyed or severely damaged by fire in 1948 49.
On account of these substantial alterations and reconstructions the premises in question had lost their identity and consequently, the principle of appointment was not applicable.
The first part of the contention based on the judgment of Samson J. is groundless.
The judgment of the first trial court was set aside in toto by the Revisional Court, and further by the High Court and the case was remanded for de novo trial to the trial court which thereafter, decided the case afresh after allowing the applicant to amend his R.A. N.S.
It is too late in the day any way to argue on the assumption that the findings still survive.
The question whether a certain property has changed its identity after the basic date is largely one of fact.
The courts below have found that excepting properties 983/10, 983/11,983/12 and 984/54 which were admittedly new structures contracted near about 1948, the rest of the properties, namely 983/1 to 983/9 had not lost their identity.
The courts therefore, worked out the economic rent of these new structures by capitalising their value and gave the landlord a fair return on Ms investments and fixed their standard rent mainly on that basis.
It was with regard to the unchanged old properties 983/1 to 983/9 that the High Court and the Revisional Court mainly adopted the method of appointment.
Even so, it allowed the landlord fair return over Rs. 14,448/ being the cost of flooring, ceiling and other fixtures fixed to property 983/6.
Now it is not disputed that on the basic date (September 1, 1940), these properties in question were parts of a larger entity comprised in a single lease or tenancy in favour of Sound Studios at a monthly rent of Rs. 1700/ .
The courts below have therefore taken into account this basic circumstance along with the other relevant facts of the case.
We do not find anything so wrong or unfair or untenable in the method adopted by them which would warrant an interference by this Court in the exercise of its special jurisdiction under article 136 of the Constitution.
Not that apportionment must be applied in all cases as a rule of law but that, if applied along with other considerations dictated by a sense of justice and fairplay, cannot be condemned by this Court as, illegal.
We therefore, overrule this contention, also.
Lastly, it is contended that the courts below have seriously erred in evaluating the land under the suit properties at Rs. 30/ per sq.
on the basis of an instance (exhibit R 6) of the year 1942, while they should have taken into account the value of the land as in the year 1948.
it is added that some photostat co pies of sale deeds pertaining to the rele vant year were produced by Mr. Deweja, architect examined by the Landlord, and the Revisional Court wrongly rejected them As unproved.
it is maintained that in 1948, the market value of the site underneath the 288 structures was Rs. 120/ per sq.
in support of his contention that the value of the land at the date of the letting is the appropriate value to be taken into account, Counsel has cited Bukmanibai Khunji Cooverji vs Shivnarayan Ram Ashre.
We are unable to accept this contention also.
The courts below in capitalising the structures, 983/10 to 983/12 and 984/54 did take into account the value of the land married to those properties at the rate of Rs. 50/ per sq.
yd; which, according to their estimate, after adding Rs. 30/ per sq.
yd for escalation, would be the market value of that land in the year 1948.
Since the rent of the old unchanged properties 983/1 to 983/9 was fixed mainly on apportionment basis, the courts did not think it necessary to take the value of their sites separately into computation in fixing the standard rent.
Moreover, there was no evidence on the record to show that the value of the land in question, in the year 1948 was Rs. 120/ per sq.
We, therefore, do not think it necessary to examine Cooverji 's case cited by the Counsel.
We however, do not rule out the propriety of paying regard to escalations in land value as put forward by Mr. Cooper, but do hold that this Court will be loath to re investigate factual conclusions not shown to be perverse or manifestly unjust.
Such is not the case here.
For all the foregoing reasons, we would answer the question posed for decision.in the affirmative and dismiss these appeals with one set of costs.
V.P.S. Appeals dismissed (1)(1966)67 Bom.
L.R. 692.

summary:
On September 1, 1940, the basic date under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the properties in dispute were parts of a larger entity comprised in a single lease.
In March 1948, the respondent took a fresh lease of the properties in dispute, Thereafter, the respondent filed applications in the court of Small Causes for fixation of standard rent on the basis of apportionment.
The trial court dismissed the applications holding that the premises, on account of structural alterations, had undergone such a change that they could no longer be identified with the property that existed in September 1940; that the mode of determining the rent by apportionment was not available to the tenant; and that there was no sufficient material for ascertaining the standard ' rent in any other way.
This order was set aside in revision and the case was remanded to the trial court.
After remand, the trial court held that except with respect to three items of the premises in dispute, which were new Structures, there was no change of identity in the rest of the properties; that the new structures belonged to the respondent who was consequently liable to pay rent only for the land underneath; and on that basis, applying the principle of apportionment, fixed the standard rent.
With respect to one item the trial court took into consideration the investment made by the landlord inclusive of the, cost of structures, estimated the value of the land underneath as in 1940, and fixed the standard rent on that basis.
