The document in question is a Bank Guarantee; i.e., a
commercial document.
Facts
The respondent a co-operative society has a sugar factory.
It entered into a contract for installation of a paper plant on turnkey basis
so as to enable it to utilize the left over material called “bagasee” of the
sugarcane with M/s. Pentagon Engg. P. Ltd. Pentagon furnished a performance
guarantee in regard to the machinery supplied by it.
Pentagon, however, by a letter dated 6th April, 1985
suggested for a modification as regards the payment clause and in its turn
proposed to have a letter of credit so that they can furnish appropriate bank
guarantee; to which the co-operative society accepted. The Bank
Guarantee/Indemnity was thereafter furnished by the Appellant Bank. Disputes
and differences arose by and between the co-operative society and Pentagon.
The contract of Pentagon was terminated by the co-operative society. Pentagon
denied and disputed its liability to pay as per the agreement. The Bank
Guarantee was thereafter invoked by the co-op society. The demand of the
co-op. society invoking the said Bank Guarantee met resistance from the
Appellant stating that it had executed an agreement of indemnity pursuant
whereto or in terms whereof only losses, claims, damages, actions and costs
which might have been suffered by it, were covered and the transaction in
question does not constitute Bank Guarantee. It was, therefore, contended that
unless the co-operative society proved any loss or damage for design,
performance, workmanship or supply of any defective material through a
competent court or authority, the Appellants were not liable to pay the said
amount.
Co-op. society thereafter filed a suit. The suit was
dismissed. An appeal was preferred there- against by the co-op. society before
the High Court. The High Court construing the said agreement to be a Bank
Guarantee decreed the suit directing Appellant bank to pay the sum of Rs.
34,00,000/- with interest @ 14% per annum. The bank preferred further appeal
to Supreme Court.
Held
A document, as is well known, must primarily be construed
on the basis of the terms and conditions contained therein. It is also trite
that while construing a document the court shall not apply any words which the
author thereof did not use.
The document in question does not on its face contain any
ambiguity. The High Court itself said that ex facie the document appears to be
a contract of indemnity. Surrounding circumstances are relevant for
construction of a document only if any ambiguity exists therein and not
otherwise.
According to the Hon’ble Court the said document,
constitutes a document of indemnity and not a document of guarantee as it was
clear from the fact that by reason thereof the Appellant was to indemnify the
co-op. society against all losses, claims, damages, actions and costs which
may be suffered by it. The document does not contain the usual words found in
a Bank Guarantee furnished by a bank as, for example. “unequivocal condition”,
“the co-op. society would be entitled to claim the damages without any delay
or demur” or the guarantee was “unconditional and absolute” as was held by the
High Court.
The High Court, thus misread and misinterpreted the
document as on scrutiny thereof, it had opined that it was a contract of
guarantee and not a contract of indemnity.
The Bank Guarantee constitutes a separate distinct and
independent contract between the bank and the defendants.
In this case, the document in question does not
specifically refer to any particular clause of the contract. In fact the
contract does not contain any clause requiring Pentagon to furnish any Bank
Guarantee.
The document in question constitutes a contract of
indemnity and not an absolute or unconditional Bank Guarantee. The High Court,
therefore, erred in construing the same to be an unconditional and absolute
Bank Guarantee.
State Bank of India & Anr vs. Mula Sahakari Sakhar Karkhana
Ltd. AIR 2007 SC 2361
A decree of partition is an instrument of partition and
therefore is required to be stamped under Schedule 1 of Article 45 r/w section
2(15) of the Stamp Act. However, and oral family settlement dividing or
partitioning the property is not required to be stamped. Similarly, a
memorandum recording an oral family settlement which has already taken place
is not an instrument dividing or agreeing to divide property and is therefore
not required to be stamped. The courts have recognized that it is legally
permissible to arrive at an oral family settlement dividing/partitioning the
properties and thereafter record a memorandum in writing whereby the existing
joint owners for the sake of property record that the property has been
already partitioned or divided. The memorandum does not by itself partition
the properties but only records for information what has already been done by
oral partition. The memorandum itself does not create or extinguish any
rights. A record of oral partition in writing is created. The writing records
a pre existing right and does not by itself partition the properties for the
first time. As the memorandum only records oral partition which has already
taken place but does not in praesenti create any right, it cannot be treated
as an instrument creating partition.
