Vishnudeo Narayan, J.
1. This appeal at the instance of the plaintiff-appellant has been preferred against the impugned judgment and decree dated 4.3.1980 and 15.3.1980 passed in Title Suit No. 37/19 of 1973/1977 by Shri Dharamdas Topno, 1st Additional District Judge, Dhanbad, whereby the said suit was dismissed.
2. The plaintiff-appellant has filed the said suit for declaration of his title and recovery of possession of the Sand Preparation and Washing Plant along with its annexures and fixtures detailed in Schedule B of the plaint situate at Dangi Hill in the district of Dhanbad and in the alternative, a decree for realisation of Rs. 6,15,354.42. The plaintiff-appellant has also sought a decree of permanent injunction restraining the defendants-respondent from further operating or running the said plants and machineries and or intermeddling with the same and for the sale of the aforesaid machineries as per Schedule B during the pendency of the suit and/or, deposit of the sale proceed in the Court. The plaintiff-appellant has also sought for decree of Rs. 6,96,983.77 as per Schedule A of the plaint along with interest pendente lite.
3. The case of the plaintiff-appellant, in brief, is that the defendant-respondent Nos. 1 to 6 are possessed of a Quartzite Mine at Dangi Hill in the district of Dhanbad by virtue of an agreement dated 27.8.1960 with the Government of Bihar and they carried on mining operation in the said Quartzite Mine in co- partnership under the name and style of Bihar Bengal Minerals and Defendant-respondent No. 1 Stefan Mandal is the managing partner of the said firm and they entered into an agreement with the plaintiff-appellant on 15.2.1965 for supply of Silica sand on terms and conditions expressly set forth in the agreement duly executed between the parties and as per the terms of the agreement aforesaid the defendant-respondent expressly covenanted and undertook to supply to the plaintiff-appellant from the said quarries a monthly quantity of 1000 tonnes of Silica sand @ Rs. 33.50 per tonne or such larger or lesser quantity as the plaintiff-appellant company may intimate to the defendants-respondent from time to time by placing the indents for the same and the Silica sand supplied to the plaintiff-appellant should conform to the size, specification and quantity as stipulated in the agreement and the price was to be paid by the plaintiff-appellant by way of adjustment, in satisfaction pro tonto of defendants-respondent bills each and every month against hiring rent payable by the defendants-respondent to the plaintiff appellant in the manner and in accordance with and the during the subsistence of a hire purchase agreement between the parties as per the agreement executed on 15.2.1965 and the balance of price, if any, after such adjustment in terms of the said agreement was to be paid by the plaintiff-appellant to the defendants-respondent against their bills and after adjustment against the hiring rent provided in the said hire purchase agreement is fully satisfied, the price aforesaid was to be paid by the plaintiff- appellant to the said defendants-respondent against their bills each and every month. It is also alleged that for the purpose of carrying into effect the above sand supply agreement the plaintiff-appellant agreed to supply and erect a sand preparation and washing plant at the work site as per terms of the agreement dated 15.2.1965 and the plaintiff-appellant in pursuance of the said agreement supplied to the defendants-respondent one sand preparation and washing plant and installed the said plant at or near the defendants-respondent stone quarries at Dangi Hill at the cost of Rs. 6,15,354.42. The further case of the plaintiff-appellant is that the plant and machineries as supplied and delivered by the plaintiff-appellant to the defendants-respondent under the hire purchase agreement has been duly put into commission by the defendants-respondent and has been extensively used by them for sand processing purpose and notwithstanding assurances given and stipulations made by the hirers i.e. defendants-respondent in this respect the supply of Silica sand by the defendants-respondent to the plaintiff-appellant has been extremely unsatisfactory and far below the minimum monthly requirement of the plaintiff-appellant and further the quality and grade of the Silica sand supplied by the defendants-respondent did not at all conform to the agreed specification. It is also alleged that the quantity of Silica sand supplied by the defendants-respondent during the period 67/68 and 68/69 amounted to 4,772 tonnes working out to a monthly average of about 200 tonnes against the agreed quota of 1000 tonnes per month and as a result of this a sum of Rs. 42,104.72 has been only recovered from the defendants-respondent as against the total advance made to them to the extent of Rs. 6,15,354.42 and interest thereon amounting to Rs. 1,19,596.34 approximately. It is alleged that in terms of the hire purchase agreement dated 15.2.1965 and subsequently revised by the deed of rectification dated 4.8.1967 the defendants-respondent expressly undertook and agreed to liquidate the full price of the plant and machineries by 31.7.1970 but they miserably failed and neglected to perform and discharge their outstanding obligations and liabilities and, accordingly, a sum of Rs. 6,96,983.77 as per account in the schedule of the plaint has become due and payable by the defendants-respondent to the plaintiff-appellant which is recoverable from them as well as from their property as per Clause 22 of the Hire Purchase Agreement read with the deed of rectification dated 4.8.1967. It is also alleged that the defendants-respondent have not paid up the stipulated value of the plant and machineries hired by them from the plaintiff appellant and the title in the said machineries has not passed unto them and it has all along remained with the plaintiff- appellant and even now rests with the plaintiff-appellant and the plaintiff-appellant has got a valid lien upon the said Sand Preparation Plant and is fully competent to seize and remove the same and to put up the same on sale and appropriate the money that may be fetched by the sale and hold the hirers liable for the balance price. Lastly it has been alleged that the defendants-respondent have entered into a fraudulent and collusive arrangement with defendant-respondent No. 7 M/s. Entracoast Private Limited who is now operating the said sand preparation and washing plant without the knowledge and consent of the plaintiff-appellant and there is no privity of contract between the plaintiff-appellant and defendant-respondent No. 7 M/s. Entracoast Private Limited who has no right to intermeddle with the plant and machinery aforesaid which appertains to the plaintiff-appellant. It is also alleged that the defendants-respondent have got no right or power to deal with or otherwise sublet and dispose of the sand preparation and washing plant set up by the plaintiff-appellant at his own cost and the defendant-respondent No. 7 M/s. Entracoast Private Limited has got no interest at stake and the said defendants-respondent is handling the plant and machinery in a very reckless and desperate manner and without any regard to its safety and security and it has been substantially damaged by defendant-respondent No. 7 M/s. Entracoast Private Limited and there is every apprehension that the said plant and machinery would be a complete loss to the plaintiff-appellant if the said defendants-respondent is further permitted to operate the same in this unlawful and reckless manner.