In revision it was held that the ownership of the three new structures also vested in the appellant, that he was entitled to get a fair return on that investment also and that the value of the land should be taken as in 1948 and not in 1940, and the standard rent was fixed on that basis.
Further revisions to the High Court were dismissed with some arithmetical corrections.
In appeal to this Court, HELD : The principle of apportionment is applicable to the fixation of standard rent of the premises in dispute and the principle had been rightly invoked and applied.
[584 F G] (a) One of the primary objects of the Act is to curb exaction of extortionate rent.
Section II (1) empowers the Court to fix the standard rent at such amount, as having regard to the provisions of the Act and the circumstances of the case, the Court deems just, If on the basic date the premises were not let out separately but were a part of the subject matter of a larger demise then section 11(1)(c) comes into operation.
If the standard rent of a whole was a specific amount it stands to reason that the standard rent of a part or sub division of the whole should not ordinarily exceed that amount.
Therefore, if in the circumstances of a given case the court feels that for securing the ends of justice and giving effect to the provisions and policy of the Act it is reasonably necessary and feasible to work out the standard rent by apportionment, it can legitimately do so.
The language of the Act consistently with its scheme and in built policy is elastic enough to permit the fixation of standard rent on apportionment basis.
At the same time, caution and circumspection are necessary in applying the principle to the particular circumstances of a case.
For example, if after the material date, the landlord has made investments and improvements in the premises it will be just and reasonable to take that factor also into account and give him a fair return on such investment.
Similarly, in apportioning the rent, the Court must also consider other relevant circumstances and advantages enjoyed by the tenant of the premises of which the standard rent is in question as compared with the rest 578 of the Property in which it is comprised.
Further,where after the basic date the premises completely changed their identity, apportionment as a method of determining just standard rent loses its efficacy and may be abandoned altogether.[583E 585C] Narayanlal Bansilal vs Venkatrao Anant Rai 67 Bom.
L.R. 352, Bainbridge vs Congdon and Fox vs Bishop of Chester ; at 655 referred to.
Dhanrajgirji Naraingirji vs W. G. Ward (1925) 27, Bom.
L.R. 877 and Bata Shoe & Co. Ltd. vs Narayan Das Mullick and Ors.
not approved.
(b)(1) The findings of the trial court before remand had been set aside in the order of remand, and there is nothing wrong or unfair or untenable in the method adopted by the lower courts after remand which would warrant interference by this Court in exercise of special jurisdiction under article 136 of the Constitution.
[587D G] (ii) The question whether certain property has changed its identity after the basic date is largely one of fact.
The factual conclusions arrived at by the revisional court and High Court are not shown to be perverse or manifestly unjust" It was with regard to the unchanged old properties that the High Court and the Revisional Court mainly adopted the method of apportionment.
Even so, they allowed the landlord a fair return over the amount invested by him towards the cost of flooring, ceiling and other fixtures.
since the rent of the old unchanged premises was fixed mainly on apportionment basis, the courts rightly did not think it necessary to take the value of their sites separately into computation in fixing the standard rent.
[588 B D] (iii) As regards the new structures the courts below, in capitalising their value did take into account the value of the land and took the market value of the land as in the year 1948.
[588B]


judgement:
Appeal No. 1330 of 1973 Appeal by special leave from the Judgment and Order dated the 22nd January, 1973 of the Delhi High Court in I. A. No. 1854 of 1972 in Suit No. 485 (A) of 1972 and Civil Appeals Nos. 1224 & 1225 of 1973.
Appeals by special leave from the Judgment and Order dated the 15th November, 1972 of the Delhi High Court in I. A. Nos. 846 and 119 of 1972 in Suit No. 158 of 1971.
L. N. Sinha, Solicitor General of India Shyamala pappu & section P. Nayar for the appellant (in all the appeals) D. G. Singhania, M. K. Garg and Shiv Khurana for respon dent (in C. A. 1330) D. D. Sharma for respondent (in C.A.s. 1224 1225) The Judgment of the Court was delivered by BHAGWATI, J.
These appeals, raise an interesting question relating to the interpretation of cl. 18 of the General Conditions of Contract contained in the Standard Form of Contract No. D.G.S. & D. 68.
That is the standard form in which contracts are entered into by the Central Purchase Organisation of the Government of India for purchase of stores from third parties described as 'contractors and the question of interpretation which arises for determination is, therefore, one of some importance, affecting as it does a large number of people who enter into such contracts with the Government of India.
The facts giving rise to these appeals follow a common pattern and it would, therefore, be sufficient if we set out the 559 facts relating to civil appeals Nos. 1221 and 1225 of 1973.
They bring out clearly the point which arises for consideration in all the three appeals.
The respondent tendered for supply of certain quantity of foam compound to the appellant and its tender was accepted by the appellant by acceptance of Tender dated 16th July, 1968.
