/2022 INSC 0992/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 8572­8573/2022
ARISING OUT OF SLP (C) NOS. 16009­16010 OF 2019
FOOD CORPORATION OF INDIA & ORS.            ....APPELLANT(S)
VERSUS
ABHIJIT PAUL        …RESPONDENT(S)
WITH
CIVIL APPEAL NOS.8574­8579/2022
ARISING OUT OF SLP (C) NOS. 16063­16068 OF 2019
WITH
CIVIL APPEAL NOS.8580­8581/2022
ARISING OUT OF SLP (C) NOS. 4045­4046 OF 2021
J U D G M E N T
PAMIDIGHANTAM SRI NARASIMHA, J. 
1. Leave granted.
2. Food Corporation of India 1
, the Appellant herein, procures and
distributes foodgrains across the length and breadth of the country
as a part of its statutory duties. In the process, it enters into many
contracts   with   transport   contractors.   In   one   such   contract,   the
1  hereinafter referred to as ‘Corporation’.
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subject matter of present appeals, the Corporation empowered itself
(under clause XII ( a)) to recover  damages, losses,  charges , costs and
other expenses suffered due to the contractors’ negligence from the
sums payable to them. The short question arising for consideration
is   whether   the   demurrages   imposed   on   the   Corporation   by   the
Railways   can   be,   in   turn,   recovered   by   the   Corporation   from   the
contractors   as   “charges”   recoverable   under   clause   XII   (a)   of   the
contract. In other  words, does contractors’ liability  for  “charges”, if
any, include demurrages? 
3. The Single Judge and the Division Bench of the High Court of
Tripura have held that demurrages cannot be recovered as a charge
by   the   Corporation.   After   examining   the   contract   in   its   entirety,
including its nature and scope, we conclude that the parties did not
intend   to   include   liability   on   account   of   demurrages   as   part   and
parcel of the expression “charges”. The liability of the contractors in
the present contracts is clearly distinguishable from  other contracts
entered into by the FCI in 2010 and 2018, having a different scope
and   objective.   Because   of   our   conclusions,   we   have   upheld   the
judgments of the High Court and dismissed the appeals filed by the
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Corporation.   Before   considering   the   submissions,   analysis   and   the
conclusions,   we   will   refer   to   the   necessary   facts   and   contractual
provisions. 
4. There are three appeals. In the first set of appeals arising out
of   Special   Leave   Petition   Nos.   16009­16010   of   2019,   the
Corporation   notified   a   Tender   inviting   a   bid   from   road   transport
contractors   for   transporting   foodgrains   from   railway   siding,
Churaibari   in   Assam,   to   Food   Security   Depot   Chandrapur   in
Tripura,   on   a   regular   basis   for   a   period   of   two   years.   The
Respondent   –   Mr.   Abhijit   Paul,   was   selected   as   the   successful
tenderer 2
. He deposited an amount of Rs. 44,95,000/­ towards the
security   deposit,   leading   to   the   execution   of   the   contract 3
.   The
Corporation   awarded  several   such   Work   Orders   to   the  Respondent
and   also   to   other   contractors   for   transportation   of   foodgrains
between its multiple Food Security Depots.
5. The   contract   was   discharged   by   performance   by   July   2014.
More   than   a   year   thereafter,   by   a   letter   dated   22.12.2015   followed
by   a   Notice   dated   29.11.2016,   the   Corporation   called   upon   the
2  hereinafter referred to as ‘contractor’.
3  Contract No. Cont.9/NEFR/TC/CBZ­CDR/2011 dated 25.04.2012, hereinafter referred to as
‘Work Order’ or the ‘contract’.
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contractor to reimburse the amount of demurrages imposed on it by
the Railways. As this demand was bereft of any reason and rightly
objected   to,   it   was   followed   by   another   letter   dated   27.06.2017   by
the Corporation. In this letter, the Corporation explained that it had
incurred   heavy   losses   on   account   of   demurrages   due   to   the
contractor’s   inability   to   readily   provide   trucks   at   railway   sidings,
inhibiting   the   Corporation   from   unloading   foodgrains   from   railway
wagons   within   the   “free   time”   specified   by   the   Railways.   The
Corporation   sought   to   recover   the   demurrages   from   the   contractor
by withholding the security deposit tendered under the Work Order.
