ORDER
1. The plaintiffs to the suit and the petitioners in both the Writ Petitions (hereinafter, for the sake of brevity, referred to only as 'the plaintiffs') are a company registered under the Companies Act are carrying on the business of manufacturing sugar and allied products at their factory at Harigaton in Ahmednagar District since the last about 45 years. Prior to the coming into force of the Maharashtra agricultural Lands (Ceiling on Holdings) Act (Maharashtra Act XXVII of 1961) on the 26th of January 1962, the plaintiffs owned a large area of agricultural lands which were contiguous to the Plaintiffs' factory and within a convenient distance from the same. The plaintiffs used to cultivate sugarcane on the said lands which was used and consumed entirely by the plaintiffs' sugar factory. In fact, it was with a view to ensure an adequate and continuous supply of raw materials of good quality, without being subject to fluctuations in the prices of sugarcane that the plaintiffs were cultivating the said lands. Under the Maharashtra Agricultural Lands (Ceiling on Holdings) Act 1961, however, all surplus lands of the plaintiffs, i.e. lands in excess of the ceiling fixed in the manner provided by the Act, vested in the State Government, subject, of course, to payment of compensation as therein provided. Section 28 of the said Act which is important for the purpose of this case and which must, therefore, be quoted in extenso, enacts as follows:
'28. (1) Where any land held by an industrial undertaking is acquired by and vests in, the State Government under Section 21, such land being land which was being used for the purpose of producing or providing raw material for the manufacture or production of any goods, articles or commodities by the undertaking, the State Government shall take particular care to ensure that the acquisition of the land does not affect adversely the production and supply of raw material from the land to the undertaking.
(2) Notwithstanding anything contained in Section 27, but subject to any rules made in this behalf, for the purpose of so ensuring the continuance of the supply of such raw material to the undertaking, and generally for the full and efficient use of the land for agriculture and its effect management, the State Government
(a) may, if it is in the opinion of that Government necessary for the purpose aforesaid (such opinion being formed after considering the representation of persons interested therein) maintain the integrity of the area so acquired in one or more compact blocks;
(b) may, subject to such terms and conditions (including in particular, conditions which are calculated to ensure the full and continued supply of raw material to the undertaking at a fair price) grant the land, or any part thereof, to a joint faring society (or a member thereof) consisting as far as possible, of
(i) persons who had previously leased such land to the undertaking,
(ii) agricultural labour (if any) employed by the undertaking on such land,
(iii) technical or other staff engaged by the undertaking on such land, or in relation to the production or supply of any raw material,
(iv) adjoining landholders who are small holders,
(v) landless persons;
Provided that, the State Government may:
(a) for such period as is necessary for the setting up of joint farming societies as aforesaid, being not more than three years in the first instance (extensible to a further period not exceeding two years) from the date of taking possession of the land, direct that the land acquired. or any part thereof, shall be cultivated by one or more farms run or managed by the State, or by one or more corporations (including a company) owned or controlled by the State;
(b) grant to the landlord so much of the surplus land leased by him to the undertaking, which together with any other land by him does not exceed the ceiling area (but if the landlord be a public trust and the major portion of the income from the land is being appropriated for purposes of education or medical relief, grant the entire land to the public trust) lease the land to a farm or corporation described in clause (a) aforesaid, and thereafter, in the case of a landlord (not being a public trust) that he becomes a member of the joint farming society, and in the case of a public trust, that it leases the land to a joint farming society.
(3) The State Government may provide that:
(a) for the breach of any term of condition referred to in clause (b) of sub-section (2), or
(b) if the landlord to whom the land is granted fails to lease the land to the farm or corporation or to become a member of a joint farming society; or
(c) if it considers after such inquiry as it thinks fit that the production and supply of raw material to the undertaking is not maintained at the level or in the manner which, with proper and efficient management it ought to be maintained, or
(d) for any other reason it is undesirable in the interest of the full and efficient cultivation of the land, that the joint farming society should continue to cultivate the land, the grant shall, after giving three months' notice of termination thereof and after giving the other party reasonable opportunity of showing cause, be terminated, and the land resumed. Thereafter, the State Government may make such other arrangements as it thinks fit for the proper cultivation of the land and maintenance of the production and supply of raw material to the undertaking.' Section 46 of the said Act empowers the State Government to frame Rules, inter alia, for carrying out the purposes of section 28 of that Act. The State Government framed Rules in exercise of the rule-making power conferred upon them under section 46 of the said Act. On 24th October 1967, the State Government amended these Rules by framing Rules 12B and 12C under sub-section 2(d) of Section 46 of the Act, to the contents of which I will refer at the appropriate place later on.
2. There are, however, certain material facts relating to this case which occurred prior to the framing of Rules 12B and 12C, which must be narrated here. On the 6th of March 1963, the Maharashtra State Farming Corporation Ltd., which is the defendant to the suit and the second respondent in both the Writ Petitions, was registered under the Companies Act in accordance with the provisions of proviso (a) to section 28(2) of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act; and it is not disputed that the entire share-holding of the said company was not only owned by the State Government, but its Board of Directors consisted wholly of nominees of the State Government, the Revenue Minister for the time being, being the Chairman of the Board of Directors of the said company. On a Writ Petition (being Special C. A. No. 80 (Sic of 1963) filed by the plaintiff company challenging the validity of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, a Division Bench of this Court, consisting of Kotawal and Mody JJ., held on the 25th October 1963 that section 28 of the said Act was void as offending against Article 14 of the Constitution, but that the rest of the said Act, which was severable, was valid. It may be mentioned that that was a common judgment delivered in the said Special C. A. No. 800 (Sic) of 1963 filed by the plaintiffs, and in several other petitions filed by other sugar companies. Appeals were filed from the said decision of the High Court, but before the same could be heard, the 17th amendment to the Constitution came into force on the 20th June 1964 by which the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, was placed as Entry No. 34 in the 9th Schedule to the Constitution, the legal effect of which was that by virtue of the provisions of Article 31B of the Constitution, the validity of the said Act could not be challenged on the ground that it violated any of the fundamental rights declared under Part III of the Constitution. In another matter that came before it on a Writ petition (Spl. C. A. No. 1642 of 1963 filed by the Godavari Sugar Mills Co. Ltd., a Division Bench of the High Court consisting of Chainani C. J. and H. R. Gokhale J., held on the 10th of March 1965, that the 17th Amendment to the Constitution had put section 28 and other provisions of the impugned Act beyond challenge on the ground that they were inconsistent with or took away or abridged any of the fundamental rights guaranteed under the Constitution, a decision which was confirmed by the Supreme Court in appeal on 10th April 1963.
3. In order to complete the outline of the previous judicial decisions on the subject, it may be mentioned that, on the 27th day of February 1967, a Special Bench of eleven judges held, by a majority, in the case of Golak Nath v. State of Punjab : [1967]2SCR762 , paragraphs 52-53) that Parliament has no power to amend any of the provisions of Part III of the Constitution so as to take away or abridge the fundamental rights enshrined therein, but applying the doctrine of 'prospective overruling' of its own earlier decisions, it was held that the 17th amendment and all amendments effected prior thereto by which fundamental rights were sought to be abridged were valid on the basis of earlier decisions of the Supreme Court itself. Soon after the decision of the High Court in Spl. C. A. No. 1642 of 1963, some time in or about April-May 1965, negotiations started between the plaintiffs' representatives and the representatives of the Government, and it is the plaintiffs' case in paragraph 24 of the plaint that, at one of those meetings, Shri D. R. Pradhan, the then Chief Secretary to the State Government and a Director of the defendants as representating the State Government and the defendants, agreed with the plaintiffs' representatives that the prices to be charged to the plaintiffs by the defendants for the sugarcane supplied from the 1966-67 season onwards would be the prices fixed by the Government of India. This agreement is denied by the defendants in paragraph 24 of the plaint that the plaintiffs' representatives were assured and promised by the said Pradhan that they would be treated and given the same terms and conditions as other sugar factories which had already handed over their surplus lands. This statement is not denied in paragraph 16 of the Written Statement. Possession of the surplus lands of the plaintiff-company, admeasuring about 11,393 acres and 18.5/8 gunthas, was given by it to the State Government on the 25th of May 1965. It was at that stage that a meeting was held between the representatives of the plaintiffs on the other hand, and two of the directors of the defendants on the other, on the 20th of July 1965. The fact that such a meeting was held is not denied by the defendants, but there is difference in the respective versions of the parties as to what transpired at the said meeting. The plaintiffs' case with regard to the same, as set out in paragraph 27 of the plaint, is that at the said meeting it was agreed between the parties that the price to be charged for sugarcane produced by the defendants on the surplus lands of the plaintiffs, all of which was to be supplied to the plaintiffs, would be governed by the notifications issued by the Government of India from time to time, and that the plaintiffs would in their turn be bound to purchase all the cane produced on the said surplus lands of the plaintiffs at those prices. This part of the averments in paragraph 27 of the plaint is not denied in paragraph 19 of the Written Statement. It is, however, further stated in paragraph 27 of the plaint that the said prices meant and were understood by the parties to mean the minimum prices fixed by the central Government under its annual notifications, and that the said minimum prices were regarded by the parties as fair prices within the meaning of Section 28 of the Act. The first part of that averment is clearly denied in paragraph 19 of the Written Statement. As far as the second part of the said averment is concerned, though the same is not denied in paragraph 19 of the Written Statement which deals inter alia with paragraph 27 of the plaint, it has been contended by the learned Advocate General that the same has been denied in paragraph 27 of the plaint, it has been contended by the learned Advocate-General that the same has been denied in paragraph 27 of the
Written Statement. It may be mentioned that it is further stated in the said paragraph that it was agreed that the defendants were to enter into a formal agreement with the plaintiffs for the supply of sugarcane. That has not been denied in paragraph 19 of the Written Statement. The plaintiffs by their letter dated 5th August 1965 (Ex. B.) forwarded to the defendants a copy of the Minutes of the said meeting of 20th July 1965 (Ex. C) and asked for confirmation of the same. In item No. 1 of the said Minutes which related to the prices of sugarcane to be charged by the Corporation, it was stated that it was agreed that the price to be charged for such cane was stated that it was agreed that the price to be charged for such cane was to be governed by notifications issued by the Government of India from time to time, and that the factory would be bound to purchase all such cane at those prices. It is further stated in the said item that the Corporation would enter into a formal agreement with the Company for the supply of cane. The Court is not concerned in the present case with the remaining items in the said Minutes. The managing director of the defendant Corporation by his letter dated 9th August 1965 (Ex. D) confirmed the arrangement arrived at in respect of the said Item No. The Board of Directors of the defendant-Corporation passed a Resolution at their meeting held on the 9th September 1965 approving of the agreement arrived at by the said Corporation with the plaintiff company as a result of discussions with their representatives. The material portion of the agreement approved of by the said Resolution was in the following terms:
'6. The Prices of Cane to be charged by the Corporation. - The prices to be charged for the Corporation's sugarcane shall be governed by the notifications issued by the Government of India, from time to time, and the factory shall be bound to purchase all such cane at that price. The Corporation should enter into a formal agreement with the company for the supply of cane.'