The Acceptance of Tender was subject to the General Conditions of Contract contained in the Standard Form of Contract No. D.G.S. & D. 68.
The only clauses of the General Conditions of Contract which are material for our purpose are cls.18 and 24 and they read as follows: "18. RECOVERY OF SUMS DUE Whenever any claim for the payment of a sum of money arises out of or under the contrat against the contractor, the purchaser shall be entitled to recover such sum by appropriating in whole or in part, the security, if any, deposited by the contractor, and for the purpose aforesaid, shall be entitled to sell and/or realise securities forming the whole or part of any 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 purchaser or the Government or any person contracting through the Secretary, if such sum even be not sufficient to cover the full amount recoverable, the contractor shall on demand pay to the purchaser the balance remaining due.
"24. ARBITRATION In the event of any question, dispute,or difference arising under these conditions or any special conditions of contract, or in connection with this contract, (except as to any matters the decision of which is specialty provided for by these or the special conditions) the same shall be referred to the sole arbitration of an Officer in the Ministry of Law, appointed to be the arbitrator by the Director General of Supplies & Disposals.
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 of his duties as a Government servant he has expressed views on all or any of the matters in dispute or difference.
The award of the arbitrator shall be final and binding on the parties to this contract.
Work under the contract shag, if reasonably possible, continue ' during the arbitration proceedings and no payment due to or payable by the purchaser shall be withheld on account of such proceedings.
560 The performance of this contract ran into difficulties and a dispute arose between the parties giving rise to claims by either party against the other.
The respondent contended that the appellant had committed a breach of the contract and was, therefore, liable to pay to the respondent a sum of Rs. 2,35,800/ by way of damages.
suffered by the respondent by reason of the breach of the contract.
The appellant, on the other hand, said that it was the respondent who had committed the breach, of the contract and was liable to pay to the appellant by way of damages a sum of Rs. 2.28,900/ under clause 14 of the General Conditions of Contract.
The Assistant Director of Supplies by his letter dated 30th March, 1971 called upon the respondent to make payment of the amount of Rs. 2,28,900/and intimated that if the respondent failed to do so on or before 30th April, 1971, the Pay and Accounts Officer, New Delhi/Madras would be authorised to recover the, same from the pending bills of the respondent in respect of other contracts.
This dispute between the parties being a dispute arising out of the contract was liable to be settled by arbitration under cl. 24 of the General Conditions of Contract and the respondent, therefore, filed an application in the Delhi High Court under section 20 of the Indian for filing the Arbitration Agreement contained in that clause.
The respondent also, at the same time, made an application to the Delhi High Court for an interim injunction restraining the appellant from recovering the amount of damages claimed by it from the pending bills of the respondent.
This application was, however, rejected by the Delhi High Court on the ground that it was not shown that there were any pending bills of the respondent at that time out of which the threatened recovery could be made by the appellant.
The application under section 20 of the Indian was thereafter heard by the Delhi High Court and by an order dated 5th May, 1972 the Delhi High Court allowed that application and ordered the arbitration agreement contained in cl. 24 to be filed and made an order of reference to arbitration in accordance with the arbitration agreement.
The claim of the respondent against the appellant for Rs. 2,35,800/ and the counter claim of the appellant against the respondent for Rs. 2,28,900/ thus became the subject matter of reference tO arbitration.
During the pendency of the arbitration some amounts became due and payable by the appellant to the respondent in respect of other contracts entered into between the parties.
In view of the letter dated 30th March, 1971 the respondent apprehended that the appellant would appropriate these amounts towards recovery of the amounts of damages claimed by it even though the claim for damages was disputed by the respondent and was pending adjudication before the arbitrator.
The respondent, therefore, made interim Application No. 119 of 1972 to the Delhi High Court on 17th January, 1972 under section 41 read with the Second Schedule to the Indian praying that the status quo should be maintained and the appellant should be restrained from recovering its claim for damages from the amounts due and payable by the appellant to the respondent in respect of the pending bills.
How it appears that this Interim Application No. 119 of 1972 was made in the Original Application under section 20 of the Indian , 561 1940 and the appellant, therefore, raised a technical objection that the Original Application under section 20 having been disposed of, Interim Application No. 119 of 1972, as filed, could not be maintained.
The respondent, in view of this technical objection raised on behalf of the appellant, filed another Interim Application No. 746 of 1972 as an independent application under section 41 read with the Second Schedule to the Indian on 16th May, 1972 praying for the same interim relief as was claimed in the earlier Interim Application No. 119 of 1972.
Both these interim applications were resisted by the appellant relying on cl. 18 of the General Conditions of Contract but Mr. Justice Avadh Bihari of the Delhi High Court, who heard these interim application, took the view that cl. 18 did not authorise the appellant to appropriate.
the amounts of any pending bills of the respondent towards satisfaction of its claim for damages against the respondent, unless such claim for damages was either admitted by the respondent or adjudicated upon by arbitration or suit in civil court.