6. The   contractor   objected   to   this   unilateral   action,   contending
that   there   was   no   power   to   recover   demurrages   under   the   Work
Order. Being unsuccessful in pursuing the Corporation to withdraw
the letters, demand and the unilateral action, the contractor filed a
writ   petition 4
  before   the   High   Court   of   Tripura   for   quashing   the
illegal and arbitrary action.  
7. This   writ   petition   was   allowed   by   the   Single   Judge   of   High
Court. It clarified that the  Corporation  was only  entitled to  recover
4  WP No. 1351 of 2016.
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losses   that   were   incurred   due   to   the   contractor’s   dereliction   of
duties   under   the   contract,   as   permissible   under   Section   73   of   the
Indian   Contract   Act   1872,   which   provides   for   recovery   of   damages
for  the breach  of a contract. This would  not permit the recovery  of
losses   that   were   causally   distant   from   the   contractor’s   actions.
Further,   it   held   that   the   Corporation   had   unilaterally   determined
and imposed demurrages on the contractor, and directed it to settle
its   claims  through  a   civil  suit  of   recovery.     The  Corporation  filed  a
writ appeal 5
  and the Division Bench of the High Court by  its order
dated   07.09.2018   dismissed   the   same   on   the   ground   of   delay.   A
Review Petition 6
  filed by the Corporation was also dismissed by the
Division   Bench   of   the   High   Court   on   22.01.2019.   The   present
appeals   are   against  the   orders   in   the   writ   appeal  as   well   as   in   the
review.
8. The   second   set   of   civil   appeals   are   also   filed   by   the
Corporation.   It   arises   out   of   Special   Leave   Petition   Nos.   16063­
16068 of 2019 and it impugns the decision of the Division Bench of
the   High   Court   of   Tripura   dated   15.05.2019.   Therein,   the   High
5  Writ Appeal No. 56 of 2018.
6  Review Petition No. 02 of 2019.
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Court   similarly   dismissed   the   writ   appeals   on   the   ground   that   the
Corporation   had   no   power   to   recover   demurrages   from   contractors
under the clauses of the contract therein.  
9. The   third   set   of   civil   appeals,   arising   out   of   Special   Leave
Petition Nos. 4045­4046 of 2021, are filed by the contractors. They
have challenged the orders of the Division Bench of the High Court
of Tripura dismissing their writ appeals 7
 and upholding the decision
of   the   Single   Judge   of   the   High   Court   dated   25.11.2019,   directing
the contractors to avail alternative remedies. 
10. Submission of Parties : Shri Neeraj Kishan Kaul , learned Senior
Counsel   appearing   on   behalf   of   the   Appellant   started   his
submissions   preempting   a   preliminary   objection   about   the
dismissal of a Special Leave Petition against an adverse order of the
High  Court  on  the  same  issue 8
, and   relatedly, about   not  appealing
another   adverse   decision   of   the   High   Court   of   Tripura   on   identical
issues 9
.   Relying   on   State   of   Maharashtra   v.   Digambar 10
,   he
submitted   that   the   dismissal   of   a   Special   Leave   Petition   at   the
7  Writ Appeals Nos. 186 of 2020 dated 04.01.2021 and 187 of 2020 dated 18.01.2021.
8   SLP No 3391 of 2018, dismissed  in limine  on 26.03.2018.
9  Writ Appeal Nos. 25­27 of 2016 (Tripura High Court)
10  (1995) 4 SCC 683.
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admission   stage   did   not   operate   as   res   judicata.   H e   also   explained
that   the   Corporation   refrained   from   appealing   against   the
aforementioned   judgment   of   the   High   Court   because   the   amount
recoverable   therein   was   low.   Moreover,   in   those   cases,   the
Corporation   had   already   issued   No   Dues   Certificates   to   the
contractors.  