The compromise application merely records the oral family
settlement to avoid any ambiguity. Therefore, in an application filed u/o 23R
3 Court was not required to pass any decree of partition but only declare the
existing factual position on the date when the compromise application was
filed, that the parties had entered into an oral family settlement and had
partitioned and separated the properties amongst themselves. It was a decree
of declaration that there exists an oral family settlement that was passed and
no decree that amounts to instrument of partition u/s. 2(15) of the Stamp Act
was passed.
Nitin Jain vs. Anuj Jain & Ors AIR 2007 Delhi 219
Petitioner challenged the legality and proprietary of the
Government Resolutions on ground that it was published in Marathi. Respondent
State contended that the State of Maharashtra has enacted the Maharashtra
Official Languages Act, 1964 whereby Marathi language is to be the languge
used for “all official purposes” referred to in Article 345 of the
Constitution except for such purposes as the State Government may be rules,
issue from time to time in the Official Gazette.
It was held that in respect of purely administrative
functions, even if the exercise of power is coextensive with the legislative
power referable to the power conferred under the Constitution or under any
law, the exercise of such power including under Article 154 normally would be
administrative. In respect of such administrative powers, there is no
requirement that the English translation of such Government resolutions or
administrative decisions must be made available.
In so far as the language of the High Courts are concerned,
the same is provided by Article
348(1)(a), which reads as under:
-
Notwithstanding anything in the foreign provisions of
this part, until Parliament by law otherwise provides.
-
all proceedings in the Supreme Court and in every High
Court,
-
xxx
shall be in the English language.
It was held that the proviso to rule 2(1) of Chapter XVII
of the High Court Appellate Side Rules is declared to be null and void as it
is ultra vires Article 348 (1)(a) of the Constitution of India.
2007 Vol. 109(2) Bom. L.R. 1089 Satish Dattatray Nadgauda
vs. The State of Maharashtra.
Fact
Appellant and Respondent entered into a leave and licence
agreement by which Appellant agreed to permit the Respondent, use and
occupation of the premises in dispute for a period of nine years. An
Arbitration clause was also contained in the leave and licence agreement.
Thereafter, disputes arose between parties and Appellant filed an Arbitration
Petition. However, learned Trial Court Judge dismissed the Arbitration
Petition as not maintainable by relying on the judgment of the Supreme Court
in Natraj Studio (P) Ltd. vs. Navrang Studio AIR 1981 SC 537 and concluded
that under the provisions of sec. 41 of the Presidency Small Cause Courts Act,
1882, the exclusive jurisdiction to entertain a suit between a licensor and
licensee for the recovery of possession and for the recovery of licence fee
was conferred on the Court of Small Causes and the jurisdiction of the Civil
Court was held to be barred by necessary implication. Hence, present appeal.
Held
In Natraj Studio P. Ltd vs. Navrang Studio, (supra), the
Supreme Court had occasion to consider the question as to Whether an
arbitration agreement could operate in respect of a dispute as to the
possession of premises where the Court of Small Causes had jurisdiction under
sec. 28(1) of the Bombay Rents, Hotel and Lodging House Rates Control Act,
1947. Sub-section (1) of section 28 of the Rent Act provided that
notwithstanding anything contained in any law, in Greater Bombay, the Court of
Small Causes, Bombay and in any area for which a Court of Small Causes is
established under the provincial Small Cause Courts Act, 1887, such court and
elsewhere the Court of Civil Judge, Senior Division, shall have jurisdiction
to entertain and try suits or proceedings between landlords and tenants
relating to the recovery of rent or possession or between licensors and
licensees relating to the recovery of licence fee or charges. The Supreme
Court held that both on the basis of the non obstante provision as well as the
object of the legislation the exclusive jurisdiction would vest in the courts
stipulated by the legislature and an arbitration agreement cannot be
recognized in the field: The Bombay Rent Act is a welfare legislation aimed at
the definite social objective of protection of tenants against harassment by
landlords in various ways. It is a matter of public policy. The scheme of the
Act shows that the conferment of exclusive jurisdiction on certain courts is
pursuant to the social objective at which the legislation aims. Public policy
requires that contracts to the contrary which nullify the rights conferred on
tenants by the Act cannot be permitted. Therefore, public policy requires that
parties cannot also be permitted to contract out of the legislative mandate
which requires certain kind of disputes to be settled by Special Courts
constituted by the Act. It follows that arbitration agreements between parties
whose rights are regulated by the Bombay Rent Act cannot be recognized by a
court of law.
2007 Vol. 109 (2) Bom. L.R. 1101 Carona Limited, vs.
Sumangal Holdings.