The learned Judge accordingly by an order dated 15th November, 1972 allowed both the interim applications and issued an interim injunction restraining the appellant "from effecting recovery of the amounts claimed to be due from the other pending bills" of the respondent.
The appellant thereupon, with certificates obtained from the Delhi High Court, preferred Civil Appeals Nos. 1224 and 1225 of 1973 in this Court.
One appeal was directed against ' the impugned order in so far it related to Interim Application No. 119 of 1972 and the other in so far as it related to Interim Application No. 846 of 1972.
The appellant also preferred Civil Appeal No. 1330 of 1973 against a similar order passed by the learned Judge in Interim Application No. 854 of 1972 in the other case.
There are in the main two grounds on which the learned Solicitor General, appearing on behalf of the appellant, challenged the order of Interim injunction made by Mr. Justice Avadh Bihari A.The impugned order amounted in effect and substance to an order directing the appellant to pay the amounts of the pending bills of the respondent: in respect of the other contracts and since the question of payment of the amounts of such pending bills did not form the subject matter of the reference which was pending before the arbitrator.
, the learned Judge had no jurisdiction under section 41 read with the Second Schedule to make such an order and the impugned order was, therefore, outside the scope of his power and hence invalid.
, B.Clause 18 comes into play when there is a claim for payment of a sum of money arising out of or under the contract.
It is not necessary that the sum of money must be due and payable to the purchaser.
It is enough if there is a claim even for damages.
Whenever, there is such claim, the purchaser is given a right under cl. 18 to recover it by appropriating "any sum then due or which at any time thereafter 562 may become due to the contractor under the contract" or under any other contract.
The appellant was, therefore, en titled to recover the amount of its claim for damages against the respondent by appropriating the sums which subsequently became due to the respondent under other contracts, even though the claim for damages was contested by the respondent and was pending adjudication before the arbitrator.
No interim injunction could be granted to prevent the exercise of such right.
If interim injunction were to be granted in a case of this kind as of course merely on the ground, without anything more, that the claim for damages is pending adjudication and until it is determined in favour of the purchaser, ' it should not be allowed to be recovered by the purchaser out of other sums due to the contractor, it would render cl.
18 meaningless and ineffectual and the tight to the purchaser under that clause would become illusory.
of course, it would be open to the court even in such a case to grant interim injunction, if it is satisfied that the claim for damages is prima facie not well founded and the balance of convenience requires that, Pending adjudication, the purchaser should be restrained from effecting recovery of the claim for damages from out of other sums due to the contractor.
But here admittedly neither of these two factors was taken into consideration by the learned Judges and the order of interim injunction made by ' him cannot, therefore, be sustained.
We shall proceed to examine these grounds in the order in which we have set them out.
Re: Ground A.
It was common ground between the parties that the order of interim injunction was made by the learned Judge under section 41 (b) read with the Second Schedule to the Indian .
Now section 41(b) says that the court shall have, for the purpose of and in relation to arbitration proceedings, 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 proceedings before the Court and one of the matters set out in the Second Schedule is "interim injunction".
The Court has, therefore, power under s.41 (b) read with the 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 proceedings in the present case were for determination of the mutual claims of the appellant and the respondent arising out of the contract contained in the acceptance of Tender dated 16th July, 1968.
The question whether any amounts were payable by the appellant to the respondent under other contracts was not the subject matter of the arbitration proceedings.
The Court obviously could not, there fore, make an 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.
Such an interim order would clearly not be for the purpose of or in relation to the arbitration proceedings as required by 563 section 41 (b).
But here the order of interim injunction made by the learned judge does not, expressly or by necessary 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 injunction.
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 to the respondent.
It does 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 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 only thing which the appellant,is interdicted from doing is to make recovery of its claim for damages by appropriating such amounts in satisfaction of the claim. 'That is clearly Within the power of the Court under section 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 the learned Judge cannot, therefore, be said to be outside the scope of his power under section 41 (b) read with the Second Schedule Re: Ground B.
That takes us to the second ground of challenge against the order of interim injunction.
This ground of challenge is based on the proper interpretation of cl. 18.
The argument of the appellant was that what is required for attracting the applicability of cl. 18 is a mere claim for payment of a sum of 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.
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 claim may not be for a sum due and payable but pay be for damages and it may be disputed by the contractor and may not have been adjudicated upon in a court of law or by arbitration.
The purchaser can in such a case recover the amount of his claim, without resort to a court of law or arbitration, by appropriating sums due to the contractor under the same contract or under other contracts, if the claim of the purchaser is not well founded and the appropriation made by him is, therefore, unjustified, the contractor can always institute a suit or arbitration for recovering the sums due to him which have been wrongly appropriated by the purchaser and in such suit or arbitration,the court or the arbitrator, as the case may be, would examine theclaim against which appropriation has been made bypurchaser and if the claim is found to be unsustainable, set at naught the appropriation and pass a decree or award for the sums due to the contractor.