A copy of the relevant portion of the Minutes of the said meeting of the Board of Directors of the defendant Corporation is Ex. E in the present proceedings.
4. A notification was issued by the Central Government on the 1st of November 1966 (Ex. H 6) under the Sugarcane (Control) Order 1966, promulgated in exercise of powers conferred on the Central Government by section 3 of the Essential Commodities Act, 1955, fixing the minimum price for the year 1966-67 (1st November 1966 to the year 1966-67) at Rs, 5.72 per quintal (Rs. 57.2 per ton) in respect of the plaintiff-company. It may be mentioned that similar notifications fixing minimum price had been issued by the Central Government from time to time ever since the enactment of the Essential Commodities Act, 1955. It may also be mentioned that in paragraph 29 of the plaint it is stated that sugarcane crop is harvested and is ready for sale from about October in each year, that in connection with the standing crop which was harvested during the crushing season 1965-66 (November-October) separate arrangements were made under an agreement dated 10th May 1965, and that the first crop of sugarcane grown and harvested by the defendants on the surplus lands of the plaintiffs was for the crushing season 1966-67 (November- October). Each one of these statements has been admitted in paragraph 20 of the Written Statement to be correct. It is also common ground that sugar has, at all material times, been a controlled commodity, and that the maximum price of sugar has been fixed from time to time by the Central Government Act. It is also an undisputed fact that the price of sugar is linked to the price of sugarcane by reason of the fact that the cost of sugarcane forms about 60% of the cost of producing sugar. A further fact which is not disputed is that partial decontrol of sugar was brought into force with effect from the 1st of October 1967, from which date sugar manufacturers were free to sell 40 per cent of their production in the free market.
5. On the 11th of November 1966, the managing director of the defendant Corporation addressed a letter (Ex. Gl) to the plaintiff-company and to all other sugar companies stating that it was no longer economic to charge prices for its sugarcane at the minimum rate announced by the Government of India under the Sugarcane Control Order, and that an increase to the extent of 25 per cent over the minimum price of sugarcane announced by the Government of India, which was reasonable and justifiable, had been decided to be charged for sugarcane harvested during the crushing season of 1966-67. The plaintiffs by their letter dated 15th November 1966 (Ex. G2), however, declined to agree to any increase in the price of sugarcane. What ultimately happened was that the defendant-Corporation supplied sugarcane and made out a bill for the crushing season 1966-67 with an increase of 25 per cent over the minimum price fixed by the Central Government, but the plaintiffs paid for the said supply only at that minimum price.
6. With regard to the next crushing season viz. 1967-68 the defendant Corporation addressed a letter dated 23rd August 1967 (Ex. G3) to the plaintiffs and to all other sugar companies that, without prejudice to any adjustments that might be (arrived) at by mutual consultation, it had been decided by the Corporation that all its sugarcane would be supplied to factories during the said season at the rate of Rs. 120 per ton. It was further stated in the said letter that the defendant-Corporation would supply sugarcane to the plaintiffs' factory during the said crushing season 1967-68 only if the plaintiffs agreed to pay for it at that rate. By its letter dated 8th September 1967 (Ex. G4) the defendant-Corporation sent a reminder in that behalf to the plaintiffs and other sugar companies, in which it was further stated that it confirmation was not received from the plaintiffs and other companies by the 15th of September 1967, it would be presumed that the plaintiffs were not interested in purchasing the defendant-Corporation's sugarcane and the defendant-Corporation would proceed to make alternative arrangements for its disposal. There was further correspondence between the parties in the course of which the plaintiff company stated that they were definitely interested in purchasing all the sugarcane grow on the farms of the defendant-Corporation which were attached to the plaintiff's factory, that under no circumstances was the defendant-Corporation at liberty to make any alternative arrangements for its disposal, and that the defendant-Corporation was bound to supply the same to the plaintiffs at the prices notified by the Government of India in respect of the plaintiff's factory. By its notification dated 25th September 1967 (Ex. H8), the Central Government fixed the minimum price of sugarcane in respect of the plaintiff-company for the year 1967-68 (1st October 1967 to 30th September 1968) at Rs. 8.33 per quintal (Rs. 83.3 per ton).
7. It was at that stage hat the State Government proceeded to amend the Rules framed by it under S. 46 of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, and invited objections from the companies concerned. As the defendant-Corporation had, in the course of the said correspondence, threatened to sell away the sugarcane grown on the surplus farms of the plaintiffs to others, after giving the requisite attorney's notice, the plaintiffs filed the present suit (Suit No. 610 of 1967) on the 16th of October 1967 against the Maharashtra State Farming Corporation, and obtained at interim injunction on the same day restraining the defendant Corporation from disposing of the sugar-cane produced on the surplus land of the plaintiffs to any party other than the plaintiffs. The Notice of Motion on which that interim order was obtained was thereafter adjourned from time to time. As the State Government against whom also an injunction was necessary has not been made a party to the said suit by reason of the fact that there was no time to give a statutory notice under Section 80 of the Code of Civil Procedure, and in view of the statutory bar to the filing of a suit contained in Section 41 of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, Miscellaneous Petition No. 615 of 1967 was filed by the plaintiffs on the 19th of October 1967, to which both the State of Maharashtra as well as the Maharashtra State Farming Corporation were made parties, for appropriate writs, directions and orders under Article 226 of the Constitution. In the meantime, on the 24th of October 1967 the State Government published the amendments effected by it in Rules framed under Section 46 (2) (d) of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, whereby the following tow Rules, which have already been referred to by me earlier, were added as Rules 12B and 12C:-
'12B, Arriving at fair price of raw materials - Where in pursuance of the provisions of Sec 28, any land held by industrial undertaking is granted to a person or a joint farming society, or is directed to be managed by a Corporation (including a company), then in arriving, from time to time at the fair price at which the full and continued supply of raw material produced from such land during any period is ensured to the undertaking, the State Government shall have due regard to the cost of production of the raw material, the price (if any) fixed under any law for the time being in force in respect of the raw material (including any minimum price fixed therefor), or of the goods, articles or commodities manufactured therefrom; a reasonable return to the supplier of the raw material; and any other relevant factors: Provided that, the State Government may for the purpose of arriving at the fair price of any raw material, be advised by a committee, consisting of not more than five persons of whom one may represent the interest of the undertaking and one of the joint farming society, or at the case may be, the Corporation, and two persons who in the opinion of the State Government have special knowledge of, or experience in, the industry. The Committee shall submit its recommendations to the State Government with in fifteen days from the date on which a reference is made to it. If the Committee fails to advise the State Government during the period allowed or such additional period, it any permitted by the State Government, the State Government may arrive at the fair price having regard to all the relevant materials before it.'
'12C, Prohibition against sale of raw material in excess of fair price - No person, joint-farming society, or corporation, shall sell to the undertaking any raw material at a price in excess of the fair price as arrived at in the matter aforesaid.'
The State Government then proceeded to act under the said Rules with, what may be called unusual promptitude or perhaps indecent hurry. By its Resolution D/- 1st November 1967, it appointed the Advisory Committee contemplated by Rule 12B, of which one G. J. Ruparel, a Director of the Kolhapur Sugar Mills Ltd. was appointed a member along with others, and it is the case of the State Government that he was appointed as the representative of all the sugar mills and not as a representative of the Kolhapur Sugar Mills Ltd. alone. The said Advisory Committee held a meeting at Poona on the 6th of November 1967, and another meeting, which was the final meeting at Bombay, on the 8th of November 1967, and the said G. J. Ruparel, after lodging a strong protest, left the said final meeting. This fact appears from a letter dated 7th December 1967 subsequently addressed by the said G. J. Ruparel to the Secretary to the Government of Maharashtra, Revenue and Forests Department, which has been tendered and marked Ex. A in Misc.Petition No. 664 of 1967. The Advisory Committee however, proceeded to make its Report on the same day and a copy of that Report which, it may be mentioned, was under the circumstances stated above, not signed the circumstances stated above, not signed by the said G. J. Ruparel, is annexed to the affidavit of J. C. Karandikar dated 29th Feb. 1968 filed in reply to Misc. Petition No. 664 of 1967. On the very next day i. e. 9th November 1967, the State Government passed a Resolution fixing the fair price of sugarcane to be supplied by the defendant Corporation to the plaintiff during the crushing-season 1967-68 at Rs. 125.44 per ton and that Resolution was released to the press on the 10th of November 1967. In view of the framing of Rules 12B and 12C and the passing of the said Resolution fixing fair price by the State Government, the plaintiff company filed another writ Petition (being Misc. Petition No. 664 of 1967) on the 13th of November 1967 against the State of Maharashtra and the Maharashtra State Farming Corporation Ltd. On the 29th of November 1967, a Consent Order was passed on the Notice of Motion taken out by the plaintiffs in the suit (Suit No. 610 of 1967) and the hearing of the suit itself was directed to be expedited. By the said Consent Order, the interim injunction
that had been granted was replaced by a working arrangement under which sugarcane was to be supplied by the defendant Corporation to the plaintiffs during the crushing season 1967-68 on payment by the plaintiffs of an additional ad hoc sum of Rs. 10/- per tonne over the minimum price fixed by the Government of India and on their furnishing a bank guarantee for the balance, if any, that may be finally found due by the Court.
8. The plaintiffs' case in the suit as well as in Misc. Petitions Nos. 615 and 664 of 1967 is that there was contract between the plaintiffs and the defendant Corporation under which it was agreed between the parties that the defendant Corporation would, on the one hand, supply sugarcane to the plaintiffs at a price which would be governed by notifications issued by the government of India from time to time, and that the plaintiffs would on the other hand, he bound to purchase all the sugarcane produced on their surplus lands at those prices. This case is to be found set out in para. 27 of the plaint in which it is further stated that the prices so agreed were meant and understood by the parties to mean the minimum prices fixed by the Central Government under its annual notifications and the said minimum prices were regarded as the fair prices within the meaning of Section 28 of the Maharashtra Agricultural Lands (Ceiling of Holdings) Act, 1961. It is also the case of the plaintiffs in paragraphs 34 and 36 of the plaint that the minimum prices of sugarcane fixed by the Central Government under its annual notifications were, in fact the fair prices, and that the unilateral and wrongful increase in prices sought to be effected by the State Government was contrary to its statutory obligations. The plaintiffs have, therefore, filed the said suit for specific performance and/or enforcement of the defendants' obligations under the contract as well as at law. The learned Advocate-General has referred me to the averments in paragraph 38 of the plaint, and to the latter part of prayer (c) of the plaint, and has submitted that the same would justify the court of sugarcane under Section 9 of the Sale of Goods Act, in the event of its coming to the conclusion that the price thereof has not been fixed in the contract itself. The plaintiffs as petitioners in Misc. Petition No. 615 of 1967, have sought a declaration that the State Government as well as the State Farming Corporation are bound to supply the entire sugarcane produced from the surplus lands of the petitioners to the petitioners, and a further declaration that both the respondents are bound to ensure that the production and supply of sugarcane from the surplus lands of the petition No. 615 of 1967, have sought a declaration that the State Government as well as the State Farming Corporation are bound to supply the entire sugarcane produced from the surplus lands of the petitioners to the petitioners, and a further declaration that both the respondents are bound to ensure that the production and supply of sugarcane from the surplus lands of the petitioners is not adversely affected, and have prayed for appropriate writs, directions and orders in that behalf.