4. Written statements were jointly filed by the defendant- respondent Nos. 1 and 6, Written statement were also filed by defendant-respondent Nos. 2, 5 and 7 separately. Vide order dated 11.3.1997 read with order dated 12.11.1998 the appeal against defendant-respondent Nos. 2 to 6 stood dismissed for default without further reference to the Bench. Therefore, there is no need to dilate regarding the case as set up by defendant- respondent Nos. 2 to 6.
5. The case of the defendant-respondent No. 1 Stefan Mandai, inter alia, is that the suit of the plaintiff-appellant is barred by limitation and all the reliefs claimed by the plaintiff-appellant are stale reliefs. It is alleged that the agreement dated 15.2.1965 is not a hire purchase agreement at all and no hiring rent was payable therefor and the said agreement ;is for sale where the price remained unpaid by the buyer but the title to the plant supplied by the plaintiff-appellant passed to defendant Respondent No. 6 i.e., Bihar Bengal Minerals and the price advanced by the plaintiff-appellant towards the purchase of the plant was agreed to be paid in kind by working the plant and supplying to the plaintiff-appellant certain quantity of Silica sand periodically and the description of hire purchase agreement merely mis describes the agreement and is a misnomer. It is alleged that the owner under a hire purchase agreement enters into a transaction of hiring out goods on the terms and conditions set out in the agreement and the option to purchase is exercisable by the customer on payment of all the installments of hire when the installments are paid and not before and in a hire purchase agreement there is no agreement to buy goods and the hirer being under no obligation to buy has an option either to return the goods or to become its owner by payment in full of the stipulated hire and the price for exercising the option. It Is also alleged that in substance the agreements Annexures A and B read with Annexures C and D did not amount to hire purchase agreement and supply agreements but were mere agreements for payment in kind of unpaid price of the plant supplied by the plaintiff-appellant to defendants-respondent No. 6 Bihar Bengal Minerals by working the plant and producing Silica sand. The further case of these defendants-respondent is that plaintiff-appellant was interested in producing Silica sand for their own consumption and approached these defendants-respondent for such sand and up to this stage the defendants-respondent firm was grinding small quantities of Quartzite stones into sand in a pilot plant and since the quantity of the Silica sand required by the plaintiff-appellant was very large, the plaintiff-appellant indicated its willingness to supply and set up a large crushing plant for the defendants-respondent firm on the slopes of the Dangi Hill at its own cost initially and get repaid out of price of Silica sand produced at the said plant and the defendants- respondent firm expressly and by implication made known to the plaintiff-appellant the purpose for which the plant was required and the quantity that it should produce 15 tonnes of sand in the minimum per hour and the defendants-respondent firm wholly relied on the skill and judgment of the plaintiff-appellant that the plant to be supplied would be reasonably fit for the purpose of the defendants-respondent firm and also of merchantable quality. It is alleged that the plant supplied by the plaintiff-appellant to this defendant-respondent was not fit to crush 15 tonnes of Quartzite stones per hour and the steel used in the fabrication of the roller crusher of the said plant was of inferior quality causing wear and tear to the plant than was normal and further that the installation of the said plant by the plaintiff-appellant was not in accordance with the agreement as well as request made from time to time by these defendants-respondent nor was it done in a workman like manner and the part of the construction was left incomplete which was completed by the defendants-respondent firm at its own cost. It is also alleged that the defendants-respondent firm had never inspected the plant prior to the supply and installation thereof nor approved of the same and the total cost and expenditure involved in the said plant amounted to Rs. 6,15,354.42 is false and incorrect. It is also alleged that the defendants-respondent are not at all liable to pay the same for the reason that the implied warranty and condition as to quality and fitness were not fulfilled in the matter of supply of the plant which was not set up in a workman like mariner and the installation work was also not completed as the plaintiff-appellant was bound to do as a result of which supply of Silica sand to the plaintiff-appellant could not be made because of the fact that the plant did not work and could not produce the required quantum and kind of Silica sand resulting in the failure of the repayment because of the latch on the part of the plaintiff-appellant and finally the claim of the plaintiff-appellant is barred by limitation. It is also alleged that supply of Silica sand could not be made to the plaintiff- appellant in terms of the agreement because the plant set up by the plaintiff-appellant did not work properly. It is also alleged that the accounts in Schedule A of the plant is incorrect, inflated and not in strict terms of the alleged agreement and the quantity of sand supplied to the plaintiff-appellant comes up to much more than what has been admitted. It has also been alleged that by non-payment of the unpaid price the defendant-respondent Nos. 1 to 6 have not lost title to the plant and the title to the plant passed to the defendant-respondent Nos. 1 to 6 at the time of supply and installation of the plant and it is wrong to say that the plaintiff-appellant has any lien on the plant as alleged and since there was no hire purchase agreement between the plaintiff-appellant and the defendant-respondent Nos. 1 to 6, the plaintiff-appellant has no title to the plant and is nor entitled to reliefs as claimed. Lastly it has been contended that defendant-respondent No. 7 M/s. Entracoast Private Limited is merely an agent and constituted attorney of defendant-respondent Nos. 1 to 6 and it cannot be made liable for the acts of the principal and the plaintiff-appellant has no cause of action against defendant-respondent No. 7.