But the court cannot and should not restrain the purchaserfrom exercising 564 his right of appropriation merely because the claim against which appropriation is sought to be made by the purchaser is disputed by the contractor and is pending adjudication before a court of law or arbitrator.
The court should not prevent the normal operation of cl. 18 by interfering with it, unless it appears to the court prima facie that the claim which is sought to be recovered by appropriation is not well founded and the balance of convenience lies in favour of restraining the purchaser from recovering it by appropriation.
The respondent, however, disputed the validity of this construction placed on cl. 18 by the appellant and contended 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 amplitude sufficient to cover even a claim for damages arising out 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 sum 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 damages is adjudicated upon by a civil court or an arbitrator and the breach of the contract is established and the amount of damages ascertained and decreed that a debt due and payable comes into existence; till then it is nothing more than a mere right to sue for damages and it does not fall within the words of cl. 18.
Moreover, cl. 18 merely provides a mode of recovery and it can have no application where a claim, even though it be for a sum due and payable, is dis puted by the contractor and has to be established in a court of law or by arbitration: cl.18 applies only where a claim is either admitted,or in case of dispute, substantiated by resort to the judicial process.
Therefore, when the 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 adjudicated upon and culminates in a decree.
The appellant in the present case had consequently no right under cl. 18 to appropriate sums due to the respondent under other contracts in satisfaction of its claim for damages against the respondent, when the claim for damages was pending adjudication before the arbitrator and the learned Judge was right in restraining the appellant from doing so by issuing an interim injunction.
These were broadly the contentions of the parties under this head of challenge and the question is which of these rival contentions is correct.
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 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 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 565 lie in a word or expression.
The exact colour and shape of the meaning of any word or expression should not be ascertained 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 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 of the parties is to be gathered not from one part of the 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 a court of law or by arbitration or they also include a claim for damages which is disputed by the contractor.
The first thing that strikes one on looking at cl. 18 is its heading which reads: "Recovery of Sums Due".
It is true that a heading cannot control the interpretation of a clause if its meaning is other wise plain and unambiguous, but it can certainly be referred to as indicating the general drift of the clauses and affording a key to a better understanding of its meaning.
The heading of cl. 18 clearly suggests that this clause is intended to deal with the subject of recovery of sum due.
Now a sum would be due to the purchaser when there is an existing obligation to pay it in present.
It would be profitable in, this connection to refer to the concept of a 'debt ', for a sum due is the same thing as a debt due.
The classical definition of 'debt ' is to be found in Webb vs Stenton (1) where Lindley, L. J., said : "a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation".
There must be debitum in praesenti; solvendum maybe in praesenti or in future that is immaterial.
There must be an existing obligation to pay a sum, of money now or in future.
The following passage from the judgment of the Supreme Court of California in People vs Arguello (2) which, was approved by this Court in Kesoram Industries vs Commissione of Wealth Tax (3) clearly brings out the essential characteristics of a debt "Standing alone, the word 'debt, ' is as applicable to a sum of money which has been promised at a future day as to a sum now due and payable.
If we wish to distinguish between the two, we say of the former that it is a debt 'owing, and of the latter that it is debt due.
" This passage indicates, that when there is an obligation to pay a sum of money at a future date, it is a debt owing but when the obligation, is to pay a sum of money in praesenti, it is a debt due.
A sum due would, therefore, mean a sum for which there is an existing obligation to pay in praesenti or in other words, which is presently payable. (2) [1869] 37 Calif. 524 (1) (3) ; 566 Recovery of such sums is the subject matter of cl. 18 according to the heading.
That is the dominant idea running through the entire cl.18.
The language used in the body of cl. 18 also supports the view that it is with recovery of sums presently due and payable by the ,contractor to the purchaser that this clause deals.
It may be noted that cl. 18 does not lay down the substantive rights and obligations of the parties under the contract.
It is merely intended to provide a mode of recovery of ' a claim for payment of a sum of money arising out of or under the contract".
It, therefore, postulates a claim for a sum which is due and payable, that is.
presently recoverable and may be recovered by the mode therein provided.
it is difficult to believe that the contracting parties could have intended that even though a sum is not due and payable by the contractor to the purchaser under the contract, the purchaser should be entitled to recover it by adopting ,the mode set out in cl. 18.
It is important to note that cl. 18 does not create a lien on other sums due to the contractor or give to the purchaser a right to retain such sums until his claim against the contractor is satisfied.
If merely a right of lien or retention were given to secure payment of a claim, then even if the claim were for a sum not presently due and payable, the provision perhaps would not have been so startling ,or unusual.