9. The case of the Maharashtra State Farming Corporation as appearing from the written statement filed by it, and of the State Government as appearing from the Affidavits filed in Reply on Misc. Petitions Nos. 615 and 664 of 1967, is that though there was a contract between the parties for the supply of sugarcane by the Maharashtra State Farming Corporation to the plaintiffs, that contract did not provide for supply being made at the minimum price fixed from time to time by the notifications issued by the Central Government, and that the Maharashtra State Farming Corporation was entitled to be paid fair prices for the supply of such sugarcane. It is further the case of the State of Maharashtra as well as the Maharashtra State Farming Corporation that the State Government was entitled to fix the fair price for the supply of sugarcane, and had done some exercise of its power under Rule 12B of the Maharashtra Agricultural Lands (Celling on Holdings) Rules, 1962.
10. In view of these rival contentions of the parties, the following issues were framed by me in the suit (Suit No, 610 of 1967) :-
(1) Whether the State of Maharashtra is a necessary party to the suit and in its absence the suit is bad for non-joinder as alleged in para 1 of the Written Statement.
(2) Whether there is any cause of action against the defendants which survives, in view of the resolution dated the 9th November 1967 of the Government of Maharashtra determining the fair price at which the defendants are to supply sugarcane to the plaintiffs as alleged in para 2 of the Written Statement.
(3) Whether in view of the determination of fair price by the Government resolution dated 9th November 1967, this Hon'ble Court has jurisdiction to determine the fair price at which the defendants have to or are to supply sugarcane to the plaintiffs as alleged in para 3 of the Written Statement.
(4) Whether the price of controlled sugar fixed by the annual notifications of the Central Government is arrived at on the basis of the cost of sugarcane at the minimum price fixed by the Central Government for sugarcane as alleged by the plaintiffs in paragraph 18 of the plaint.
(5) Whether prior to the execution of the agreement dated the 10th May 1965 Shri. D. R. Pradhan representing the defendants agreed with the plaintiff's representatives that the price to be charged to the plaintiffs by the defendants for sugarcane for the season 1966/1967 onwards would be the price fixed by the Government of India as alleged in para 24 of the plaint.
(6) Whether it was agreed and understood between the parties that the entire production of sugarcane produced on the surplus lands of the plaintiffs would be sold by the defendants to the plaintiffs at the minimum price fixed by the Central Government as alleged by the plaintiffs in paras 27, 28 and 37 of the plaint.
(7) Whether at the meeting held on 20th July 1965 between the plaintiffs and the defendants it was clarified that the prices of sugarcane would be governed by the notifications issued by the Government of India from time to time and that they would not be the same as the minimum prices fixed by the Government of India form time to time as alleged in para 14 of the written statement of the defendants.
(8) Whether the minimum prices fixed by the Government of India from time to time are fair prices for the growers of sugarcane within the State of Maharashtra including the defendants as alleged in para 36 of the plaint.
(9) Whether the plaintiffs are entitled to any reliefs and it so, what?
(10) Generally.
11. On the 22nd of July 1968. Mr. Nariman stated that he did not desire to lead any oral evidence on issue No. 5 in view of the fact that the agreement pleaded in paragraph 2 of the plaint had not been denied in the Written Statement of defendants. Mr. Nariman also stated on that day that, as far as issue No. 8 was concerned he did not desire to lead any oral evidence with regard to the same, but relied only upon a construction of the relevant statutory provisions and orders to which he had referred in the course of his arguments. As far as issue No. 9 relating evidence in regard to prayers (c) and (d), in the event of the Court holding against the plaintiffs with regard to the question as to what was the contract between the parties, and the learned Advocate-General agreed that that was the proper course to be adopted. I, therefore, directed that evidence, if any, in regard to these prayers will stand reserved till I have delivered judgment on the other issues in the case. With the remarkable fairness that is characteristic of him. learned Advocate-General Mr. Seervai, however, made certain statements which have been extremely useful in narrowing down the arena of conflict between the parties. On the 17th of July 1968 he made a statement that the order sugar factories which had already handed over their surplus lands to the State Government without contest were supplied sugarcane by the defendant-Corporation from their respective names in the notifications issued by the Government of India on 30th October 1964 and 4th November 1965. That statement was, of course, made by the learned Advocate-General entirely without prejudice to the defendant's contention that the facts stated therein are not admissible for interpreting the contract between the parties. It was made with a view to make it unnecessary for the plaintiffs to lead evidence to prove these facts which the defendants do not dispute. On 23rd July 1968, the learned Advocate-General stated that on further consideration he had come to the conclusion that issue No. 7 did not arise and that he would give up the same. The learned advocate-General further stated, at the end of his argument, that he also gave up issue No. 1 framed by me. On 26th July 1968 a statement was recorded by me that the parties were agreed that a policy had been announced by the Central Government on the 16th of August 1967 whereby a quantity equal to 60 per cent of the production achieved from the 1st of October 1966 to the 30th of September 1967 would be procured from the sugar factories from their production from 1st October 1967 to 30th September 1968 at a fixed levy price, that factories would be free to sell the balance production anywhere in India at the free market price, subject to releases from factories sanctioned by the Government of India; that the entire stock of sugar from the production upto 30th September 1967 would continue to be controlled as on the 16th of August 1967 and releases would be made on the basis existing at that date till November 1967; and that the levy scheme would commence after the production of the year 1966-67 had been exhausted. Parties were further agreed that the said policy had in fact existed from 1st Oct, 1967 to 30th September 1968, with some modifications to which it was unnecessary to refer. The said statement was made by the parties and recorded by me with a view to make it unnecessary to prove the same by leading evidence, oral or documentary, in that behalf.
12. Though issues are not ordinarily framed in the trial of Writ Petitions, it was, by consent of parties, thought advisable by me, in view of the complicated and important questions that were sought to be canvassed in Miscellaneous Petition No. 664 of 1967, to frame issues therein. Towards the end of the arguments before me Counsel on both sides were agreed that it is not necessary for me to give my findings on any of the issues framed by me in the said Petition in view of certain statements made by the learned Advocate-General in regard to this Petition on 22nd July 1968 and 29th July 1968 to which I will presently refer. Under the circumstances, I do not think it necessary to set out the issues framed by me in the said petition. On the 17th of July 1968, the learned Advocate-General made a statement in regard to Misc. Petition No. 664 of 1967 which, he submitted, would render it unnecessary for the court to go into the question as to whether the State Government had the power to frame rules in regard to the fixation of fair price. The learned Advocate-General stated that having regard to Rule 12C of the Maharashtra Agricultural Lands (Ceiling on Holdings) Rules 1962, as amended by the notification dated 24th October 1967, the price fixed was the maximum price and, therefore, any price fixed under Rule 12B did not come in the way of the contract between the parties, whatever to be construction of the contract adopted by the Court. On the 22nd of July 1968, the learned Advocate-General stated that he had, by then, taken instructions from the State Government and that he desired to make a statement from the Bar that having regard to the fact that before the State Government fixed the prices by its Resolution dated 9th November 1967, it did not have before it the view of one Ruparel who was a member of the Advisory Committee appointed under Proviso to R. 12B and had been appointed to represent the interests of the undertakings, he was not in a position to support the said Resolution, or the Report of the Advisory Committee dated 8th November 1967, and both of them may be set aside by this Court. The learned Advocate-General further stated on that day that the Resolution dated 1st November 1967, appointing the said Advisory Committee, may also be set aside, as the same was only appointed to determine the fair prices for the season 1967-68 and as the same had already submitted its Report and had, therefore, become functus officio. In view of the said statements made by the Advocate-General, it became unnecessary for me to decide issues Nos. 10 and 12 framed by me in regard to this petition, and though issue No. 11 was reframed by me even the same did not survive in view of the said statements. In fact it was stated to me by the learned Counsel on both sides, on 29th July 1968, that they were agreed that it was not necessary to determine the matters arising in Misc. Petition No. 664 of 1967, because in view of the Statement made by the learned Advocate-General on the 22nd of July 1968 the impugned Resolutions dated 1st November 1967 and 9th November 1967 were to be set aside, The learned Advocate-General further stated that, having regard to the language of Rule 12-C, it was open to the defendants to charge less that the fair price determined under Rule 12-B.
13. It was, however, not thought necessary to frame issues in Misc. Petition No. 615 of 1967, as, even according to Mr. Nariman himself, the said objection survived only to the extend of considering whether or not the reliefs sought in prayers (a) and (b) of the petition should be granted, all the contentions raised therein being covered by Misc. Petition No. 664 of 1967, subsequently filed, which is the more comprehensive Petition.
14. In my option it would be convenient to deal first with issue No. 6 framed by me in Suit No. 610 of 1967. The fact that there was a contract arrived at between the parties at the meeting held on the 20th of July 1965 and that the same was approved by the Board of Directors of the defendant-Corporation at its meeting held on the 9th of September 1965 is not the subject-matter of dispute between the parties. It is, however, a matter of acute controversy between the parties as to what was the stipulation in regard to the price of sugarcane to be charged by the defendant-Corporation under that agreement. The form and wording of that stipulation both in the Minutes of the Meeting held on the 20th of July 1965 as recorded by the plaintiff company (Ex. C), and as recorded in the Minutes of the meeting of the Board of Directors of the defendant Corporation (Ex. E) is identical, viz, that the price which was to be charted for the sugarcane to be supplied by the defendant- Corporation to be plaintiff company at the minimum price fixed by the Central Government under notification issued by it from time to time under the Sugarcane (Control) Order 1955, which in its turn was made under Section 3 of the Essential Commodities Act,, 1955. It is the contention of the defendant-Corporation, on the other hand, that that was not the stipulation agreed to between the parties in regard to price and though no positive case has been set out by the defendants in their written statement or on affidavit as to what according to them was the agreement in regard to prince the learned Advocate-General has, in the course of his argument, stated that the defendants' version was that the price at which sugarcane in question was to be supplied by the defendant-Corporation to the plaintiff-Company under the said contract was to be the price as fixed by the State Government by the Rules framed under the Maharashtra Agricultural Lands (Ceiling on Holidays) Act, 1961, having regard to the minimum price notification that may be issued by the Central Government.