11. Before proceeding any further, we make it clear here itself that
we   do   not   propose   to   dismiss   the   Corporation’s   appeals   on
preliminary   objections.   We   will   therefore   consider   Shri   Kaul’s
submission on the merits of the case. 
12. Referring to and relying on the contractual clauses, Shri Kaul
submitted   that   the   expression   “charges”   in   clause   XII   (a)   of   the
Work   Order   clearly   includes   demurrages,   and   the   Corporation   is
empowered   to   recover   the   same.   He   relied   on   the   decision   of   this
Court   in   Raichand   Amulakh   Shah   and   Anr.   v.   Union   of   India 11
  and
Trustees of the Port of Madras   v.   Aminchand Pyarelal & Ors 12
  to say
that   demurrages   constitute   a   charge .   He   also   submitted   that   the
11  (1964) 5 SCR 148.
12  (1976) 3 SCC 167.
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Handbook used by Corporation 13
  would demonstrate that “charges”
certainly include “demurrage”. 
13. Supplementing   the   above   submissions,   Shri   Ajit   Puduserry,
AOR   submitted   that   in   the   construction   of   contractual   terms,   the
interpretation proposed by the author of the tender document must
be   relied   on.   He   referred   to   Agmatel   India   Pvt   Ltd   v.   Resoursys
Telecom   &   Ors 14
  for   this   purpose.   He   further   submitted   that   the
action   of   the   Corporation   is   unexceptionable   as   it   merely   followed
the   directions   of   the   High   Court   in   an   earlier   round   of   litigation
where  the  court  directed  it  to  issue  notice  before  taking   a  decision
on   the   contractors’   liability.   It   is   his   contention   that   notices   were
accordingly   issued   before   recoveries   were   made.   Appearing   on
behalf   of   the   Corporation   in   the   third   appeal,   Shri   Abhay   Kumar,
AOR, supported the arguments of the Appellant Corporation on the
same grounds.
14. Shri   Sanjay   Parikh ,   learned   Senior   Counsel   appearing   on
behalf   of   the   Respondents   submitted   that   the   Corporation   acted
arbitrarily.   It   failed   to   follow   due   process   of   law   to   determine   the
13  Movement Operations in Food Corporation of India (FCI Handbook 2020).
14  (2022) 5 SCC 362.
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liability   of   the   contractors,   despite   specific   instructions   in   a
previous   round   of   litigation.   He   also   submitted   that   contractors
were   not   responsible   for   loading   and   unloading   of   foodgrains   from
railway   wagons.   Hence,   the   event   which  leads   to  the   incurrence   of
demurrages,   i.e.,   delayed   unloading   of   foodgrains   from   railway
wagons, was not within the scope of contractor’s responsibilities. He
took us through the contracts that were executed in 2010 and 2018
by   the   Corporation,   which   delegated   the   task   of   loading   and
unloading  the foodgrains to contractors, and therefore the relevant
expression   “demurrages”   was   present   in   the   liability   clauses   in
those contracts. 
15. Supplementing   the   above   submissions,   Shri   Shoeb   Alam,
Advocate,   submitted   that   the   Corporation   was   not   entitled   to   be   a
judge in their  own  cause and  to  unilaterally  determine the liability
with   respect   to   demurrages.   He   placed   reliance   on   State   of
Karnataka   v.   Shree   Rameshwara   Rice   Mills 15
,   BSNL   and   Anr.   v.
Motorola India (P) Ltd 16
 and  J.G. Engineers (P) Ltd  v.  Union of India 17
. 
15  (1987) 2 SCC 160.
16  (2009) 2 SCC 337.
17  (2011) 5 SCC 758.
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Analysis:
16. The core question arising for our consideration is whether the
contractual   clause   enabling   the   Corporation   to   recover   “charges”
includes   the   recovery   of   demurrages.   It   is   pertinent   to   extract   the
relevant   clauses   of   the   road   transport   contract ,   i.e.,   Work   Order.
The   clauses   detailing   the   description   of   work,   liability   of   the
contractors, and the power to recover losses, which are identical in
the three appeals before us, read as under:
“ (B) Brief description of work : 
i)   Transportation   of   foodgrains   from
Depots/Mandis/Rail   Heads   of   Churaibari   to   various
destinations as per Appendix­I...