But here the right given to the purchaser under.
18 is a right to recover the amount of his claim by appropriating other sums due to the contractor and, on the, interpretation of the appellant, this can be done even if the claim is for a sum which is not due or payable in praesenti and the purchaser is otherwise not entitled to recover it.
That would indeed be a highly extra ordinary result which we would be loathe to reach in the absence of clear and compelling language.
This interpretation, if accepted, would mean that as soon as a claim is made by the purchaser, it would immediately become recoverable and the purchaser would be entitled to sell off the securities of the contractor and appropriate the sale proceeds in or towards satisfaction of such claim and in case that is insufficient, recover the balance by appropriating other sums due to the contractor and if there is even then a shortfall, recover it personally from the contractor, for the last words of cl. 18 provide that "the contractor shall on demand pay to the purchaser the balance remaining due".
And this consequence would ensue even if the claim is for a sum which the contractor is under no existing obligation to pay or which is not presently payable or is disputed as regards the existence of liability or its quantum.
A mere making of a claim by the purchaser would impose a liability on the contractor to pay it.
That surely could not have been the intention of the contracting parties.
It would be more consonant with reason and good sense to take the view, which, as pointed out above, is plainly and indubitably supported by the language used by the contracting parties, that cl.
Is does no more than merely provide an additional mode of recovery to the purchaser, and the purchaser is entitled to exercise the right conferred, under that clause only where there is a claim for a sum which is presently due and payable by the contractor.
This view, indeed, becomes irresistible 567 when we consider the last words of cl. 18, namely, "the contractor shall on demand pa to the purchaser the balance remaining due", which clearly postulate that the reference in the clause is to a sum presently due and payable by the contractor to the purchaser, so that, if any balance remains unrecovered after adopting the special mode of recovery provided in the clause, such balance must be paid by the contractor to the purchaser on demand.
The appellant laid great emphasis on the use of the word 'claim ' in the opening part of cl. 18 and contended that the Standard Form of Contract which was in use prior to the adoption of the present Standard Form of Contract, cl. 14, and which corresponded to the present cl. 18, opened with the words " 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 present Standard Form was introduced and instead, the words "whenever any claim for the payment of sum of money arises. " were substituted and this change in phraseology indicated that in order to attract the applicability of the present cl.18 it was not necessary that there should be a sum 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 by the contractor, irrespective of whether such sum of money was presently due and payable or not.
This contention is, in our opinion wholly untenable.
We do not think it is legitimate to construe cl. 18 of the contract between the parties by reference to a corresponding clause which prevailed in an earlier Standard Form of Contract.
This is not a statute enacted by the 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, any reference to a similar or dissimilar clause in another contract would be irrelevant.
The only question before us is, what does cl.18 mean and that depends on the plain interpretation of its language in the context in which it occurs.
Moreover, on a question of construction of cl. 18, mere use of the word "claim" cannot be a decisive factor.
18 has to be read as a whole, each part throwing light on the other, without any undue emphasis on one word or the other.
We cannot allow our interpretation of cl. 18 to be hijacked from its true course by the use of a solitary word such as "claim", but we must arrive at the true meaning of the clause by construing it in all its parts and in its proper contextual setting.
So viewed, it is clear that cl. 18 applies only where the purchaser has a claim for a sum presently due and payable by the contractor.
Having discussed the proper interpretation of cl. 18, we may now turn to consider what is the real nature of the claim for recovery of which the appellant is seeking to appropriate the sums due to the respondent under other contracts: The claim is admittedly one for damages for breach of the contract between the parties.
Now, it is true that the damages which are claimed are liquidated damages under cl. 14, 568 but so far as the law in India is concerned, there is no qualitative difference in the nature of the claim whether it be for liquidated damages or for unliquidated damages.
74 of the Indian Contract Act eliminates the some what elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages 'and stipulations in the nature of penalty.
Under the common law a genuine preestimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties a stipulation in a contract in terrors is a penalty and the Court refuses to enforce it, awarding to aggrieved party only reasonable compensation.
The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty, and according to this principle, even if there is a stipulation by way of liquidated damages, a party complaining of breach of contract can recover only reasonable compensation for the injury sustained by him, the stipulated amount being merely the outside limit.
It, therefore makes no difference in the present case that the claim of the appellant is for liquidated damages.
It stands on the same footing as a claim for unliquidated damages.
Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority.
When there is a breach of contract, the party who commits the breach does not eo instanti incur any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party.
The only right which the party aggrieved by the breach of the contract has is the right to sue for damages.
That is not in actionable claim and this position is made amply clear by the amendment in section 6(e) of the Transfer of Property Act, which provides that a mere right to sue for damages cannot be transferred.