15. On behalf of the plaintiff-company, Mr. Nariman submitted a threefold argument on the point. His first contention was that the words of the agreement which have been quoted above were clear and applied in terms to whatever was the price fixed by the notifications issued by the Central Government from time to time, whether the same happened to be the minimum price or any other price. In the alternative, Mr. Nariman contended that if the words of the stipulation in regard to price quoted above are not held by the Court to be clear, the court must look at the circumstances surrounding the said agreement between the plaintiff-company and the defendant Corporation for the purpose of finding out in what manner the language of the said agreement was related to existing facts as is permitted to be done by proviso (6) to Section 92 of the Evidence Act. In the further alternative, it was contended by Mr. Nariman that if the court comes to the conclusion that the stipulation in regard to price which has been quoted above, might have been meant to apply to any one of the three possible prices that could be fixed by the Central Government by notification viz., the minimum price, the maximum price or the levy (controlled) price, and could not have been meant to apply to more than one of those prices, extrinsic evidence can be given under Section 96 of the Evidence Act to show to which of these prices it was intended to apply. The learned Advocate-General has, on the other hand, contended that though, according to him also, the words of the stipulation quoted above, are clear, what they show, as a matter of plain language, is that the agreement the parties was not that the price to be charged by the defendant-Corporation for the sugarcane to be supplied to the plaintiff-company was to be minimum price fixed by the Central Government under the notifications issued by it from time to time, for if that was the agreement between the parties, nothing would have been simpler than to express the same in clear terms. The learned Advocate General contended that since the language of the stipulation in regard to price which has been quoted above is clear and unambiguous in terms, it is not permissible to look to extrinsic evidence, oral or documentary, for the purpose of construing that stipulation, or as an aid to its interpretation.
16. The first question that I must, therefore, proceed to consider is whether the stipulation in regard to price quoted above, is clear in terms, as both sides have contended, and if so, what is it that it clearly expresses. In my opinion, the terms of that stipulation are clear. The fact that the parties could have if they so chose, expressly stipulated that the price to be charged for the sugarcane supplied by the defendant-Corporation to the plaintiff-company was to be the minimum price fixed by the Central Government by its notifications, cannot be conclusive on the point. It is at least, an argument which the learned Advocate-General is entitled to use in support of his contention and which, it may be stated, has been used in some of the cases that we cited before me in the course of the argument. The simple answer to that argument, however, is that it is only because the parties have not expressed something in clear terms that litigation ensues. Indeed, that was the precise answer given by Lord Dunedin in his speech in the House of Lords in the case of Carrington and Co., Ltd. v. Wooder 1914 AC 71 to such a contention which was advanced in the said case in the House of Lords. He said. 'I do not think it rests with either party to say to the other, if the meaning is as you contend, why did you not express it otherwise?' Both contentions as to the true meaning can be expressed by a gloss. If either of those glosses had been expressed there would be no possibility of dispute. It, therefore, comes back to the question, 'what is the true interpretation of the expression in the contract?'' I must, therefore, come back to the question what is the true interpretation of the agreement in the present case in regard to price between the parties. In my opinion, Mr. Nariman is right when he contends that the stipulation in regard to price is clear (a) in that the said stipulation in regard to price clearly provides that the price is to be fixed in accordance with the notifications issued by the Central Government, and (b) in that there are notifications of the Central Government fixing the price of sugarcane. It may be mentioned that it was not sought to be argued, either by Mr. Nariman or by the learned Advocate-General, that the words 'governed by' in the stipulation in regard to price quoted above do not mean the same thing as 'fixed'. The learned Advocate-General has, however, contended that no price has in fact been fixed by the Central Government in regard to sugarcane, that what was been fixed by the Central Government by the notifications issued under the Sugarcane (Control) Order 1955 is the minimum price, and that, therefore, if those notifications are to be read into the contract between the parties in regard to price, the contact would read as if the parties had stipulated that the price to be paid to the defendant-Corporation for the sugarcane supplied by it to the plaintiff-company was not toe be 'lower than' the price fixed by those notifications, that being the effect of the Sections 3(1) read with 3 (2) of the Sugarcane (Control) Order 1955. I am afraid I cannot accept that argument of the learned Advocate-General, for it is not a question of reading the entire notification along with all the provisions of the Sugarcane (Control) Order into the contract, but what the contract provides is merely that if there is a price fixed by the Central Government by the notifications which it issues from time to time, the figure of that price is to be lifted from the notification and read into the contract as if it had been written therein. Whether the price fixed is the minimum price, or the maximum price, or the levy price which is popularly called the controlled price, it is all the same, a price fixed by the Central Government by notification, and the words of the stipulation in the contract between the parties in the present case in regard to the price of sugar-cane would, therefore, apply squarely to it. The question as to whether the legal position would be the same, or as to what it would be, if and when there is more than one price fixed by the Central Government by notifications issued by it from time to time under orders made in exercise of powers under the Essential Commodities Act 1955 does not arise for my consideration. There being, on the facts before me only one price fixed by the notifications issued by the Central Government from time to time, the stipulation in the contract would clearly apply to the same. In my opinion, the words in question are clear in expressing the intention of the parties and apply to the facts as they existed at the date of the contract. In that view of the matter, as laid down by the authorities discussed later on in this judgment, extrinsic evidence would not be admissible for construing those words. I, therefore, hold that the defendant Corporation is bound to supply sugar-cane to the plaintiff-company at the minimum price fixed by the Central Government by the notifications issued by it, so long as there is no other price fixed by the Central Government by its notifications.
17. In the event of my being wrong in the view which I have taken above, and if the view taken is that the stipulation in the contract in regard to the price at which sugar-cane is to be supplied by the defendant-Corporation to the plaintiff-company is not stated in clear terms in the contract, the question that arises is whether it is permissible to the Court to consider the circumstances surrounding the entering into of the said contract as an aid to its interpretation by virtue of the provisions of proviso (6) to Section 92 of the Evidence Act. In the event of my coming to the conclusion that extrinsic evidence is permissible under the said proviso, I would further have to consider what is the interpretation that should be put upon the said stipulation after considering the extrinsic evidence in the present case. It may be mentioned that no oral evidence has been led in this case by either party, and the extrinsic evidence on which Mr. Nariman has relied consists entirely of statutory Acts. Orders and Notifications, and of the documentary evidence tendered as exhibits in the present case, as well as the admissions made by or on behalf of the defendant-Corporation in the correspondence as well as at the Bar in the course of the arguments. A large number of authorities were cited before me in regard to the first of those questions viz. whether extrinsic evidence is admissible under proviso (6) to Section 92 of the Evidence Act as an aid to the interpretation of the stipulation in regard to price in the contract between the parties. Whilst I do not propose to deal with each and every one of those authorities, I must proceed to consider such of them as, in my opinion, merit discussion.
18. Mr. Nariman has relied on the decision of the Privy Council in the leading case of Balkishen Das v. W. E. Legge, (1900) 27 Ind App 58 which arose out of a suit for redemption of mortgage filed by the respondent in which the question was whether certain deeds of conditional sale in respect of a talook with a proviso for re-purchase on a fixed date were in reality mortgages. the evidence of the respondent ,and of a person named Man, was admitted by the trial judge for proving the real intention of the parties, and was to some extent relied upon in both the lower Courts. The Privy Council held that that evidence was not admissible for the purpose of construing or ascertaining the intention of the parties in view of the provisions of S. 92 of the Indian Evidence Act. After setting out the terms of that section, Lord Davey in his speech said that it was conceded that the said case could not be brought within any of the provisos to that section and that the cases in the English Court of Chancery which were referred to by the learned Judges in the High Court of Chancery which were referred to by the learned Judges in the High Court did not have any application to the law of India as laid down in Acts of the Indian Legislature. Curiously enough, however, Lord Davey then proceeded to lay down as follows (at p. 65):
'The case must, therefore, be decided on a consideration of the contents of the documents themselves, with such extrinsic evidence of surrounding circumstances as may be required to show in what manner the language of the document is related to existing facts.'The latter part of that statement reproduces the identical terms of proviso (6) to Section 92 of the Evidence Act, though it had been stated by Lord Davey a little earlier in his speech that none of the provisos to Section 92 of the Evidence Act was applicable. In point of fact, therefore, the decision in the case of (1900) 27 Ind App 58 (PC) was based on the contents of the documents in question construed in the light of the extrinsic evidence permissible under proviso (6) to Section 92 of the Evidence Act, and I construe the said decision as authority for the proposition that the said proviso can be restored to as an aid to the interpretation of a document the terms of which are not clear. It was by resorting to that mode of construction that the Privy Council upheld the decision of both the lower Courts that the transaction in question was intended to be and was a mortgage by conditional sale and that the respondent was entitled to a decree for redemption.