6. The case of defendant-respondent No. 7 M/s. Entracoast Private Limited in its written statement, inter alia, is that he is merely an agent and constituted attorney of some of the defendants-respondent and in the absence of a contract to the contrary an agent cannot be made liable for the acts of principal and as such the plaintiff appellant has no cause of action against the defendants-respondent. It is alleged that the plant as supplied by the plaintiff-appellant could not be operated because of the lapses on the part of the plaintiff-appellant and the greater part thereof rusted and deteriorated into junks by ravages of nature and also the machinery and the plant as supplied by the plaintiff-appellant to a large extent are how non-existent and new parts of the machinery have been supplied thereto by this defendant-respondent at a cost of Rs. 1,31,239.50 and over these parts of the plant the plaintiff-appellant can have no lien or claim. It is also alleged that this defendant- respondent is only the managing agent of defendant respondent Nos. 1 to 6 and he is no intermeddler. It is also alleged that it is wrong and false to say that this defendant-respondent has worked the plant and machinery in the reckless and desperate manner causing substantial damage to it. The case of this defendant-respondent is that it has repaired the plant supplied new parts where the old parts became unusable and installed new crushers in place of old crushers which were unusable and this defendant-respondent has advanced about Rs. 1,73,503.50 for re-commissioning of the plant.
7. In view of the pleadings of the parties the learned Court below has framed thefollowing issues :
(i) Is the suit as framed maintainable ?
(ii) Is the suit barred by limitation ?
(iii) Has the plaintiff got any valid cause of action for the present suit ?
(iv) Is the suit barred by waiver, estoppel and acquiescence ?
(v) Is the suit bad for misjoinder of parties ?
(vi) Is the suit bad for non-joinder of parties ?
(vii) Were the agreements between the plaintiff and defendants 1 to 7 in nature of a hire purchase agreement or an agreement for sale ?
(viii) Is the plaintiff entitled to a decree as claimed ?
(ix) To what other reliefs, if any, the plaintiff is entitled ?
8. In view of the oral and documentary evidence on the record while deciding issue No. 7 aforesaid the learned Court below has held that the agreements between the plaintiff-appellant and the defendants-respondent were not in nature of a hire purchase agreements but they were the agreements for a sale. The learned Court below while deciding issue No. 2 has held that the claim of the plaintiff-appellant and the suit filed by it is barred by limitation and the plaintiff-appellant is not entitled to a decree as claimed. In view of the findings above the suit of the plaintiff-appellant was dismissed.
9. Assailing the impugned judgment it has been submitted by the learned counsel for the plaintiff-appellant that the agreement Ext. 2 will govern the relationship between the parties and it is explicit from the agreement aforesaid that it is a hire purchase agreement and not an agreement for sale in view of the stipulations made in Clause 8 of the said agreement and the learned Court below did not properly construe the agreement Ext. 2 as well as the intention of the parties as per the terms of the agreement. It has also been submitted that it has been agreed as per terms of the agreement that the plaintiff-appellant shall supply and erect the said plant to produce Silica sand which the plaintiff-appellant will let and the defendants-respondent as hirer will take on hire on the terms and conditions enumerated in the said agreement and Clause 8 of the agreement stipulates that if the defendants-respondent i.e. the hirer shall duly pay to the plaintiff-appellant i.e. the owner the value of the plant by way of adjustment as per the stipulations in the said agreement, the said plant shall belong to the defendants-respondent and the plaintiff-appellant will execute the necessary deed for the same but until last payment shall have been made in full the plant shall remain the property of the plaintiff- appellant and the defendants-respondent shall at all times during the continuation of the hiring keep affixed in a conspicuous place on the said plant such plate mark and number as the plaintiff-appellant may require denoting that the said plant is its property and on such full payment and the execution of the necessary deed the agreement shall be deemed to have been duly fulfilled. Elucidating further it has been submitted that DW 1 Stefan Mandal (defendant-respondent No. 1), who is the managing partner of Bihar Bengal Minerals, in para 26 of his evidence had stated that he has not ever disputed the ownership of the plant being vested with IISCO i.e. the plaintiff-appellant and in view of the said admission read with Clause 8 of the agreement, the agreement in question is the agreement for hire purchase and it cannot be termed as agreement for sale. It has further been submitted that Clause 15 of the agreement stipulates that during the continuation of the hiring, the defendants- respondent will permit the plaintiff-appellant, its servants and agents, at all reasonable times to enter into the premises where the said plant may be installed to inspect the same and they will keep insured the said plant in the name of the plaintiff- appellant against loss and damage by fire, theft, burglary, robbery, riots and accident in any sum not exceeding the sum of Rupees three lack and fifty thousand and pay the premium thereof within due date and in case of default of payment of such premium the plaintiff-appellant will be at liberty to pay the premium not so paid by the defendants-respondent and deduct the same against the price of material and Clause 13 further provides that the defendants-respondent will not without consent in writing of the plaintiff-appellant make any addition or alteration to the said plant and shall not sell, assign, pledge or part the possession of the said plant or any part thereof and the aforesaid stipulations clearly indicate that the plaintiff-appellant is the owner of the said sand preparation and washing plant and the defendants-respondent is a hirer in respect thereof as per the terms of the agreement. It has further been contended that it is very much explicit from Clause 8 read with Clause 22 of the agreement (Ext. 2) that option to purchase has been given to the defendants-respondent on payment of all the installments of hire and for any reasons the amount of consideration remains unadjusted or unpaid the defendants-respondent will be bound to return the machineries to the plaintiff-appellant without any claim lien or charge thereon nd reading the stipulations contained in the agreement Ext. 2 the only intention of the parties is that it is a hire purchase agreement and not an agreement of sale. The further contention of the learned counsel for the plaintiff-appellant is that the claim in respect of alternative relief for realization of the amount of Rs. 6,15,354.42 brought on the record as per amendment is the part of the claim of Rs. 6,96,983,77 as per Schedule A Of the plaint along with interest pendente lite and the said claim of Rs. 6,96,983.77 is not barred by law of limitation. It has also been submitted that DW 1, the Managing Director of the Bihar Bengal Minerals in paras 41 and 42 of his evidence has admitted in the most clear and unequivocal terms that the plaintiff-appellant is entitled to claim a sum of Rs. 5,71,895 along with interest amounting of Rs. 1,25,000.88 total of which comes to Rs. 6,96,000 and odd after deduction of Rs. 43,458.69 as the amount of price of the Silica sand adjusted in respect of the said amount and in view of the admission in respect thereof of the learned Court below has erred in coming to the finding of the fact that the claim of the plaintiff-appellant in respect of the relization of Rs. 6,96,983.77 is barred by limitation. Therefore, the impugned judgment is unsustainable.