This has always been the law in England and as far back as 1858 we, find it stated by Wightman, J., in Jones vs Thompson (1) "Exparte Charles and several other cases decide that the amount of a verdict in an action for unliquidated damages is not a debt till judgment has been signed".
It was held in this case that a claim for damages dots not become a debt even after the jury has returned a verdict in favour of the plaintiff till the judgment is actually delivered.
So also in O ' Driscoll vs Manchester Insurance Committee,(2) Swinfen Eady, L. J., said in reference to cases where the claim was for unliquidated damages "in such cases there is no debt at all until the verdict of the jury is pronounced assessing the damages and judgment is given.
The same view has also been taken consistently by different High Courts in India.
We may mention only a few of the decisions, namely, Jabed Sheikh vs Taher Mallik,(3) section Malkha Singh vs M/s N. K. Gopala Krishna Mudaliar(4) and Iron & Hardware (India) Co. vs Firm Shamlal & Bros.(5) (1) (3) 45 Cal.Weekly Notes, 519.(2) (4) (5) 569 Chagla, C. J. in the last mentioned case, stated the law in these terms: " In my opinion it would not be true to say that a person who commits a breach of the contract incurs any pecuniary liability, nor would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party.
As already stated, the only right which he has is the right to go to a Court of law and recover damages.
Now, damages are the compensation which a Court of law gives to a party for the injury which he has sustained.
But, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach.
He gets compensation as a result of the fiat of the Court.
Therefore, no pecuniary liability arises till the Court has determined that the party complaining of the breach is entitled to damages.
Therefore, when damages are assessed, it would not be true to say that what the Court is doing is ascertaining a pecuniary liability which already existed.
The Court in the first place must decide that the defendant is liable and then it proceeds to assess what that liability is.
But till that determination there is no liability at all upon the defendant.
" This statement in our view represents the correct legal position and has our full concurrence.
A claim for damages for breach of contract is, therefore, not a claim for a sum presently due and payable and the purchaser is not entitled, in exercise of the right conferred upon it under cl. 18, to recover the amount of such claim by appropriating other sums due to the contractor.
On this view, it is not necessary for us to consider the other contention raised on behalf of the respondent, namely, that on a proper construction of cl. 18, the purchaser is entitled to exercise the right conferred under that clause only where the claim for payment of a sum of money is either admitted by the contractor, or in case of dispute, adjudicated upon by a court or other adjudicatory authority.
We must, therefore, hold that the appellant had no right or authority under cl. 18 to appropriate the amounts of other pending bills of the respondent in or towards satisfaction of its claim for damages against the respondent and the learned Judge was justified in issuing an interim Injunction restraining the appellant from doing so.
We accordingly dismiss the appeals.
The appellant in each appeal will pay the costs of the respondent all throughout, V.P.S. Appeals dismissed.

dataset_name: IN-Abs

summary:
A dispute arose regarding the performance of a contract between the appellant and respondent, each party contending that the other had committed a breach of the contract and claiming large sums of money by way of damages.
The appel lant 's claim was for damages stipulated under cl. 14 of the contract.
The respondent was called upon to pay the amount claimed and was also informed that on failure to make the payment the appropriate officer would be authorised to recover the amount from the pending bills of the respondent in respect of other contracts under cl. 18 of the Contract.
The respondent thereupon moved the High Court under section 20 of the , and the claim and counter claim were referred to arbitration.
During the pendency of the arbitration some amounts became due and payable by the appellant to the respondent in respect of other contracts between them.
The respondent applied to the High Court for an injunction restraining the appellant from recovering its claim for damages from the amounts which had fallen due and the High Court granted the injunction holding that cl. 18 did not authorise the appellant to appropriate the amounts of any pending bills of the respondent towards satisfaction of its claim for damages against the respondent unless such claim was either admitted by the respondent or adjudicated upon by the arbitrator or the Court.
Dismissing the appeal to this Court, HELD : (1) The order of interim injunction cannot be said to be outside the scope of the High Court 's power under section 41 (b) of the .
[563D E] (a) Section 41 (b) says that the Court shall have, for the purpose of and in relation to arbitration proceedings, 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 proceedings before the Court and one of the matters set out in the second Schedule is 'interim injunction. ' The, Court has therefore power to issue interim injunction.
But such interim injunction can only be for the purpose of and in relation to arbitration proceedings.
The Court could not therefore make an 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.
[562F 563A] (b) However, in the present case, the order of interim injunction ' does not expressly or by necessary implication direct the appellant to pay amounts due to the respondent under other contracts.
The a appellant can still refuse to pay such amounts if it thinks it has a valid defence and the only remedy open to the respondent then would be to take measures in an appropriate forum.
No breach of the interim injunction as such would be involved in non payment of such amounts by the appellant to the respondent.
The only thing which the appellant is interdicted from doing is to satisfy its claim for damages by appropriating such amounts.