19. An identical question as to whether a document in the form of a sale deed was in reality a mortgage arose for decision in several other cases and it would be convenient to dispose of four of those cases which were cited before me in the context of the decision in the case of (1900) 27 Ind App 58 which I have just discussed. The first of them in chronological order is the decision of the Privy Council in the case of Baijnath Singh v. Hajee Valley Mahomed 27 Bom LR 787 = AIR 1925 PC 75 in which the same question as in Balkrishan Das' case arose not, however, in relation to immovable property, but in relation to certain shares. It may be mentioned that though there were two sets of transactions in dispute in the said case, one called the Jamal transactions, the Privy Council was concerned, as the statement of fact (at p. 790 of Bom LR) = (at p. 77 of AIR) shows, only with the Jamal transactions. The privy Council referred (at p. 791 of Bom LR) = (at pp. 77-78 of AIR) to their own earlier decision in the leading case of (1900) 27 Ind Ap 58 (PC) and to Section 92 of the Evidence Act, but held that neither the said decision nor the said section had any application to the case before them in the view which their Lordships took to the same. It was stated by the Privy Council (at p. 791 of Bom LR) = (at pp. 77-78 of AIR) that Section 92 merely prescribes a rule of evidence bur 'does not fetter the Court's power to arrive at the true meaning and effect of a transaction in the light of all the surrounding circumstances', and their Lordships then proceeded to deal with those circumstances and held that Jamal transactions in question were mortgages and the plaintiff was entitled to redeem the same. In Baijnath Singh's case 27 Bom LR 787 = AIR 1925 PC 75 the Privy Council had no doubt held Section 92 of the Evidence Act to be inapplicable, but in considering evidence of the surrounding circumstances for the purpose of arriving 'at the true meaning and effect' of the transactions in question, the Privy Council has in effect applied proviso (6) to Section 92, though it has not in terms referred to the same. That was a course which was permissible in view of exceptional nature of the relation which proviso (6) bears to substantive part of the section, as will be pointed out later on in this judgment. Proviso (6) to Section 92 has been constructed by a Division Bench of this Court in the case of Martand v. Amritrao 27 Bom LR 951 = AIR 1925 Bom 501. In that case also, the question was precisely the same as in the case of (1900) 27 Ind App 58 (PC) viz. whether the document in the said case which was in the form of a sale deed was in reality a mortgage, the suit being one for redemption of the alleged mortgage. Curiously enough, however, the decision of the Privy Council in the case of (1900) 27 Ind App 58 (PC) has not been referred to in the judgment of the Division Bench. Sir Norman Macleod C. J. delivering the Judgment of the Division Bench, observed that when the District Judge had proceeded to discuss the circumstantial evidence with regard to the transaction in order to satisfy himself that it was in the nature of a mortgage, probably had in mind proviso (6) to Section 92 of the Evidence Act and that the language of that proviso was rather vague and then proceeded to state as follows (at p. 957 of bom LR) = (at p. 503 of AIR) :-
'It is true that evidence of the circumstances surrounding a document is admissible; but it is admissible only for the purpose of throwing light on its meaning. It words, we think, be not permissible to consider the surrounding circumstances with a view to holding that a document which on the face of it is a sale deed was intended to operate as a mortgage.' The learned Chief Justice then proceeded to observe that there could otherwise be no certainty as to the proper construction to be placed on a document which to all appearance was unambiguous. The Division Bench, therefore, held that the transaction in question was a sale and allowed the appeal and dismissed the plaintiff's suit. The question as to whether the transaction in question was a mortgage by conditional sale, or a sale with a condition of repurchase arose again in the case of Chunchun Jha v. Ebadat Ali : [1955]1SCR174 . Bose J. delivering the judgment of the Court referred to the case of (1900) 27 Ind App 58 (PC) and stated as follows (at. p. 177 of SCR) = (at p. 346 of AIR): 'But certain broad principles remain. The first is that the intention of the parties is the determining factor: Sec (1900) 27 Ind App 58 (PC). But there is nothing special about that in this class of cases and here, as in every other case where a document has to be construed, the intention must be gathered, in the first place, from the document itself. If the words are express and clear, effect must be given to them and any extraneous inquiry into what was thought or intended is ruled what was thought or intended is ruled out. The real question in such a case is not what the parties intended or meant, but what is the legal effect of the words which they used. If, however, there is ambiguity in the language employed, then it is permissible to look to the surrounding circumstances to determine what was intended. '
After discussing the various clauses of the deed in question before them, Bose J. stated (at p. 180 of SCR) = (at p. 347 of AIR) that it did lack the precision of a practised hand and that probably accounted for its ambiguities and that there was ambiguity is patent from what he had said earlier in the judgment in discussing the various clauses of the deed. Bose J. then proceeded to discuss (at p. 181 et seq of SCR) = (at p. 348 of AIR) the applicability of the provisions of Section 58(c) of the Transfer of Property Act to the facts of the said case and ultimately held that, taking everything into consideration, their Lordships were of opinion that the deed in question was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act. A careful consideration of the judgment of Bose J. shows that the decision in the said case is not based only on the terms of Section 58(c) of the Transfer of Property Act and that the principle which he has laid down in the passage (at p. 177 of SCR) = (at p. 346 of AIR) quoted above, is enunciated by him as a broad principle which has nothing special about the class of cases to which the said case related. Pandit Chunchun Jha's case shows that the real question which the Court must first consider is what is the legal effect of the words which the parties have used, and that it is only if the language employed is not clear that it is permissible to look to the surrounding circumstances to determine what was intended. There is one more case in which the same question as to whether a transaction, ostensibly of sale, should be regarded as a mortgage, arose in the case of Bhaskar Waman Joshi v. Narayan Rambilas, : [1960]2SCR117 , which arose out of a suit for redemption filed by the transferors. Shah J., delivering the judgment of the Court, observed (at p. 122 of SCR) = (at p. 304 of AIR) that the question whether by the incorporation of a condition of the nature contemplated by Clause (c) of Section 58 of the Transfer of Property Act a transaction, ostensibly of sale, may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The learned judge then proceeded to state (at p. 123 of SCR) = (at p. 304 of AIR) as follows:-
'The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the deed viewed in the light of the surrounding circumstances. If the words are plain and unambiguous they must, in the light of the evidence of surrounding circumstances, be given their true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may, by law, be permitted to be adduced to show in what manner the language of the deed was related to existing facts.'
20. The learned Advocate-General Mr. Seervai has sought to distinguish the line of cases headed by (1900) 27 Ind App 58 (PC) which has been discussed above, on the ground that they fall into a distinct class in which the transaction had a formal aspect and a real aspect, and extrinsic evidence was admitted to show the real aspect or nature of the transaction. I do not think there is any basis for the distinction which the learned Advocate-General sought to make for, as stated by no less an authority than the Supreme Court itself in Pandit Chunchun Jha's case, : [1955]1SCR174 cited above. The decision in those cases proceeds on a broad principle which had nothing special about the class of cases in which the question whether a transaction which was ostensibly a sale was in reality a mortgage arose. Moreover, the same principles in regard to the admissibility of extrinsic evidence as an aid to the interpretation of a document have been laid down in other decisions which do not fall within that class and which I must now proceed to discuss. In the case of Ramgopal v. Nandlal, : [1950]1SCR766 one of the main questions was whether a deed of transfer described as a Tamaliknama by which two items of property, which were the subject-matter her 'malik' gave her an absolute interest in those properties which was heritable and alienable, or whether there was anything in the surrounding circumstances to cut down the full proprietary rights that the word 'malik' ordinarily imported and the said Meria got merely the interest of a life-tenant in those properties. Mukherjea J. delivering the judgment of the Court, laid down (at p. 772 of SCR) = (at p. 141 of AIR) the principle that in construing a document the fundamental rule was to ascertain the intention from the words used, and that the surrounding circumstances were to be considered, but that was only for the purpose of finding out 'the intended meaning of the words which have actually been employed.' For that limited purpose, the Supreme Court actually did consider the surrounding circumstances (at pp. 776 to 779 of SCR) = (at pp. 143-144 of AIR) and came to the conclusion (at p. 779 of SCR) = (at p. 144 of AIR) that there was nothing in the context of the document or in the surrounding circumstances which would displace the presumption of full proprietary rights which the use of the word 'malik' is apt ordinarily to convey. The learned Advocate-General relied upon the decision of the Privy Council in the case of Bomanji Wadia v. Secretary of State 56 Ind App. 51 = AIR 1929 PC 34 in which the facts were that the first appellant's ancestors enjoyed a grant of Rs. 4000 per annum, in lieu of which, at his request, the Government by a deed dated 9th February 1848 made a grant of the villages of Juju and Vile Parla in Salsette Island, near Bombay, which were assigned to him and his heirs in perpetuity. Without referring in detail to the questions relating to land-revenue with arose in that case, it may be stated that for the purpose of deciding the same it was necessary for the Court to come to the conclusion whether the grant of 1848 was merely an assignment of Rs. 4000 per annum out of the revenues of the said villages, or was a grant of the villages themselves subject to the conditions attached to the grant. The Privy Council took the view that the effect of the deed was 'quite clear' (at p. 54) and they, therefore, declined to go into certain correspondence prior to the deed of grant, though the same was referred to in the preamble to the deed. Viscount Dunedin observed in his speech (at p. 58 of Ind App) = (at pp. 36-37 of AIR) that it was no doubt clear that the Government intended and thought that what they were giving was worth Rs. 4000; but they were not giving Rs. 4000, but were, on the contrary, giving something instead of Rs. 4000 which at that time they had been paying in case. Viscount Dunedin also observed (at p. 57 of Ind App) = (at p. 36 of AIR) that nothing was better settled than that, when parties had entered into a formal contract, that contract must be construed according to its own terms and not be 'explained or interpreted by the communing which led up to it', that that was especially true of a conveyance, and that, in the case of a conveyance, even if there had been formal antecedent contract, that contract could not have been looked at to control the terms of the conveyance, much less could mere communings, which could only show what parties meant to do but could not show what they did. I do not think the decision in that case is of any assistance to the learned Advocate-General for the simple reason that it was a case in which the Privy Council took the view that the language itself was quite clear, and Mr. Nariman does not dispute that in such a case extrinsic evidence would not be admissible for the purpose of interpreting a document. A decision of single judge of this Court in the case of Afshar Tacki v. Dharamsey Tricamdas : AIR1947Bom98 was also cited before me, but in view of the clear pronouncements of higher court. I do not think it necessary to deal with the same in detail. Suffice it to say, that in that case what the learned judge took into account for the purpose of interpreting a mercantile contract were matters of common knowledge like the prevalence of a World War and the consequences that flowed from it, but declined to admit oral evidence under the guise of surrounding circumstances to show what the parties really meant by the expression 'in case I am unable to effect shipment of the goods.' The learned judge observed (at p. 664 of Bom LR) = (at p. 100 of AIR) that it would involve a plain violation of Section 92 of the Evidence Act to admit such evidence for the purpose to proving that when a party 'wrote one thing he meant, and was understood to mean, something totally different.' In my opinion, what the learned Judge rightly ruled out was extrinsic evidence for the purpose of contradicting or varying the written contract in violation of Section 92 of the Evidence Act, a rule of evidence which Mr. Nariman does not dispute. The decision of the Supreme Court in the case of Radha Sundar v. Mohd. Jahadur Rahim : [1959]1SCR1309 was also cited by the learned Advocate-General in the courser of the argument of this case. The question which arose in that case was one of construing a grant of chaukidari chakran lands, and an objection was raised on behalf of the appellant that the respondent - defendants had not raised a certain plea in regard to that grand and should not, therefore, have been allowed to raise that point in Second Appeal in the High Court as it would necessitate the taking of evidence. Dealing with the contention, the Supreme Court held (para 6) that the true nature of the grant was a matter to be decided on a construction of the terms of the document, which was a question of law, and that it was well settled that no evidence was admissible on a question of construction of a contract of grant which must be based solely on the terms of the document, 'there being no suggestion that there is any dispute as to how the contents of the document are related to existing facts, and the decision in the case is, therefore, in my opinion, of no assistance for the purpose of determining the ambit of proviso (6) to Section 92 of the Evidence Act. The next decision which was cited before me by the learned Advocate-General was another and a later decision of the Supreme Court in the case of Kamla Devi v. Takhatmal, : [1964]2SCR152 in which the question which arose was one of construction of the expression 'when required' in a surety bond. The Supreme Court referred to Section 94 of the Evidence Act and declined to go into the surrounding circumstances and observed as follows (para 8) :-
'When a Court is asked to interpret a document, it looks at its language. If the language is clear and unambiguous and applies accurately to existing facts, it shall accept the ordinary meaning, for the duty of the Court is not to delve deep into the intricacies of the human mind to ascertain one's undisclosed intention, but only to make the meaning of the words used by him, that is to say his expressed intention. Sometimes when it is said that a Court should look into all the circumstances to find an author's intention, it is only for the purpose of finding out whether the words apply accurately to existing facts. But if the words are clear in the context of the surrounding circumstances, the Court cannot rely on them to attribute to the author an intention contrary to the plain meaning of the words used in the document.'