10. It has been submitted by the learned counsel for the defendants-respondent that the learned court below has rightly held that it is not a hire purchase agreement rather an agreement of sale in the view of the fact that in the agreement (Ext. 2) there is no right reserved to the defendants-respondent to return the sand preparation and washing plant at any time during the subsistence of the contract and only when such right is reserved there shall not be an agreement for sale. It has also been contended that the stipulations contained in Ext. 2 further shows that there is binding obligation on the defendants-respondent to purchase the said plant and thus it cannot be termed as a hire purchase agreement but an agreement of sale despite the stipulations in the agreement and the admissions made by the defendant-respondent No. 1 and, therefore, the title to the plant passed to the defendants-respondent on the date of the execution of the agreement and further in case of sale in which price is to be paid by installment also, the property passes as soon as the sale is made even though the price has not been fully paid and may later on be paid in installments. It has also been contended that the plaintiff-appellant is not entitled to claim Rs. 6,96,983.77 as it itself did not fulful its obligation as per terms of the agreement and the plaintiff-appellant is not entitled to claim any damages to the tune of Rs. 6,96,983.77. Lastly it has been contended that the claim of Rs. 6,15,354.42 has rightly been negatived by the learned court below as it was barred by law of limitation in view of the fact that the said alternative relief was sought by way of amendment dated 5.1.1979. Viewed thus there is no illegality in the impugned judgment.
11. In view of the pleadings of the parties and the evidence on the record the following facts are admitted facts :
The defendant-respondent Nos. 1 to 5 along with original defendant No. 2 Mrs. Nargis Mandal (since dead) were the partners of defendant -respondent No. 6, Bihar Bengal Minerals, a registered firm having its office at Dhanbad and the said firm was appointed as managing agent by the State of Bihar by an indenture dated 27.8.1960 for the purposes of managing Silica Stone (Quartzite) raisings, all works in connection therewith, all sales and exports of the said ores and stones, the management of the mine and also the searching, winning, raising, extracting, making merchantable and all Silica stones in the Dangi Hill which was renewed on 10.9.1969 for a period of ten years and defendants-respondent No. 6 the Bihar Bengal Minerals have been carrying on the work of Silica stone raising and its utilization as stated above since then. There has been an agreement between the plaintiff-appellant on the one hand and the defendant- respondents excepts defendant-respondent No. 7 on the other hand for the supply of Silica sand by them to the plaintiff-appellant on terms, and conditions expressly set forth in the agreement duly executed between them on 15.2.1965 and the said firm undertook to supply the plaintiff-appellant from the said quarries a monthly quantity of Silica sand of 1000 tonnes or such larger or lesser quantity as the plaintiff-appellant may intimate to them from time to time by placing the indents for the same and the Silica sand to be supplied by the said firm to the plaintiff-appellant shall conform to the size, specification and quantity as per terms stipulated in the said agreement and the said agreement shall remain in enforce till 31.7.1970 with a renewal clause. It was agreed between the parties that the price payable by the plaintiff-appellant to the defendants-respondent will be at the rate of Rs. 33.50 per tonne ex-Dangi Hill loaded into the plaintiff-appellant lorries on approved Silica sand received for the plaintiff-appellant for every month and the said price was to be paid by the plaintiff-appellant by way of adjustment in satisfaction pro tonto of the defendants-respondent bills each and every month against hiring rent payable by them to the plaintiff-appellant in the manner and in accordance with and during the subsistence of a hire purchase agreement executed on 15.2.1965 regarding, the sand preparation plant therein mentioned and the balance of the price, if any, after such adjustment in terms of the said agreement was to be paid by the plaintiff-appellant to the said defendants-respondent against their bills and for the purpose of carrying into effect the above sand supply agreement the plaintiff-appellant agreed to supply and erect and the defendants-respondent agreed to accept the sand preparation and washing plant at work site Dangi Hill as per the terms stipulated in the said agreement. The plaintiff-appellant in pursuance of the said agreement supplied to the defendants-respondent one sand preparation and washing plant and installed it at or near the defendants-respondent stone quarries at Dangi Hill at the admitted cost of Rs. 6,15,354.42. It has been stipulated in the agreement that during the continuation of the hiring the defendants-respondent will punctually pay without demand to the plaintiff-appellant as and by way of hiring rent for the said plant a sum of Rs. 7/- for each tonne of Silica sand processed and sold from the said plant and further the defendants- respondent shall also pay in addition Rs. 1.50/- to be added to the said hiring rent for re-payment of the interest aforesaid provided that in the event of the defendants-respondent delivering to the plaintiff-appellant less than 80 per cent of the quantity indented by the plaintiff-appellant during one month, payment of hiring rent to the owner will become due on 80% of the indented quantity and the said payment monthly made shall be credited to the account of the defendants-respondent towards liquidation of the assessed value of the plant and shall be adjusted, accordingly. There was also a supply agreement (Ext. 2/A) separately executed in respect of the supply of the Silica sand by the defendants-respondent to the plaintiff-appellant on that very day. Some of the terms of the agreement (Ext. 2) dated 15.2.1965 was modified by virtue of the two agreements Ext. 2/B and 2/C on 4.8.1967 wherein the amount of hiring charge was enhanced from Rs. 7/- to Rs. 12.50/- for each tonne of Silica sand. After the said sand preparation and washing plant became operational, the defendants-respondent supplied Silica sand in the period 1967-68 and 1968-69 amounting to 4772 tonnes which works out to a monthly average of about 200 tonnes against the agreed quota of 1000 tonnes per month and as a result of this a sum of Rs. 42.104.75 has been only recovered from the defendants- respondent as against the total advance made to them to the extent of Rs. 6,15,354.42 and interest thereon has accrued amounting to Rs. 1,19,596.34 and DW 1, the Managing Director of the said firm had admitted the fact that the plaintiff-appellant is entitled to claim a sum of Rs. 5,71,895.73 besides interest amounting to Rs. 1,25,088 up to 31st July, 1973 and for this his evidence appearing in paras 41 and 42 of his testimony is referred to.