...
X.   Liability   of   Contractor   for   losses   suffered   by
Corporation
a) The Contractor shall be liable for all   costs, damages,
registration   fees,   charges   and   expenses   suffered   or
incurred   by   the   Corporation   due   to   the   Contractor's
negligence   and   unworkmanlike   performance   of   any
services under this Contract, or breach of any terms of
the Contract, or failure  to carry out the  work under the
Contract ,   and   for   all   damages   or   losses   occasioned   to
the Corporation, or in particular to any property or plant
belonging   to   the   Corporation,   due   to   any   act   whether
negligent   or   otherwise,   of   the   Contractor   or   his
employees. ...
...
XII. Recovery of losses suffered by the Corporation
(a)   The   Corporation   shall   be   at   liberty   to   reimburse
themselves   for   any   damages,   losses,   charges,   costs   or
expenses   suffered  or  incurred   by  them,  or  any   amount
payable   by   the   Contractor   as   Liquidated   Damages   as
provided   in   Clauses   X   above .     The   total   sum   claimed
shall  be deducted from  any sum then due, or which at
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any time thereafter may become due, to the Contractors
under this, or any other, Contract with the Corporation.
In   the   event   of   the   sum   which   may   be   due   from   the
Contractor   as   aforesaid   being   insufficient,   the   balance
of   the   total   sum   claimed   and   recoverable   from   the
Contractors   as   aforesaid   shall   be   deducted   from   the
Security   Deposit,   furnished   by   the   contractor   as
specified in Clause IX... ”       
 (emphasis supplied)
17. The   Corporation   seeks   to   recover   demurrages   as   a   part   of
“charges”   provided   under   clause   XII(a)   as   extracted   hereinabove.
The expression “charges”, stand alone, is not amenable to a precise
meaning.   Its   dictionary   meaning   is   open   textured,   defining
“charges”   as   “any   consideration   that   one   must   pay   for   goods   and
services provided”. Therefore, the scope of the expression “charges”
must be understood as intended by the parties to the contract. The
process of interpretation, though the exclusive domain of the Court,
inheres the duty to decipher the meaning  attributed to contractual
terms by the parties to the contract. It is with this purpose that we
shall   now   proceed   to   understand   the   meaning   of   the   expression
“charges”.  
18. There are certain basic principles evolved by  courts of law for
deciphering   the   true   and   correct   meaning   of   expressions   in   a
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contract.   In   Bihar   State   Electricity   Board,   Patna   and   Ors.   v.   M/s
Green   Rubber   Industries   and   Ors. 18
,   this   Court   observed   that,
“Every   contract   is   to   be   considered   with   reference   to   its   object   and
the   whole   of   its   terms   and   accordingly   the   whole   context   must   be
considered   in   endeavouring   to   collect   the   intention   of   the   parties,
even   though   the   immediate   object   of   enquiry   is   the   meaning   of   an
isolated clause. ”
19. In  Union of India  v.  Raman Iron Foundry 19
,  this Court held that
contractual terms  cannot be interpreted in isolation , following strict
etymological rules or be guided by popular connotation of terms, at
variance with the contractual context. It observed:
“ 8.  It is true that the words “any claim for the payment
of   a   sum   of   money”   occurring   in   the   opening   part   of
Clause   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 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
18  (1990) 1 SCC 731, ¶23.
19  (1974) 2 SCC 231.
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should   be   read   structurally   and   in   its   context,   for   its
meaning   may   vary   with   its   contractual   setting .   We
must,   therefore,   read   the   words   ‘any   claim   for   the
payment   of   a   sum   of   money’   occurring   in   the   opening
part   of   Clause   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   dispute,
established   in   a   Court   of   law   or   by   arbitration   or   they
also include a claim for damages  which is disputed by
the contractor.”                     