The Supreme Court then proceeded to state that the other sections, viz. 95 to 98 of the Evidence Act, deal with ambiguities, peculiarities in the expression and inconsistencies between the written words and the existing facts , and stated that in the case before them no such ambiguity or inconsistency existed as the expression 'when required' was capable of only one meaning. I am afraid the said decision is, therefore, also of no assistance to the learned Advocate-General for the purpose of the present case, in so far as the language of the document in question and proviso (6) to Section 92 of the Evidence Act was, therefore, not attracted. The learned Advocate-General also cited the decision of the Supreme Court in the case of Bai Hira Devi v. Official Assignee of Bombay : [1958]1SCR1384 , but I do not propose to deal with the same as the said decision was cited only for the purpose of showing the correlation between Sections 91 and 92 of the Evidence Act inter se, it being stated therein (at pp. 1387-1388 of SCR) = (at p. 450 of AIR) that the said sections in effect supplement each other and can both be said to be based on the best evidence rule. No question of the applicability of proviso (6) to Section 92 of the Evidence Act arose in the said case. The decision thereon is, therefore, of no assistance in the present case. The learned Advocate-General also cited the decision of the Supreme Court in the case of the Central Bank of India Ltd. v. Hartford Fire Insurance Co. Ltd. : AIR1965SC1288 which related to the construction of a clause in an insurance policy providing for the termination of that policy 'at any time at the request of the Insured' and also 'at any time at the option of the Company'. The main question in the appeal was whether the policy had been terminated by the Company under that clause by its letter dated 7th August 1947. It was contended on behalf of the Bank that a term must be implied in clause 10 that the termination could only be for a reasonable cause, which the termination in the said case was not. Rejecting that contention of the Bank, it was observed in the judgment of the Supreme Court (para 5) that it was commonplace that it was the court's duty to give effect to the bargain of the parties according to their intention, and when that bargain was in writing the intention was to be looked for in the words used 'unless they are such that one may suspect that they do not convey the intention correctly. If those words are clear, there is very little that the court has to do. The court must give effect to the plain meaning of the words, however it may dislike the result.' The Supreme Court took the view (para 6) that the clause in question in the said case was plain, and its categorical language could not be radically changed by relying upon the surrounding circumstances, and it was observed that a right to terminate at will could not, by reason of the circumstances, be read as a right to terminate for a reasonable cause. It must be noted that in this case also, as in Radha Sundar's case : [1959]1SCR1309 cited above though the language used is somewhat different, what the Supreme Court has by clear implication laid down is that there must be some controversy as to how the contents of the documents are related to existing facts so as to give rise to a suspicion in the mind of the court that the words of the document do not convey correctly the intention of the parties, before extrinsic evidence can be admitted as an aid to the interpretation of a document. Mr. Nariman in his reply relied upon a decision of the Supreme Court in the case of Dhanrajmal v. Shyamji Kalidas and Co. : [1961]3SCR1029 in which one of the questions which arose was whether a mercantile contract in which it was stated that it was 'subject to the usual force majeure clause' was void on the ground of vagueness and uncertainty under Section 29 of the Contract Act. The Supreme Court held (at p. 177) that the word 'usual' referred to something which was invariably found in contracts of that particular type and that the impugned clause was, therefrom capable of being made certain and definite within the terms of Section 29 of the contract Act by proof that between the parties, or in the trade, or in dealings with parties in British East Africa, there was invariably included a force majeure clause of a particular kind, and the contract was, therefore, not void for vagueness or uncertainty. this decision is important for the purpose of the present case in view of the terms of the contract in regard to the price of sugar-cane viz. that it was to be 'governed by the notifications issued by the Government of India from time to time.' The definite article 'the' is to be found both in the Minutes of the meeting held between the parties on the 20th of July 1965 (Ex. C) as approved by the defendant-Corporation, as well as in the Minutes of the meeting of the Board of Directors of the defendant-Corporation itself held on the 9th of September 1965 (Ex. E), in conjunction with the word 'notifications' which also occurs in both those Minutes. In my opinion, the use of the definite article 'the' in respect of the notifications mentioned in the stipulation in regard to price shows clearly that the parties had something definite in mind as far as the notifications which used to be issued are concerned. It has, therefore, a connotation similar to the word 'usual' on the strength of which the Supreme Court took the view that extrinsic evidence could be led in order to make the clause in question in Dhanrajmal's case capable of being made certain. The expression 'from time to time' which also occurs in both the said Minutes (Exs. C and E) in my opinion, also conveys the idea that the parties had in mind the notifications that were usually being issued by the Central Government. That finishes with a discussion of the Indian cases on the point. There are, however, three decisions of English Courts which were cited before me and which I must now deal with.
21. The first of them is the decision of the Privy Council in the case of Van Diemen's' Land Co. v. Marine Board 1906 Ac 92. The said appeal arose out of an action for trespass to land in which the question was whether certain land on the foreshore was included in the grant. It may be mentioned that the grant neither expressly excluded it nor expressly included it (p. 97), and the facts of the case as recited in the grant showed that the obvious intention was to give a title to land that had been taken possession of by the appellant company before the actual grant, on which it had expended money. Extrinsic evidence of what land the grantees were in possession of at the date of the grant was held admissible and it was observed (at p. 98). 'The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it.' Relying on the decision in Lord Hasting's case cited above, it was made clear in the speech of the Earl of Halsbury in the said case that if the language of the grant itself were absolutely plain and unambiguous no amount of user could prevail 'against' the plain meaning of the words. The evidence that was admissible in that case was, therefore, clearly evidence which was intended to show in what manner the language of the document was related to the facts existing at the date of the grant and is in consonance with the principle underlying proviso (6) to Section 92 of the Indian Evidence Act as interpreted by the decisions of Indian Courts which have already been discussed above. The next English decision which was cited in the course of the argument was the decision of the House of Lords in the case of Carrington & Co. Ltd. V. Wooder 1914 AC 71. The facts of that case were that London brewing company demised a public house to a publican, who convenanted to deal exclusively with the lessors for beer, provided that they would be willing to supply the same to him 'at the fair market price'. It appeared that there were two market prices current in the trade, one in respect of tied houses which was applicable to the bulk of the brewers' trade in London with a discount which was allowed at certain recognized rates, and the other in respect of what were called free tenants in whose case a higher discount was often obtained as a matter of special bargain. The question was, which was the market price that was intended by the parties as being the price of the beer to be supplied? It was laid down that if the language of the written contract had a definite and unambiguous meaning, parole evidence was not admissible to show that the parties meant something different from what they have said, but that if the description of the subject-matter was 'susceptible of more than one interpretation.' evidence was admissible to show what were the facts to which the contract related (at p. 77), and that (at p. 79) the term 'market' was a word covering a variety of possible forms. The Housing of Lords, therefore, held that surrounding circumstances must be taken into consideration and that they showed that the fair market price to be charged was that applicable to tenants of tied houses. Lord Kinnear stated (at p. 80):
'It is said that this involves a violation of the rule which does not allow a written instrument to be varied by oral evidence. But the objection is, in my opinion, groundless. Evidence is not admissible to put a peculiar meaning upon plain and unambiguous words. But it may be necessary to prove the relation of the document to facts; and I take it to be sound doctrine that for this purpose evidence may be given to prove any fact to which it refers, or may probably refer, or to identify any person or thing mentioned in it. In so stating the law, I am using the language of Sir James Stephen; and accepting his doctrine as I do, I cannot think it doubtful that, in order to interpret the contract before us, we must know the facts about which the parties were bargaining and consider the circumstances of the market to which they refer as that in which they propose to deal.' This decision of the House of Lords also, in my opinion, lays down the same principles in regard to the admissibility of extrinsic evidence as have been laid down by the decisions of our own Indian Courts discussed above, The last English case which I must consider is one on which there was considerable discussion in the course of the argument before me. That is the case of Hillas's and co. Ltd. v. Arcos Ltd. (1932) All E. R. (Reprint) 494. The facts of that case were that the plaintiffs agreed to buy from the defendants a quantity of timber of a particular quality. The agreement contained an option to purchase more timber at a later date, but gave no particulars as to the quality. The agreement contained an option to purchase more timber at a later date, but gave no particulars as to the quality, When the plaintiffs tried to exercise their option the defendants objected that it had not been intended that there was to be a binding contract in regard to the purchase of more timber at a later date, but that it was simply intended to provide a basis for future negotiations. The House of Lords held, that, in the light of the previous dealing between the parties, there was sufficient intention to be bound, and that the terms left uncertain in the option could be ascertained by reference to those contained in the original contract and from the normal practice to the timber trade. It had been observed in the judgment of the Supreme Court in Dhanrajmal's case, : [1961]3SCR1029 cited in the preceding paragraph (at p. 177 of Bom LR) = (at p. 1291-1292 of AIR) that the observations of Lord Wright in Hillas's case 1932 All ER 494 to the effect that commercial documents are sometimes expressed in language which does not on its face bear a clear meaning and the effort of the court should be to give a meaning, if possible, have become classic and have been quoted with approval both by the Judicial Committee and the House of Lords ever since. In my opinion, however celebrated that observations of Lord Wright in the Hilla's case 1932 All ER 494 may have become, the question which arose in that case was one in regard to the requirement of certainty in a contract, and all that was held was that though businessmen are in the habit of making contracts in a crude and summary fashion, it should be the endeavour of the court to give them a meaning, and that in the contract in question before the House of Lords in that case the terms left uncertain in the option could be ascertained by reference to the original contract and by proof in regard to the normal practice of the particular trade. Hillas's case 1932 All ER 494 is, in my opinion, not an authority which can be of any assistance in regard to the question which I am considering in the present case viz., in what cases is extrinsic evidence admissible as an aid to interpretation. As is apparent from the observations of Lord Wright (at p. 504) in the said case all that the House of Lords did in the said case was to extract the fair meaning of the parties to the contract from an earlier clause in the contract itself and from the practice of the trade. I do not think Hillas's case 1932 All ER 494 is, therefore, of assistance to me in deciding the question of admissibility of extrinsic evidence as an aid to the interpretation of a document in the manner contemplated by proviso (6) to Section 92 of the Indian Evidence Act.
22. Having dealt with the case law on the subject, it may be convenient to refer to the statements of the law on the point which I am now convenient to refer to the statements of the law on the point which I an mow considering in some standard works on the subject. In my opinion, the best statement of it is to be found in Odgers on the Construction of Deeds and Statutes (4th edn.) p. 31, in the following terms:-
'Rule V - When is extrinsic evidence admissible to translate the language?