12. Now the bone of contention between the parties is as to whether the agreement (Ext. 2) is a hire purchase agreement or an agreement of sale in respect of the sand preparation and washing plant which was erected and, installed in the premises of the defendants-respondent by the plaintiff-appellant. It is the well settled principle of law by catena of decisions of the Apex Court that when any document has been put in evidence and proved, the function of the Court is to interpret it so as to find out the true meaning of the words used and to give effect to the true intention of the maker and where the documents are plain and unambiguous they must be interpreted according to their plain and unambiguous language without extraneous help. The presumption is that ordinary words in a language are used to convey their ordinary meaning and the parties must have meant what they have written. The established rule of construction is to read the words in their ordinary and grammatical sense and to give them effect unless such construction would lead to some absurdity or inconvenience or would be plainly repugnant to the intention of the parties to be collected from other parts of the deed. The primary object is to determine what is the intention conveyed by the deed and the primary source of determining such intention is the language used in the deed. The intention has to be gathered from the document itself and for the purpose of gathering the intention the language of the entire deed should be taken into consideration and the intention is to be gathered from the document as a whole and too much stretch should not be laid on a word here and on a word there. The deed has to be read as a whole in order to ascertain the true meaning of its several clauses and the word of each clause should be interpreted so as to bring them into harmony with the other provisions of the deed if that interpretation does no violence to the meaning of which they are naturally susceptible. In the case of Delta International Limited v. Shyam Sunder Ganeriwalla and Anr., (1994) 4 SCC 545 the Apex Court has observed thus :
'..........The intention of the parties is to be gathered from the document itself. Mainly, the intention is to be gathered from the meaning and the words used in the document except where it is alleged and proved that the document is a camouflage. If the terms of the document evidencing the agreement between the parties are not clear, the surrounding circumstances and the conduct of the parties have also to be borne in mind for ascertaining the real relationship between the parties. Thus if the document is a camouflage, the mask or veil is required to be removed for determining the true intent and purpose of the document.'
The learned Court below has also dilated in para 9 of the impugned judgment in respect thereof in which it has been stated that in construing an agreement the substance of the transaction must be looked into by the Court and not the form and if in substance the agreement between the parties is a sale transaction then it will not matter whether it is in the form of hiring or hire purchase. The actual words used in the agreement of the, term of the agreement are not paramount or conclusive and the Court will have to find out the substance of the agreement by considering and construing the agreement as a whole to determine what was the intention of the parties, what was the substance of the agreement and what was the real nature of the transaction. In the case of M/s. Damodar Valley Corporation v. The State of Bihar, AIR 1961 SC 440 the Apex Court has observed in para 8 which runs thus:
'...........It is well settled that a mere contract of hiring, without more, is a species of the contract of bailment, which does not create a title in the bailee, but the law of hire purchase has undergone considerable development during the last half a century or more and has introduced a number of variations, thus leading to categories, and it becomes a question of some nicety as to which category a particular contract between the parties comes under. Ordinarily, a contract of hire purchase confers no title on the hirer, but a mere option to purchase on fulfillment of certain conditions. But a contract of hire purchase may also provide for the agreement to purchase the thing hired by deferred payments subject to the condition that title to the thing shall not pass until all the installments have been paid. There may be other variations of a contract of hire purchase depending upon the terms agreed between the parties. When rights in third parties have been created by acts of parties or by operation of law, the question, which does not arise here may arise as to what exactly were the rights and obligations of the parties to the original contract. It is equally well settled that for the purpose of determining as to which category a particular contract comes under, the Court will look at the substance of the agreement and not at the mere words describing the category. One of the tests to determine the question whether a particular agreement is a contract of mere hiring or whether it is a contract of purchase on a system of deferred payments of the purchase price is whether there is any binding obligation on the hirer to purchase the goods. Another useful test of determine such a controversy is whether there is a right reserved to the hirer to return the goods at any time during the subsistence of the contract. If there is such a right preserved, then clearly there is no contract of sale, vide Helby v. Matthews, 1895 AC 471.
In the case of Bhimji N. Dalai v. Bombay Trust Corporation Ltd., AIR 1930 Bom 306, it has been observed that:
'...........In construing a hire purchase agreement the substance of the agreement must be considered as a whole, not the substance apart from the language used, nor the mere words divorced from the substance, but the substance which must be gathered from the true meaning of the language in which it is sought to be expressed. The true effect of an instrument depends upon the intention of the parties as gathered from its terms, and in construing the terms it is the duty of the Court to regard the intention rather than the form and to give effect to the whole instrument.'
It has been further observed therein which runs thus :
'..............Where the agreement imposes an obligation upon the 'hirer' to buy the chattel mentioned therein from the other party, such obligation attaches on the execution of the agreement, and the agreement is really an agreement of sale notwithstanding the use of words, such as hire purchase agreement, lessor and lessee, hiring rent tenancy, etc. Such an obligation arises when it is clear from the agreement that the party taking the chattel called the hirer or lessee, has to pay the full amount of the consideration mentioned in the agreement even though the payment is by installments and that amount is sufficient to cover the purchase price of the chattel; or when it is clear from the agreement that the hirer or lessee cannot at any time during the period mentioned in the agreement return the chattel to the other party called the owner or lessor and absolve himself from the obligation to make further payment. If the hirer is not bound to pay the full amount of the purchase price or if he can terminate the hiring at any time by delivering the chattel to the other party the agreement is in fact as well as in form a true agreement for hire, and all that the hirer has obtained is an option to purchase.'