(emphasis supplied)
20. In  Provash Chandra Dalui and Anr.  v.  Biswanath Banerjee and
Anr. 20
,   noting   that   the   intention   of   the   parties   must   be   discerned
from the context of the contract, this Court observed:
“ 10.   ‘Ex   praecedentibus   et   consequentibus   optima   fit
interpretatio.’   The   best   interpretation   is   made   from   the
context.  Every contract is to be construed with reference
to   its   object   and   the   whole   of   its   terms .   The   whole
context must be considered to ascertain the intention of
the   parties .   It   is   an   accepted   principle   of   construction
that   the   sense   and   meaning   of   the   parties   in   any
particular   part   of   instrument   may   be   collected   ‘ex
antecedentibus et consequentibus;’   every part of it may
be brought into action in order to collect from the whole
one uniform and consistent sense , if that is possible. 
...
In   construing   a   contract   the   court   must   look   at   the
words   used   in   the   contract   unless   they   are   such   that
one   may  suspect   that   they   do   not   convey   the   intention
correctly.   If   the   words   are   clear,   there   is   very   little   the
court   can   do   about   it.   In   the   construction   of   a   written
instrument it is legitimate in order to ascertain the true
meaning of the words used and if that be doubtful it is
20  1989 Supp (1) SCC 487.
Page  13  of  24

legitimate   to   have   regard   to   the   circumstances
surrounding   their   creation   and   the   subject   matter   to
which   it   was   designed   and   intended   they   should
apply .”          (emphasis supplied)
21. In   BESCOM   v.   E.S.   Solar   Power   Pvt   Ltd   and   Ors 21
,   this   Court
held   that   in   case   of   two   possible   interpretations   of   a   contractual
term,   the   court   must   accord   primacy   to   the   one   that   is   consistent
with the underlying purpose of the contract. It noted:
“ 17.   ...   In   seeking   to   construe   a   clause   in   a   contract,
there   is   no   scope   for   adopting   either   a   liberal   or   a
narrow   approach,   whatever   that   may   mean.   The
exercise   which   has   to   be   undertaken   is   to   determine
what the words used mean.  It can happen that in doing
so   one   is   driven   to   the   conclusion   that   clause   is
ambiguous,   and   that   it   has   two   possible   meanings .   In
those  circumstances,  the   court  has   to   prefer  one  above
the   other   in   accordance   with   the   settled   principles.   If
one   meaning   is   more   in   accord   with   what   the   court
considers to be the underlined purpose and intent of the
contract, or part of it, than the other, then the court will
choose the former or rather than the latter.. .” 
                                       
              (emphasis
supplied)
22. Keeping   in   mind   the   above   referred   principles   we   have   to
examine the expression “charges” in the context of its related words
in   the   contract,   which   are   costs,   damages,   registration   fees,   and
expenses .   These   expressions   indicate   the   different   heads   under
which   losses   are   recoverable   from   the   contractors   for   acts   of
21  (2021) 6 SCC 718.
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negligence,   unworkmanlike   performance   of   any   service,   breach   of
terms   and   failure   to   carry   out   the   work   in   the   context   of   the
working of the contract. These expressions are equally wide and do
not   aid   us   in   understanding   the   meaning   of   the   expression
“charges”.   Under these circumstances, we have to understand the
meaning   of   the   expression   “charges”   in   the   larger   context   of   the
contract. 
23.  The preamble of the contract, i.e., the Work Order, reads that
the   contractor   is   engaged   for   “ transportation   of   foodgrains   from
depots,   mandis,   rail   heads   of   Churaibari   to   various   destinations   as
per appendix 1 ”. Further, clause XIII of the Work Order detailing the
responsibilities   of   the   contractor,   to   the   extent   relevant   for   our
purposes, reads as under:­
XIII. Responsibilities of the Contractor
(a)   The   Contractor   shall   be   responsible   to   supply   adequate
and   sufficient   number   of   trucks   for   transportation   of   food
grains   and   carrying   out   any   other   services   under   the
Contract   in   accordance   with   the   instructions   issued   by   the
General Manager or an officer acting on his behalf.
...