It is to be noticed that extrinsic evidence of the writer's intention but evidenced to enable the court to interpret the language used. It is only admissible, as so often with this subject to construction, when there is some doubt as to what the words mean or how they are to be applied to the circumstances of the writer.'
In Halsbury's Laws of England (3rd edn.) Vol. 11 p. 381 para 628. (It is stated) that the object of all interpretation of a written instruments to discover the intention of the author, the written declaration of whose mind it is always considered to be. It is further stated (at pp. 405-406, para 658) in the same volume of Halsbury that the object of interpretation is to ascertain the intention of the parties to the instrument as expressed by the words they have used; and, since the words are the sole guide to the intention, extrinsic evidence of that intention is not admissible, save in the case of latent ambiguity which cannot otherwise be resolved. In the said passage it is, however, further stated that extrinsic evidence is admissible both to ascertain where necessary the meaning of the words used, and to identify the persons or objects to which they are to be applied, as the court which has to construe the document ought to know the surrounding circumstances at the time when it was executed, so as to place itself, as nearly as possible, in the position of the parties, the intention of the parties being expressed in the words, used as they were with regard to the particular circumstances and facts. To the same effect are the observations in Anson on the English Law of contract (22nd edn.) pp. 24 to 29 and 138 to 141, and in Chitty on Contracts (22nd edn.) Vol. 1 paras 624, 626 and 640. In the last of those paragraphs, the position is admirably summed up by Chitty in these words, 'Extrinsic evidence of this sort does not usurp the authority of the written instrument. It is the instrument with operates. The extrinsic evidence does no more than assist its operation, by assigning a definite meaning to the terms capable of such explanation or by pointing out and connecting them with the proper subject-matter.'
23. The next question that arises for my consideration is whether the court is entitled to consider the subsequent conduct of the parties by way of extrinsic evidence as an aid to the interpretation of a contract when its terms are not clear. Mr. Nariman had contended that the Court is entitled to do so. In support of that contention, he has relied upon the observations of Mahajan J. in the case of Abdulla Ahmed v. Animendra, : [1950]1SCR30 . Mahajan J. has observed in the said case that the evidence of conduct of the parties as to how they understood the words can be considered in determining the true effect of the contract made between the parties where there remains a doubt as to its true meaning, and particularly when the acts are done shortly after the date of the instrument. Those observations of Mahajan J. are, as the learned Advocate-General has pointed out, however, in a dissenting judgment on the point. The question in that case was whether the appellant who was an estate broker, was authorised to conclude a contract of sale. The majority of the Supreme Court held that he did not have that authority. Mahajan J. in his dissenting judgment, however, held that under the terms of the commission note in the said case, the appellant had authority to enter into a binding contract, and it was in support of that conclusion of his that Mahajan J. has relied upon the subsequent conduct of the parties. The observations of Mahajan J. on which Mr. Nariman has relied, therefore, occur in a dissenting judgment on the point to which they relate. In my opinion it is well established that when the terms of a contract have been reduced to writing, extrinsic evidence as to what transpired subsequent to the contract is not admissible for ascertaining the terms. In the case of : [1960]2SCR117 which arose out of a suit for redemption filed on the footing that an ostensible sale was really a mortgage and which has already been cited above, it was laid down in clear terms (at p. 123 of SCR) = (at p. 304 of AIR) by Shah J., delivering the judgment of a Bench of three Judges of the Supreme Court, that evidence of contemporaneous conduct is always admissible as a surrounding circumstance, but evidence as to subsequent conduct of the parties is inadmissible, Reference may also be made, in this connection, to the decision of a Division Bench of this Court in the case of Dinkerrai Lalit Kumar v. Sukhdayal 48 Bom LR 821 = AIR 1947 Bom 293 in which Chagla J., delivering the judgment of the Bench, stated (at p. 823 of Bom LR) = (at p. 294 of AIR) that the trial Judge had fallen into an error in admitting parol evidence with regard to negotiations antecedent to the contract and also with regard to the subsequent conduct of the parties and observed (at p. 824 of Bom LR) = (at p. 295 of AIR): 'It is hardly necessary to say that what the terms of the contract between the parties were, cannot be ascertained by allowing parol evidence as to what transpired antecedent to the contract or what the parties did subsequent to the contract,' in the case of a contract which has been reduced into writing. The law in England is the same and, in England also, there is the highest authority for that proposition. In the case of North-Eastern Railway Co. v. Lord Hastings 1900 AC 260, the facts were that in May 1853 Lord Hastings granted certain way-leaves to the railway company and that was a way-leave by which on certain terms the coal going over any part of the railways. which crossed Lord Hastings' land should pay certain rates. There could be no doubt that under the said agreement the sole right of Lord Hastings was to claim in respect of railways conveying coal through or over his own land. By another agreement of May 1854, however, certain way-leaves and rights in respect of them were granted by Lord Hastings, and the question which arose was whether under the said agreement of May 1854, like that of 1853, the right to get rents or sums was dependent upon whether the coal was carried through or over any part of Lord Hastings's land, or whether the railway company was liable to pay rents upon coal conveyed over any part of the railways even though it did not pass over Lord Hastings's land. For a period of over forty years after the said agreement, rent was paid by the railway company only for coal carried over the land of Lord Hastings, and not for coal which did not pass over the land of Lord Hastings. That was relied upon strongly in support of the case of the railways. It was held by the House of Lords that the clause in the agreement of May 1854 was clear and free from ambiguity (at pp. 265 and 270) and that 'no amount of acting by the parties can alter or qualify words which are plain and unambiguous' (at p. 263). It was further held that in view of the clear and unambiguous terms of the relevant clause of the agreement of May 1854, no limitation of its terms could be imported by the light to the earlier agreement of May 1853 (at p. 265). In my opinion, the ratio of the decision of the House of Lords in Lord Hasting's case is that neither an antecedent contract nor subsequent conduct can be used for the purpose of altering, qualifying or limiting words which are plain and unambiguous. It may, however, be noted that no question of resorting to extrinsic evidence to show in what manner the language of the document was related to existing facts as an aid to construction, as contemplated by proviso (6) to Section 92 of the Evidence Act, arose at all in Lord Hasting's case.
24. The propositions that emerge from a consideration of these authorities on the subject are as follows: (1) cases in the English Courts of Chancery have no application to the law of India as laid down in the Evidence Act. (2) In view of the provisions of Section 91 of the Evidence Act, no extrinsic evidence, oral or documentary, can be admitted to prove the terms of a contract, grant or other disposition of property, except the document itself or secondary evidence of its contents when admissible under the relevant provisions of that Act, and the court must find out the expressed intention of the parties. The fundamental rule of construction is to ascertain the intention from the words used in the document which is considered to be the written declaration of the mind of the author.(3) If the words are clear in expressing that intention and the language applies to existing facts, extrinsic evidence is not admissible for construing the deed or for ascertaining the real intention of the parties e.g. surrounding circumstances cannot be considered with a view to holding that a document which is, on the face of it, a sale deed was intended to operate as a mortgage. (4) if, however, the words are such that one may suspect that they do not convey the intention correctly, or in other words, there is some doubt as to what the words mean or how they are to be applied to the circumstances of the writer or to the facts existing at the time when the document was executed, extrinsic evidence is admissible, both under proviso (6) to Section 92 of the Evidence Act as well as in English law. In such cases, extrinsic evidence is admissible for the purpose of finding out the meaning of the words which have actually been employed, or what is same thing, in order to translate the language of the document by assigning a definite meaning to terms capable of such explanation or by connecting them with the proper subject-matter, or in other words, for the purpose of throwing light on the meaning of the words used with a view to arrive at the true effect of the transaction to which the document relates. The whole object in such cases is to place the court as near as may be, in he position of the parties to the document. (5) The subsequent conduct of the parties is, however not relevant or admissible for the purpose of unstring a written document. (6) If the language employed in the document is ambiguous, the question of the admissibly or otherwise of extraneous evidence would be regulated by the provisions of Sections 93 to 98 of the Evidence act. The plain meaning of the word 'ambiguous' is, obscure, or of double meaning (Concise Oxford Dictionary). (7) In view of section 92 of the Evidence Act, oral evidence can, in no event, be admitted to contradict, vary, add to or subtract from the terms of the document, as far as the parties to that document are concerned.
25. The learned Advocate-General has sought to explain away the cases discussed above in which extrinsic evidence has been held to be admissible for the purpose of showing in what manner the language of a document is related to existing facts by stating that all these cases fall into certain definite classes, and that it is only in cases falling within any of these classes that extrinsic evidence is admissible as an aid to the interpretation of a document. He has formulated four such classes. viz. (1) cases in which, as already stated above, evidence is admissible to show the real nature of the transaction when that transaction has a real and a formal aspect; (2) cases in which evidence is admissible to prove an implied term not inconsistent with the contract; (3) cases in which evidence is quality of the subject-matter of the instrument i.e. to identify the persons to whom, or the things to which, the instrument refers; and (4) cases in which evidence is admissible to rebut presumption that arises as a result of law or judicial decisions. The learned Advocate General has, however, stated that these four classes are not necessarily mutually exclusive and a case may well fall within more than one of these classes. In the course of his argument, he proceeded to show into which class or classes the various cases that were relied upon by Mr. Nariman, or cited by the learned Advocate-General himself, would fall. In spite of the ingenuity as well as to originality of this argument of the learned Advocate-General, I am afraid I cannot accept the same. First and foremost, no such classification is to be found in any standard work or in any if the decided cases, as the learned Advocate-General has himself conceded. It is not difficult to take each of the cases cited and make out a number if classes into which one or the other can be shown to fall. The classification which the learned Advocate-General sought to make out in the course f his argument cannot, however, stand the test of the judicial pronouncements as well ad the statements of law in standard works on the subject which express the rule in regard to the admissibility of extrinsic evidence under proviso(6) to Section 92 of the Evidence Act, or under the corresponding English rule of evidence, in very wide terms, subject to the sole limitation that, that rule can be resorted to only in cases in which the words used in an instrument are such that one may suspect that they do not convey the intention correctly, or, in other words, that there is some doubt as to what the words used in the instrument mean or how they are to be applied to the circumstances of the writer or to then existing facts. That is laid down as the only limitation that fetters power of the court to admit extrinsic evidence as an aid to the interpretation of a document in standard works and in the decided cases discussed above, as well as by the language of proviso (6) to Section 92 . The rule in question, which has been formulated by me as proposition No. 4 in the preceding paragraph does not in any manner contradict the provisions of the substantive portions of Section 91 or Section 92 of the evidence Act, nor is it an exception to the main part of Section 92 . It is well settled that though a proviso to a section is, as a general rule, added to quality or create an exception to what is contained in the section to which it relates, provisos are often added, not as exceptions or qualifications to the main enactment, nut as saving clauses, in which case hey will not be construed as controlled by the Section. : [1962]2SCR159 and in exceptional cases, a proviso may not really be a substantive provision itself : [1968]1SCR148 . In may opinion, proviso (6) to Section 92 of the Evidence Act is of that exceptional nature, in so far as it is not an exception to the rule laid down in the main part of the section that no evidence of any agreement or statement can be admitted for the purpose of contradicting, varying, adding to or subtracting from the terms of a written document. It is a substantive provision itself laying down the law relating to the admissibility of extrinsic evidence as an aid to the construction of a document in cases in which it is necessary to find out how the document is related to existing facts. It has nothing whatsoever to do with question of contradicting, varying, adding to or subtracting from the terms of the document with which the main part of Section 92 deals, Proviso (6) to Section 92 does not take away or quality anything that would, but for that proviso, have fallen within the substantive portion of that section. It is significant that, unlike the main portion of Section 92 , proviso (6) is not restricted to extrinsic evidence of an 'oral agreement' or statement. Proviso (6) cannot therefore, be construed as being an exception to S. 92 and controlled by the main part of that section, or even as being a saving clause to the substantive portion of the section. I, therefore, hold that extrinsic evidence would be admissible in the present case under proviso (6) to Section 92 of the Evidence Act, for the purpose of showing what was intended by the parties when, in regard to the price to be charged by the defendant-Corporation to the plaintiff company they used in the contract the expression, 'government of India from time to time'. in the event of my being wrong in the view which I have taken that the said words are clear in expressing the intention of the parties and apply to the facts existing at the time of the contract, I must, therefore, proceed to consider the extrinsic evidence on which Mr. Nariman has relied in the present case.