In the case of A. Cecil Cole v. Nanalal Moraji Dave, AIR 1925 Bom 18, it has been observed thus :
'...... .A hire purchase agreement and an agreement to sell are different. In the latter the property in the thing sold passes immediately to the purchaser, while in the former there is not only no such immediate transfer of title but also the hirer is not bound to complete the purchase and can at his option return the thing at any time, before the installments are paid. An agreement is only one of the sale though it may profess to be a hire purchase one if it contains an obligation to pay the purchase money.'
In the light of the principle in construing the document stated above read with the guidelines enunciated in the ratio of the Case of M/s. Damodar Valley Corporation (supra), Bimji N. Dalai (supra) and A. Cecil Cole (supra) let us now look into the agreement (Ext. 2) to gather the intention of the parties as to whether the said agreement is an agreement for hire purchase or an agreement of sale in respect of the sand preparation and washing plant. It is pertinent to mention here that the learned Court below in the impugned judgment had come to a finding of fact that the defendants-respondent had no option to return the plant as per the terms of the agreement? (Ext. 2) and for that he has placed reliance upon the Clauses 2, 4, 9, 16, 23 and 25 of the said agreement but the terms as mentioned in Clauses 6, 8 and 22 of the said agreement have not been considered by the learned Court below in coming to the said finding wherein it has been stipulated in clause 22 of the agreement that if, for any reason whatsoever, this agreement is determined or terminated or be declared void the hirer i.e. the defendants-respondent shall be bound to return the machineries to the owner without any claim, lien or charge thereon. In the agreement (Ext. 2) the plaintiff-appellant has been described as to owner and the defendants-respondent has been described as hirers and for the purpose of carrying into effect the supply agreement (Ext. 2/1) executed on the same day between the parties, the owner has agreed to supply and erect the said plant and the hirers have agreed to accept the said plant as per terms and conditions contained in Ext. 2 and the owners have supplied and erected the said plant to produce Silica sand which the owner will let and the hirer i.e, defendants-respondent will take on hire. For gathering the true intention of the parties to the agreement (Ext. 2) it is necessary to quote for proper appreciation regarding to the mater in controversy the relevant clauses of the said agreement which are as follows :
'Clause (ii).--The cost of erection and installation of the works and the fixtures and fittings and other cost mentioned in the schedule hereto so as to make the said plant complete for efficient operation will be borne initially by the owners and, thereafter, will be included in the value of the said plant under these presents so as to be paid by the Hirers and will be considered as a complete unit for the purpose of this agreement.
Clause (iv).--It is hereby declared that after the said plant and the fixture and fittings and the constructions incidental thereto as described in the Schedule have been mutually approved and the owners have placed orders with the manufacturers or any Contractor for such erection- if the hirers be placed in a position either by operation for law or otherwise not to fulfill the agreement for any reason whatsoever, the owner shall be entitled to cancel the agreement forthwith without any obligation or liability whatsoever and be entitled to realize from the hirers all such expenses, costs and charges already incurred in the mater.
Clause (vi).--The Hirers will during the continuance of the hiring operate the said plant skillfully with their own personnel and maintain and repair the same in accordance with good engineering practice, it being up to the Hirers to procure such spares as may be required for the purpose. The Hirers shall make good all damages caused by tire, theft, accident or otherwise except those arising out of any event beyond the Hirers' control.
Clause (vii).--It is hereby declared that the value of the said plant and of those items as are mentioned in the schedule hereunder have been estimated at about Rs. 4,50,000/- or such higher or lower sum as the actual cost may come to exclusive of all taxes and other duties if any together with interest at 4% per annum simple on the said amount or such lower and higher figure as may be found in actual calculation as aforesaid, hereafter called 'the value of plant' and the said interest will be proportionately reduced as the payment in the manner provided in Clause (9) hereof is made and the principal amount found due at the close of each and every month is liquidated in terms of the said clause until the entire value of the plant is wiped off. Provided, however, if for any reason whatsoever at the close of any month there is no sufficient money after adjustment of the principal amount then found due, the interest will carry forward for adjustment against the payment of the subsequent month or months, as the case may be.
Clause (viii).--If all the stipulations and conditions of this Agreement be observed and performed and if the Hirers shall duly pay to the owner the value of the plant by way of adjustment as hereafter stated or otherwise, the said plant shall belong to the Hirers and the Owner will execute the necessary deed for the same but until such payment shall have been made in full, the plant shall remain the property of the Owner and the Hirer shall at all times during the continuance of the hiring keep affixed in a conspicuous position on the said plant such name plate, mark and number as the owner may require denoting that the said plant is its property. On such full payment and the execution of the necessary deeds as aforesaid this Agreement shall be deemed to have been duly fulfilled and terminated, accordingly.
Clause (ix).--During the continuance of the hiring, the Hirers will punctually pay without demand of the Owner as and by way of hiring rent for the said plant a sum of Rs. 7/- for each tonne of Silica sand processed through and sold from the said plant. The Hirers will also pay in addition Rs. 1.50/- to be added to the said hiring rent for repayment of the interest aforesaid provided that in the event of the Hirers delivering to the Owner less than 80% of the quantity indented by the Owner during any one month, payment of hiring rent to the Owner will become due on 80% of the indented quantity. The said payments to be made monthly will be credited to the hirers' account towards liquidation of the assessed value of the Plant as aforesaid and will be adjusted, accordingly. During the continuance of this agreement, the Hirers shall also pay to the owner as and by way of payment aforesaid, a further sum of Rs. 6.50/-on each tonne of sand processed through and sold from the said plant to third parties. The said payment will be credited to the supplier's account towards liquidation of the value of the said plant. The Owner will also be at liberty to deduct appropriate and adjust towards the value of the plant, the balance if any payable by it to the Hirers for the price of Silica sand under the provisions of the supply agreement hereinbefore mentioned. Provided, however, that in case the value of the said plant in actual calculation be lower or hither than Rs. 4,50,000/- aforesaid, then the said hiring rent may be decreased or increased after a year from the date of operation of the plant at the rate of 50 paise from every 50,000/- of decreased or increased value. Provided the entire value of the plant, inclusive of cost of erection, together with the interest aforesaid will be recoverable by the company within July, 1970 and the Hirers will be bound to liquidate the amount within the said period.