(f) The Contractor shall be responsible for the safety of the
goods   from   the   time   they   are   loaded   on   their   truck   from
godowns/mandis/rail heads until they have been unloaded
from   the   trucks   at   godowns   or   at   other   destinations   as
specified   in   the   Contract   or   as   directed   by   the   General
Manager/Area   Manager   or   any   other   officer   acting   on   his
behalf ... ”        
(emphasis supplied)
Page  15  of  24

24. We   have   scanned   the   entire   contract,   in   addition   to
scrutinising   the   provisions   extracted   above,   and   seen   that   there   is
no contractual provision requiring the contractors to undertake the
task   of   loading   and   unloading   of   foodgrains   from   the   railway
wagons.   This  is confirmed  by  the   written  submissions  on  behalf  of
the   Corporation,   where   the   imposition   of   demurrages   is   justified
only   for   the   reason   that   the   contractor   did   not   provide   adequate
number   of   trucks   near   the   railway   sidings,   to   enable   the
Corporation   to   promptly   hand   over   the   foodgrains   to   them   to
commence   transportation.   The   relevant   portion   is   extracted   as
under:­
“ 10.   The   reason   why   demurrage   charges   get   levied
during   the   performance   of   an   RTC   contract   is   on
account   of   the   failure   of   the   contractor   to   supply
required   number   of   trucks   even   after   prior   intimation
about the placing of the railway rakes due to which the
Petitioner   is   unable   to   empty   the   wagons   as   the
foodgrains are liable to get spoiled if they are unloaded
onto   the   siding   due   to   rain   etc.   Even   after   unloading
unless   they   are   removed   from   the   railway   premises
within   the   free   time   available   wharfage   is   charged   by
the   Railways.   The   failure   to   prove   trucks   leads   to
detention   of   wagons   beyond   the   free   time   allowed   by
the Railways... ”
25. We   may   note   that   there   is   a   dispute   about   the   availability   of
trucks for the transportation of foodgrains by the contractor. While
Page  16  of  24

the   Corporation   asserts   that   trucks   were   not   made   available   in
numbers as well as in time, the contractor denies the same stating
that   their   trucks   were   kept   waiting   at   the   Corporation’s   Food
Security Depots.  
26.  Irrespective   of   the   disputed   fact,   the   real   question   is   whether
the   contractors   had   any   obligation   towards   loading   and   unloading
of   foodgrains   from   the   railway   wagons.   It   is   evident   from   the
contractual   provisions   and   also   the   admissions   of   the   Corporation
in   written   submissions,   that   the   task   of   loading   or   unloading   of
foodgrains from the railway wagons was not a part of the contract.
Thus,   based   on   interpretation   of   the   expression   “charges”   in   the
contractual   context,   we   are   of   the   opinion   that   it   did   not   include
liability   on   account   of   demurrages.   Consequently,   the   Corporation
cannot impose and collect demurrages from the contractors. 
27.   Interpretation   of   contracts   concerns   the   discernment   of   the
true   and   correct   intention   of   the   parties   to   it.   Words   and
expressions   used   in   the   contract   are   principal   tools   to   ascertain
such   intention.   While   interpreting   the   words,   courts   look   at   the
expressions   falling   for   interpretation   in   the   context   of   other
Page  17  of  24

provisions of the contract and also in the context of the contract as
a   whole.   These   are   intrinsic   tools   for   interpreting   a   contract.   As   a
principle of interpretation, courts do not resort to materials external
to the contract for construing the intention of the parties. There are,
however,   certain   exceptions   to   the   rule   excluding   reference   or
reliance   on   external   sources   to   interpret   a   contract.   One   such
exception   is   in   the   case   of   a   latent   ambiguity ,   which   cannot   be
resolved   without   reference   to   extrinsic   evidence.   Latent   ambiguity
exists   when   words   in   a   contract   appear  to   be   free   from   ambiguity;
however, when they are sought to be applied to a particular context
or question, they are amenable to multiple outcomes.   This position
is  well­explained in the following passage of  Halsbury’s 22
:
“ Latent   ambiguity:   When   the   instrument   appears
on its face to be free from ambiguity but, upon the
endeavour   being   made   to   apply   it   to   persons   or
things   indicated,   it   appears   that   the   words   are
equally applicable to two or more persons, or two
or   more   things,   either   without   any   inaccuracy   or
with a common inaccuracy... ”