Such an order would be within the power of the court under section 41 (b), because the claim for damages forms the subject matter of arbitration proceedings.
[563A D] (2) The appellant had no right or authority under cl. 18 to appropriate the amounts of other pending bills of the respondent, 'in or towards satisfaction of its claim for damages against the respondent, and so, the High Court has justified in issuing the interim injunction .
[569G] 557 (a) Though the words"where any claim for the payment of a sum of money arises" occurring in the opening part of cl. 18 are words of great amplitude, covering even a claim for damages, 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 intended to be attained.
The context and collection of a particular expression may show that it was not intended to be used in the sense which it ordinarily bears.
The words must therefore be read not in isolation but in the context of the whole clause.
[564G 565B] (b) The heading of the clause reads "Recovery of sums due".
The heading cannot control the interpretation of a clause if its meaning is otherwise plain and unambiguous, but it can be referred to as indicating the general drift of the clause and affording a key to a better understanding of the meaning.
When there is an obligation to pay a sum of money at a future date it is a debt owing, but when the obligation is to pay a sum of money in present, it is a debt due.
A sum due would therefore mean a sum for which there is an existing obligation to pay in present or in other words which is presently payable.
[565 C D, G H] (c) The language used in the body of the clause also supports the view that it is with recovery of sums presently due and payable by the respondent that this clause deals.
The clause is merely intended to provide a mode of a claim for payment of a sum of money arising out of or under the contract. ' It therefore postulates a claim for a sum which is due and payable, that is, presently recoverable and it may be recovered by the mode therein provided.
It is difficult to believe that the contracting parties could have intended that even though a, sum is not due and payable by the respondent, the appellant should be entitled to recover it by adopting the mode set out in the clause.
Such an interpretation would mean that as soon as a claim is made by the appellant, it would immediately become recoverable and the appellant, under the clause, would be entitled to sell of the securities of the respondent and appropriate the sale proceeds in or towards satisfaction of such claim, and in case that is insufficient, to recover the balance by appropriating other sums due to the respondent, and if there is even then a shortfall, to recover it personally from the respondent.
And this consequence would ensue even if the claim is for a sum which the respondent is under no existing obligation to pay or which is not presently payable or, is disputed as regards liability or quantum.
It would be more consonant with reason and good sense to take the view, which is supported by the language of the clause that it does no more than merely provide an additional mode of recovery.
to the appellant and that the appellant is entitled to exercise the right conferred under it only where there is a claim for a sum which is presently due and payable by the respondent.
The last words of the clause namely, "the contractor shall on demand pay to the purchaser the balance remaining due", clearly postulate that the reference in the clause is to a sum presently due and payable by the respondent to the appellant.
[566B 567B] (d) It is not legitimate to construe the clause by reference to a corresponding clause which prevailed in the earlier standard form of contract where the words were whenever under the contract any sum of money is recoverable '.
This is not a statute enacted by the 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 was intended to convey a different meaning ' This is a clause in a contract and in construing it any reference to a similar or dissimilar clause in another contract would be irrelevant.
Moreover, on a question of construction of the clause the mere use of word 'claim ' cannot be a decisive factor.
The clause has to be read as a whole, and so read, it applies.only where the appellant has a claim for a sum presently due and payable by the respondent.
[567B G] (e) In the present case, the claim is for damages for breach of the contract.
The damages claimed are liquidated damages under cl. 14 of the Contract; but under Indian law there is no difference in the nature of the claim whether it be for liquidated damages or for unliquidated damages.
Even if there is a stipulation for liquidated damages a party complaining of breach of contract can recover 558 only reasonable compensation for the injury sustained by him, the stipulated amount being merely the outside limit.
The claim in the present case therefore stands on the same footing as a claim for unliquidated damages.
A claim for unliquidated damages does not give rise to a debt until the liability is adjudicated upon and damages assessed by an adjudicatory authority.
When there is a breach of contract, the party who commits the breach does not eo instanti incur any pecuniary obligation nor does the party complaining of the breach become entitled to a debt due from the other party.
The only right which the party aggrieved by the breach has is the right to sue for damages and this is not an actionable claim.
A claim for damages for breach of contract is therefore not a claim for a sum presently due and payable and the appellant is not entitled, in exercise of the right conferred upon it under cl. 18, to recover the amount of such claim by appropriating other sums due to the respondent.
[567H 569G] Kesoram Industries vs Commissioner of Wealth Tax ; followed.
Jones vs Thompson , Jabed Sheikh vs Taher Malik 45 Cal.
Weekly Notes, 519 and section Malkha Singh vs M/s. N. K. Gopala, Krishna Mudaliar 1956 A.I.R. Pun.
174, referred to.
Iron & Hardware (India) Co. vs Firm Shamlal & Bros. approved.