Clause (xi).--The hirers shall during the continuance of the hiring keep the said plant at their factory at Dangi Hill in the district of Dhanbad or at the place where the same may be fixed and shall not without the consent in writing of the owner remove or allow to be removed the same or any part thereof from the factory or site or any other place to which the same may with such consent have been removed or fixed.
Clause (xiii).--The hirers shall during the continuance of the hiring keep the said plant in good order and condition, reasonable wear and tear, damages by acts of God and other irresistible force are being excepted. The Hirers shall not without consent in writing of the owner make any addition or alteration to the said plant.
Clause (xiv).--The hirers shall indemnify the owner against all loss of or damages to the said plant or any part thereof from whatever causes arising.
Clause (xv).--During the continuance of the hiring the Hirers will permit the owner, its servants and agents at all reasonable times to enter into the premises where the said plant may be installed or be lying at and/or to inspect the same. The hirers will keep insured in the name of the owner the said plant against loss and damage by fire, theft', burglary, robbery, riots and accident in any sum not exceeding the sum of Rupees three lacs and fifty thousand and pay the premium or premia therefor within the due date (without waiting for the grace period) and will keep the said insurance effective. They will produce to the owner the receipt for the payment of the last premium or premia so paid, at least 15 days before the grace period thereof where such grace period is for one month and in any other case sufficiently before such expiry. Provided that in case of any default of payment of such premium or premia the owner will be at liberty to pay the premium or premia not so paid by the hirers and deduct the same against the price of materials herein stipulated.
Clause (xvi).--The hirers at any time during the continuance of the hiring shall not sell, assign, pledge, charge or part with possession of the said plant or any part thereof.
Clause (xix).--The owner will be at liberty to keep some watchmen or durwans at the premises of the Hirers to watch and guard the said plant let out to the hirers under these presents either after the same are completely installed or during the process of their erection and the hirers will not be entitled to make or raise any objection thereto.
Clause (xxi).--During the continuance of the hiring the hirers shall not without the consent in writing of the owner previously obtained mortgage, charge or otherwise encumber the land and premises where the said plant may be fixed and shall procure that any mortgage, charge or encumbrances shall take effect subject to the right of the owner under this Agreement in respect of the said plant including the right of removal notwithstanding that the said plant or any part thereof may be affixed to the land.
Clause (xxii).--If the hirers make default in the punctual payment of the sums payable in respect of the hire of the said plant and if for any reason the amount of consideration remains unadjusted or unpaid and if for any reason whatsoever this agreement is determined or terminated or be declared void, the hirers will be bound to return the machineries to the owner without any claim, lien or charge thereon to the entire satisfaction of the owner in the same condition as the same were handed over to the hirers by the owner reasonable wear and tear being excepted. But the hirers will be liable to make good any damage, deterioration or diminution in value or for any defect in the operation of the said machineries as may be found at that time. The hirers, however, shall not be entitled to any replacement or credit or allowance for any payment previously made to the owner under the provisions hereof and all such payments whether by adjustment or otherwise shall belong to the owner absolutely.
Clause (xxiii).--This agreement shall remain in full force and effect so long as the hirers right in the mining area remains subsisting or valid during the period of these presents and or the supply agreement remains in force. In the event of the supply agreement being terminated by the company or becoming impossible of performance for any reason whatsoever the entire value, of the said plant remaining unadjusted on such date will be immediately payable by the suppliers and/or the hirers under these presents.
Clause (xxv).--Notwithstanding anything contained herein the owner shall be at liberty to terminate this agreement at any time by giving to the hirers three calendar months' notice in writing and such notice shall be deemed to be duly served if sent by registered post to the hirers' address hereinbefore mentioned. In such event the entire value of the said plant as remaining unadjusted at the time shall be immediately payable by the hirers. In case the hirers fails to perform any of the terms and conditions contained in these presents, the owner will be at liberty to terminate the agreement forthwith without assigning any reason whatsoever and realize the entire unadjusted value of the said plant and in this respect the owner's decision shall be final.
Clause (xxvi).--To ensure due realization of the full value of the said plant, the hirers do and each of them both hereby agree, undertake and personally guarantee unto the owner the payment of the said value of the said plant and hereby acknowledge their personal liability for full payment of the value of the said plant.