22   Halsbury’s Laws of England  (5th edn, 2012) vol 32, para 409.
Page  18  of  24

Extrinsic evidence, in cases of latent ambiguity, is admissible both
to   ascertain   where  necessary,  the  meaning  of  the  words  used,  and
to identify the objects to which they are to be applied. 23
 
28.  Applying the above­referred principles to the present case, we
will   juxtapose   the   present   contracts   with   similar   but   not   identical
contracts   entered   into   by   the   Corporation,   to   confirm   our
interpretation that the word “charges” in the contract is exclusive of
liability   for   demurrages.   Pursuantly,   we   will   examine   certain
contracts   entered   into   by   the   Corporation   with   other   transporters.
For   example,   we   will   refer   to   a   contract   entered   into   by   the
Corporation in 2010, which is prior in time to the present contract.
The relevant clauses read as under:­
“ B. Brief description of work  
I. Unloading/Loading   of   foodgrain   bags   from/into
railway wagons, trucks etc . stacking...and transporting
of   foodgrains   from   Railway   Station   to   Corporation’s
Godown or vice­versa...”
XII. Liability   of   Contractors   for   losses   etc.
suffered by Corporation
a) The   contractor   shall   be   liable   for   all   costs,
damages,   demurrages ,   wharfage,   forfeiture   of   wagon,
registration   fees,   charges   and   expenses...due   to...their
failure   to   carry   out   the   work   with   a   view   to   avoid
incurrence of demurrage etc ...
23   Halsbury’s Laws of England  (5th edn, 2012) vol 32, para 394.
Page  19  of  24

b)   The   Corporation   shall   be   at   liberty   to   reimburse
themselves   of   any   damages,   losses,   charges,   costs,   or
expenses   suffered   or   incurred   by   them   due   to
contractors   negligence   and   un­workmanlike
performance   of   service   under   the   contract   or   breach   of
any terms thereof... ”        
 (emphasis supplied)
29. It   is   evident   from   the   above   that   the   contracts   delegating   the
responsibility   of   loading   and   unloading   of   foodgrains   from   railway
wagons,   as   an   integral   part   of   the   contract,   include   a   clear   and
distinctive   clause   for   the   imposition   of   liability,   inter   alia ,   on
account   of   demurrages.   Evidently,   the   liability   clause   in   these
contracts, termed the Handling and Transport Contracts, is starkly
distinct from the present Road Transport Contracts.
30. We   have   every   reason   to   believe   that   the   Corporation,
statutorily obligated to procure and distribute foodgrains across the
nation, enters into contracts depending on the services it requires.
These   contracts   naturally   vary   depending   on   the   needs   and
purposes   of   the   Corporation.   With   the   aid   of   the   provisions   in   the
Handling   and   Transport   Contract   from   2010,   we   are   able   to
understand   the   intention   of   the   parties   while   entering   into   the
present Road Transport Contracts. As the present contracts do not
Page  20  of  24

involve   the   task   of   loading   and   unloading   of   foodgrains   from   the
railway wagons as a part of the contractors’ responsibility, there is
no   clause   enabling   the   recovery   of   demurrages   from   them   by   the
Corporation.   Thus,   our   interpretation   of   the   expression   “charges”,
as exclusive of liability for demurrages, stands confirmed.
31. We   will   proceed   to   examine   yet   another   Handling   and
Transport   Contract   which   was   executed   seven   years   after   the
present contract, i.e., in 2018. The relevant clauses of the contract
are as under:­
“B. Brief description of work
I. Unloading/Loading   of   foodgrain   bags   from   /into
railway   wagons,   trucks   etc .   stacking   the   foodgrains   in
bags, bagging, weighment, standardization, cleaning of
foodgrains,   etc.,   and   transporting   of   foodgrains   from
Railway   Good   Shed/siding   to   Corporation   Godown   or
vice­versa   or   transporting   them   from   any   place   to   any
other place in and around Railhead KUMARGHAT/FSD
KUMARGHAT...