26. The first of the surrounding circumstances on which Mr. Nariman has relied is the statutes, orders and rules in force at the time of the contract. As already stated above the definite article 'the' which occurs immediately before the word 'notification shows that the parties had something definite in mind, as fat as the notifications which used to be issued by the Government of India are concerned, and the inference is strengthened by the use of the words 'from time to time' which follow, meaning the notifications that used to be issued by the government of India from time to time. It is also significant to note, as Mr. Nariman has rightly contended, that what the said clause refers to is prices fixed by 'notifications', and that there is no reference whatsoever to the Sugarcane (Control Order 1955, or to the Essential Commodities Act 1955 under S. 3. of which the said Sugarcane Control) Order was issued. The notifications that were admittedly being issued by the Central Government, ever since the year 1955, were notification under Section 3 of the Sugarcane (Control) Order of that year, and those notifications could only fix, and actually did fix only, the minimum price of Sugarcane. The second 'surrounding circumstance' on which Mr. Nariman has relied, therefore, was that having regard to the history of the legislation in respect of sugarcane, the price control which was in the reasonable contemplation of the parties when they made the contract was only the minimum price control and the when the parties used the words 'the notifications issued by the Government of India from time to time', they intended to refer specifically to the minimum price notifications which were being issued by the Government of India since several years prior to the contract, and right upto the time of the contract itself. Mr. Nariman has rightly commented, in reply to the arguments of the learned Advocate-General on the point that the court was not concerned with the fact that maximum prices or levy (controlled) prices may also have been fixed by the Central Government in respect of cotton or drugs or other commodities, or even in respect of sugar, as the price fixation in respect of other commodities could not have been in the reasonable contemplation of the parties when they entered into the contract in the present case. I have no hesitation in accepting this contention of Mr. Nariman. Mr. Nariman also relied upon the provisions of Section 28 of the Maharashtra Agricultural Lands (Ceiling on holdings) Act, 1961. He contended that whereas sub-section (1) of that section created a statutory obligation on the State Government to ensure that the acquisition of the sugarcane lands held by industrial undertakings did 'not affect adversely the production and supply of raw material from the land to the undertaking' it did not impose any correlative delegation on industrial undertakings to take the supply of all the raw materials from the lands which were previously being used for the purpose of providing raw materials to them. There is force in Mr. Nariman's contention that is in the light of these circumstances that the contract in the present case must be interpreted and, that having regard to these circumstances, what the parties intended to do and did was that the plaintiff-company bound itself to take all the sugarcane produced from their surplus lands, and the defendant-Corporation in its turn agreed to supply the same at the minimum price which used to e fixed by the Central government by the notification which it issued from time to time. Mr. Nariman has contended that if there had been no agreement as to the price, and if the plaintiff-company was not getting sugarcane at a rate which it considered profitable to itself, there was no reason why the plaintiff-company should have bound itself to take all the sugarcane from its surplus lands. The answer of the learned Advocate-General to the said contention of Mr. Nariman that the plaintiff-company bound itself to take all sugarcane because it was extremely anxious to have the sugarcane for its own factory is, in my opinion, no answer at all, in view of the fact that, under the statutory obligation contained in Section 28, it was entitled to get all the sugarcane produced from its surplus lands as a matter of right. I do not accept the learned Advocate-Genera's further argument that there was no such enforceable statutory obligation in favour of the plaintiff-company by reason of the fact the same did not arise unless the plaintiff-company was willing to take the sugarcane at a fair price. The fact that statutory obligation to supply the sugarcane grown on the plaintiff's surplus lands only if the plaintiff-company was willing to purchase the same is apparent from the use of the word 'adversely' in Section 28 (1). For, if the plaintiff-company did not want the sugarcane and the sugarcane was sold off elsewhere, it could never be said that plaintiff-company had been adversely affected in regard to the supply of the sugarcane. If the plaintiff-company were to seek an injunction restraining the deft, Corporation from selling the sugarcane to any other party, though it did not want it for itself, Section 41(1) of the Specific Relief Act 1963 would be a complete bar to the granting of such an injunction. I have no hesitation in holding that the State Government is bound to ensure the supply to the plaintiffs of the entire sugarcane produced from the surplus lands of the plaintiffs, for the crushing season of 1967-68 and for all future seasons, so long as the plaintiffs want it and that the defendant-Corporation is bound to sell the same to the plaintiffs so land as the plaintiffs are ready and willing to but that sugarcane at the contract price. I also do not accept the argument of the learned Advocate-General that I should not place on the contract in the present case a construction which would make it void under the second clause of Section 23 of the Contract Act as being calculated to defeat the provisions of section 28 of Maharashtra agricultural Lands (Ceiling on Holdings) Act, 1961, which provide for the payment of a fair price. In my opinion, there is no provision in the said section 28 which could be said to be defeated by a contract between the parties to but and sell sugarcane at a stipulated price, whatever be that price. All that the said Section 28 does is to impose certain obligations on the state Government, but there is nothing in that section which would render invalid a contract between the State Government and an industrial undertaking in regard to the price to be charged for the supply of sugarcane by the state Government. In this connection it is pertinent to note that Rule 12C which has been framed by the State Government under its alleged rule-making power under Section 46 (2) (d) of the Maharashtra Agricultural Lands (ceiling on holdings) act, 1961, makes it perfectly clear that it is open to the defendants to charge less than the fair price determined under Rule 12B. The legality of the contract in the present case to sell sugarcane at the minimum price fixed by notifications of the central Government would not, therefore, be affected by reasons of the price which may be determined as the price under Rule 12B.
27. The next 'surrounding circumstance' on which Mr. Nariman has relied is the fact that the parties knew that the minimum price that was being fixed by notifications issued by the Central Government from time to time was not just an arbitrary price, but was fixed after taking into account certain factors which have been set out in section 3 (1) of the Sugarcane (Control) Order 1955, one of which is the market price of sugar. If, therefrom, sugar was wholly or partially decontrolled at any future date, that would be reflected in the minimum price of sugarcane that would be fixed by notifications issued by the Central Government under the Sugarcane (Control) Order 1955. There have in fact been occasions when the Government of India has amended the minimum price fixed by it for sugar even in the middle of a season on account of change of circumstances. The argument of the learned Advocate-General that the defendant-corporation could never have agreed to bind itself to supply sugarcane at the minimum price fixed by the statutory notifications issued by the Central Government from time to time according to the change in circumstances is regard to the production and supply of sugarcane and sugar. These surrounding circumstances on which Mr.Nariman has relied are circumstances in regard to the existence of which there is no dispute between the parties, the dispute only being in regard to the inferences and arguments based thereon. In the result, I hold that even if the view taken is that the words 'governed by the notifications issued by the Government of India from time to time' in regard to price are not clear in expressing the intention of the parties, the surrounding circumstances clearly show that what the parties intended when they used those words was that the price that was to be paid for the supply of sugarcane by the defendant-Corporation to the plaintiff-company was to be the minimum price fixed by the notifications issued by he Central Government from time to time.
28. The third and the fourth alternative limb of Mr. Nariman's argument which was to the effect that he is, in any event entitled to resort to extrinsic evidence under the provisions of Section 96 of the Evidence Act, does not arise, because that is not a case in which there are several notifications of the Central Government fixing price, only to one of which the words in question might have been meant to apply. It is only in such cases that the provisions of section 96 of the Evidence Act would be attracted, In my opinion, Section 96 is wholly inapplicable to the facts of the present case in which there is admittedly only one notification of the Central Government, and that is the notification fixing the minimum price issued from time to time., Issue No. 6 must, therefore, be answered in favour of the plaintiffs.
29. I answer the issues framed in the suit as follows:-
(1). Given up by the defendants.
(2) and (3). Do not survive in view of the statement made by the learned Advocate-General on the 22nd of July 1968 which has been recorded by me in Misc. Petition No. 664 of 1967 that he is not in a position to support the Resolutions dated 1st November 1967 and 9th November 1967, or the Report of Advisory Committee dated 8th November 1967, and that the same may be set aside by the court.
(4). Unnecessary.
(5). Not proved by the Plaintiffs.
(6). In the affirmative.
(7) Given up by the defendants.
(8). Does not arise.
(9) and (10). See Order below.
30. Parties are agreed that in view of the statements made by the learned Advocate-General in Misc. Petition No. 664 of 1967 on the 22nd of July 1968 and on the 29th of July 1968, it is not necessary for the court to give a finding in regard to any of the issues raised in the said petition, or to determine any of the questions arising therein. I, therefore, do mot answer any of the issues framed by me in the said petition. In view of the said statements made by the advocate-General, the petitioners will, ever, be entitled to appropriate reliefs in the said petition.
31. As far as Misc. Petition No.615 of 1967 is concerned, Mr. Nariman contended that reliefs in terms of prayers (a) and (b) thereof should be granted to the plaintiffs. As far as prayer (a) of the said petition is concerned, I have already held in this judgment that the State Government is bound to ensure the supply to the plaintiffs of the entire sugarcane produced from the surplus lands of the plaintiffs, for the crushing season 1967-68 and for all future seasons, so long as the plaintiffs want it, and that the deft-corporation is bound to sell the same to the plaintiffs so long as the that sugarcane at the contract price I, grant a declaration in the terms in which it is sought in prayer (a) of the said petition. As far as prayer (b) of the said too vague in its terms to be the subject matter of a declaration, and I decline to grant the same.