13. It, therefore, appears from the stipulations contained in Ext, 2 referred to above that on payment of the entire value of the plant by way of adjustment as a result of the supply of the Silica sand to the plaintiff-appellant the said plant shall belong to the defendants-respondent and the plaintiff-appellant will execute the necessary deed for the same and until such payment shall have been made in full the plant shall remain the property of the owner and the defendants-respondent at all times during the continuance of the hiring keep affixed in a conspicuous position oh the said plant such name plate, mark and number as the owner may require denoting that the said plant is its property. It also appears that on such full payment and execution of the necessary deed this agreement shall stand terminated. It is evident from the stipulations referred to above that the defendants-respondent has to pay hirer charge per tonne of the production of the Silica sand. It also appears that the defendants-respondent shall not without the consent in writing of the plaintiff-appellant make any addition or alteration in the said plant and they have to indemnify the plaintiff-appellant all loss of or damages to the said plaint or any part thereof from whatever causes. There is also a stipulation that the defendants-respondent during the continuance of the hiring shall not sell, assign, pledge, charge or part with possession of the said plant or in part thereof. The plaintiff appellant has right to engage some watchmen or durwans in the premises of the defendants-respondents to watch the said plant and in the event of the agreement being terminated for any reason whatsoever right has been reserved with the defendants-respondent to return the plant to the plaintiff-appellant without any claim, lien or charge thereon. Therefore, the terms stipulated in the agreement clearly envisage that it is a hire purchase agreement and definitely not an agreement of sale in respect of the said plant. The intention of the parties is crystal clear from the stipulations contained in the agreement (Ext. 2) that they have entered into a hire purchase agreement in respect of the said plant and it cannot be termed to be an agreement of sale. Ordinarily a contract of hire purchase confers no title on the hirer but a mere option to purchase on fulfillment of certain conditions. There is no denying the fact that the contract of hire purchase may provide in the agreement to purchase the thing hired by deferred payment subject to the condition that the title to the thing shall not pass until all the installments have been paid. Such stipulations have been contained in Clause 8 of the agreement (Ext. 2). Herein this case a right has been reserved to the hirer to return the plant in case of the termination of the tenancy for any reasons whatsoever-Therefore, a right has been reserved to the defendants-respondent to return the plant on termination of the agreement and in this view of the matter this agreement (Ext. 2) cannot be termed as agreement of sale rather it is an agreement of hire purchase. It is also evidence that in a case of sale title passes to the vendee on payment of the consideration which is partly paid or partly promised. Here in this case there is stipulations which clearly incident that title shall pass in the plant to the defendants-respondent only on the eve of payment of the entire consideration money, i.e. the value of the plant by adjustment of the supply of Silica sand by the defendants-respondent to the plaintiff-appellant. Considering all the stipulations of the agreement (Ext. 2) in totality it is the clear intention of the parties that the agreement (Ext. 2) is a hire purchase agreement and not an agreement of sale in respect of the said plant. It is equally, relevant to mention here that the term of the agreement is inconsistent of its being an agreement of sale. Ext. A/22-A shows that the defendants-respondent had sought the written permission of the plaintiff-appellant for the modification of the plant and in the alternative to take over the plant aforesaid by the plaintiff-appellant. Ext. A/23 shows that the defendants- respondent also sought, the consent of the plaintiff-appellant to dispose of the said plant to a third person who is interested to purchase the said plant. The contents of the letters appearing in Ext. A/22-A and Ext. A/23 of the defendants-respondent is inconsistent with his claim that the said agreement (Ext. 2) is an agreement of sale and not a hire purchase agreement. The learned Court below has misconstrued the aforesaid letters of the defendants-respondent. And to crown all defendants-respondent No. 1 Stefan Mandal in para 27 of his testimony has deposed in the most clear and unequivocal term that he has never disputed the ownership of the plant being vested with IISCO i.e. the plaintiff-appellant. This admission of DW 1 is in conflict with his Case that the agreement (Ext. 2) is an agreement of sale as a result of which title in the plant has accrued in favour of the defendants-respondent. Deed has to be read as a whole in order to ascertain its true meaning as well as the intention of the parties. It is true that agreement (Ext. 2) imposes an obligation upon the hirer i.e. defendants-respondent to buy the plant mentioned therein from the plaintiff-appellant and such obligation is attached on the execution of the agreement and there is also no stipulation in the specific term in the agreement of the option on the part of the hirer i.e. defendant-respondent to return the plant to the plaintiff- appellant in the continuance of the agreement but in spite of that Clause (8) of the agreement read with the admission of DW 1 appearing in para 27 of his testimony clearly indicates that it was the intention of the parties to the agreement that the agreement (Ext. 2) is a hire purchase agreement. Therefore, the ratio of the case of Bimji N. Dalal (supra) and A. Cecil Cole (supra) have no application in this case in view of the specific stipulations contained in agreement (Ext. 2) in terms of which it cannot be construed that the agreement (Ext. 2) is an agreement of sale. In view of the said admission of DW 1 read with the stipulations contained in the agreement (Ext. 2) I have no hesitation to come to the conclusion that agreement (Ext. 2) is an agreement for hire purchase and it cannot be termed as an agreement of sale. Therefore, the finding of the learned Court below construing the agreement (Ext. 2) as an agreement of sale is erroneous and he has committed a manifest error in respect thereof. Therefore, the plaintiff-appellant has valid right and title in the said plant and is equally entitled for the declaration in respect thereof and also of recovery of possession of the said plant. The plaintiff-appellant, however, is not entitled in the facts and circumstances of this ease to recover the unpaid value of the plant amounting to Rs. 6,15,354.42 as per schedule 'A' of the plaint. However, the plaintiff-appellant is entitled for the amount of interest amounting to Rs. 1,19,596.34 by way of damages against the defendants-respondent in view of the admission of defendant-respondent No. 1 referred to above.
14. The said plant is functioning and is run by defendant-respondent No. 7 M/s. Entracoast Private Limited as agent of defendant-respondent No. 1 in contravention of the terms of the agreement (Ext. 2) and in this view of the matter the plaintiff-appellant has good case (or permanent injunction restraining the defendant-respondent No. 1 and defendant-respondent No. 7 from further running and operating the said plant and machineries and or intermeddling with, the same.
15. There is, merit in this appeal andit succeeds. The appeal is hereby allowed.The impugned judgment and decree of thelearned Court below are hereby set aside.The suit of the plaintiff-appellant is decreedwith costs throughout. The right and title ofthe plaintiff-appellant is declared in respectof the sand preparation and washing plantaforesaid and the plaintiff-appellant is alsoentitled to recover possession of the saidplant along with annexures and fixtures asper Schedule B of the plant. The defendants-respondent is directed to return thesaid plant to plaintiff-appellant within threemonths from the date of this order failingwhich the plaintiff-appellant will recoverthe possession of the said plant in accordance with due process of law. The plaintiff-appellant is also entitled to realize Rs.1,19,596,34/- by way of damages from thedefendants-respondent. The defendants-respondent Nos. 1 and 7 are also restrainedfrom further running and operating thesaid plant or intermeddling with the sameforthwith.