...
X.  Liability   of   Contractors   for   losses   etc.
suffered by Corporation
a) The   contractor   shall   be   liable   for   all   costs,
damages,   demurrages ,   wharfage,   forfeiture   of   wagon,
registration   fees,   charges   and   expenses   suffered   or
incurred   by   the   Corporation   due   to   the   contractor’s
negligence   and   un   workmanlike   performance   of   any
services   under   this   contract,   or   breach   of   any   terms
thereof or his failure  to carry out the  work   with a view
to   avoid   incurrence   of   demurrage   etc .   under   this
contract or breach of any terms thereof or his failure to
carry   out   the   work   with   a   view   to   avoid   incurrence   of
demmurage;   etc.   and   for   all   damages   or   losses
occasioned   to   the   Corporation   due   to   any   act   whether
Page  21  of  24

negligent   or   otherwise   of   the   contractor   themselves   or
his   employees.   The   decision   of   the   General   Manager
regarding   such   failure   of   the   contractor   and   their
liability for the losses, etc. suffered by the Corporation,
and the quantification of such losses, shall be final and
binding on the contractor ...”
(emphasis supplied)
32. It   is   evident   from   the   above   that   the   Handling   and   Transport
Contract   from   2018,   similarly   involved   loading   and   unloading   of
foodgrains from the railway wagons within the scope of contractors’
duties,   thereby   necessitating   the   inclusion   of   demurrages   as   a
penalty   for   non­performance   of   contractual   duties.   Thus,   the
present Road Transport Contract is distinct from the Handling and
Transport Contract from 2018, as the responsibility of loading  and
unloading   of   foodgrains   from   railway   wagons   is   absent   in   the
present   contract.   For   this   reason,   the   Corporation   in   the   present
contract has chosen not to include the power to recover demurrages
and   as   such   the   expression   “charges”   cannot   be   interpreted   to
include demurrages. 
33. In   light   of   the   foregoing   conclusions,   we   are   not   inclined   to
adopt   a   textual   approach   for   the   interpretation   of   the   contractual
term “charges”, and hence, the decisions of this Court in   Raichand
Page  22  of  24

Amulakh Shah 24
  and   Trustees  of the  Port  of  Madras 25
  are of no  aid,
as   they   simply   describe   demurrages   as   a   charge.   Demurrage   is
undoubtedly   a   charge,   however,   such   a   textual   understanding
would   not   help   us   decipher   the   true   and   correct   intention   of   the
parties to the present contract. 
34. For   these   reasons,   Civil   Appeals   arising   out   of   SLP   Nos.
16009­16010 of 2019 and SLP Nos. 16063­16068 of 2019, filed by
the   Corporation   are   dismissed.   The   decisions   of   the   High   Court   of
Tripura in Writ Appeal No. 56 of 2018 dated 07.09.2018 and Review
Petition No. 02 of 2019 dated 22.01.2019 are upheld. The decision
of   the   High   Court   of   Tripura   in   Writ   Appeal   Nos.   53­58   of   2017
dated   15.05.2019   is   also   upheld.   We   may   clarify   that   our   decision
has   no   bearing   on   any   other   remedy   available   to   the   Corporation,
like the institution of a suit for recovery, if law enables them to do
so.
35. In so far as Civil Appeals arising out of SLP Nos. 4045­4046 of
2021 filed by the contractors are concerned, they are allowed for the
same   reasons   as   indicated   above.   The   judgments   of   High   Court   of
24  Supra note 11.
25  Supra note 12.
Page  23  of  24

Tripura   in   Writ   Appeal   Nos.   186   of   2020   and   187   of   2020   dated
04.01.2021 and 18.01.2021 respectively are set­aside and the Civil
Appeals stand allowed. 
36.  The parties shall bear their own costs.
……………………………….J.
                                                            [A.S. BOPANNA]
……………………………….J.
[PAMIDIGHANTAM SRI NARASIMHA]
NEW DELHI;
NOVEMBER 18,2022                         
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