Supreme Court: If the transaction is contained in more than one document between the same parties they must be read and interpreted together and they have the same legal effect for all purposes as if they are one document

 The defence so raised itself being the question of law, as the interpretation of documents itself goes to the root of the transactions/contract and the claim based upon it. In the present case, B.O.I. Finance Ltd. (Supra), as relied is not applicable on facts and the laws. That was a case of ready forward contract. In the case in hand, three documents and the transactions, of which two views of the learned Judges unless decided finally in due trial, it is difficult to accept the case that the view taken by the one learned Judge that transactions are sham and bogus and unseverable and other Judge hold it to be severable, without trial and by overlooking the earlier opinion, this itself is a triable issue. The Appellate Bench also may not decide such issue on such question of law, considering the scope and purpose of law on order XXXVII of the CPC, at this stage of the Summary Suit. It should be after final Judgment. In the present case, the same documents are interlinked and interconnected as observed by the earlier learned Judge, therefore, unless these findings are set aside, the findings in the impugned order that those are severable just cannot be accepted, without the trial. The case of misconstruction or interpretation of all connected documents itself made out a case of good defence. It cannot be treated as sham or bogus defence. The misinterpretation itself affects the rights and the transaction/claim. Therefore, the construction of documents is always question of law so is the position in case in hand. The distinction, therefore, at this stage, in summary proceedings like this, itself will not sufficient to deny the order of unconditional leave as granted by one Judge on the basis of same documents. (Sir Chunilal V. Mehta and sons Ltd. v. Century Spinning and Manufacturing Co. Ltd.11 and Hero Vinoth (Minor) v. Seshammal12) {Para 56}

Interpretation of documents and the nature of transactions-triable issue-

57. We have to consider the legal position in view of the contentions so raised by the learned counsel appearing for the parties. The Apex Court in Smt. Krishnabai Bhritar Ganpatrao Deshmukh v. Appasaheb Tuljaramarao Nimbalkar13, while dealing with the aspects of interpretation of any deed or documents, has held as under:-

“27. Secondly, there is ample authority for the proposition that when there is a dispute in regard to the true character of a writing, evidence de hors the document can be led to show that the writing was not the real nature of the transaction, but was only an illusory, fictitious and colourable device which cloaked something else, and that the apparent state of affairs was not the real state of affairs. [See Chandi Prasad Singh v. Piari Bidi C.A. No. 75 of 1964, decided on 16-3-1966, and Bhagwan Dayal v. Mst. Reoti Devi (supra)].

58. While dealing with the effect of various transactions, based upon the various documents, the Court required to deal with and take into consideration every connected transactions and the documents, to give total effect to the transactions by treating them all as one document. The Apex Court in (S. Chattanatha Karayalar v. The Central Bank of India Ltd.)14 has observed as under:-

3. ………. “The principle is well established that if the transaction is contained in more than one document between the same parties they must be read and interpreted together and they have the same legal effect for all purposes as if they are one document. In Manks v. Whiteley 1912-1 Ch. 735 at p. 754, Moulton, L.J. Stated:

“Where several deeds form part of one transaction and are contemporaneously executed they have the same effect for all purposes such as are relevant to this case as if they were one deed. Each is executed on the faith of all the others being executed also and is intended to speak only as part of the one transaction, and if one is seeking to make equities apply to the parties they must be equities arising out of the transaction as a whole.”

 In the High Court of Bombay

(Before Anoop V. Mohta and G.S. Kulkarni, JJ.)

Hubtown Limited Vs IDBI Trusteeship Service Limited, 

Commercial Appeal No. 7 of 2016

Decided on October 24, 2016

     

Citation: 2016 SCC OnLine Bom 9019. Read full Judgment here: Click here.

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Bombay HC: summary suit as originally filed, prior to the commencement of the and as now transferred, being commercial dispute matter, the original procedure as provided under Order XXXVII shall be applicable to such summary suits

“Summary Suit” and “Summary Judgment”-

34. The conceptual position of “summary suit” as contemplated under Order XXXVII of CPC and its specific provisions are governed as per the original provisions of CPC. The amended CPC, in view of Section 16 of the Commercial Courts Act inserted the provision for a “summary judgment”, through Order XIII-A which is made applicable to the classes of Suits (commercial suits) which required to be decided by the Commercial Division/Court. It prescribes the procedure and stages for application for summary judgment. This also includes and provides the powers of a Commercial Judge to pass conditional order including for evidence for hearing of summary judgment. We are concerned with Order XIII-A, Rule 1(3) of CPC, whereby it is specifically provided “notwithstanding anything to the contrary, “an application” for summary judgment under this Order shall not be made in a Suit in respect of any commercial disputes that is originally filed as a summary suit under Order XXXVII.”. Therefore, once the summary suit as originally filed, prior to the commencement of the and as now transferred, being commercial dispute matter, the original procedure as provided under Order XXXVII shall be applicable to such summary suits. The parties are not entitled to prayer for summary judgment under XIII-A in view of the specific provision so referred above. This also means that the judgments and the issues so decided in summary suit shall for all purposes be governed by the CPC, even after such suits are transferred as commercial suits. The Commercial Division Judge is required to follow the original C.P.C. and is required to keep in mind the position in law revolving around all the facets of summary suits. The provisions of Section 13, therefore, is required to be interpreted and/or considered accordingly, when any decision is given by the Commercial Division/Court in such summary suit. 

 In the High Court of Bombay

(Before Anoop V. Mohta and G.S. Kulkarni, JJ.)

Hubtown Limited Vs IDBI Trusteeship Service Limited, 

Commercial Appeal No. 7 of 2016

Decided on October 24, 2016

     

Citation: 2016 SCC OnLine Bom 9019.

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Can the court declare a document invalid if there is an erroneous description of a person or a thing in a written instrument?

 A reference may usefully be made to the maxim "Falsa demonstratio non nocet cum de corrore constat" which means mere false description does not vitiate, if there be sufficient certainty as to the object. 'Falsa demonstratio' means an erroneous description of a person or a thing in a written instrument; and the above rule respecting it signifies that where the description is made up of more than one part, and one part is true, but the other false, there, if the part which is true describes the subject with sufficient legal certainty, the untrue part will be rejected and will not vitiate the devise: the characteristic of cases within the rule being that the description, so far as it is false, applies to no subject at all, and, so far as it is true, applies to one only. (See Broom's Legal Maxims, 10th Edition, pp. 426-

427). Broom quotes (at page 438) an example that an error in the proper name or in the surname of the legatee should not make the legacy void, provided it could be understood from the will what person was intended to be benefited thereby.

Supreme Court of India

Harikrishna Lal vs Babu Lal Marandi on 30 October, 2003

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When arbitration clause in one contract will not be incorporated in another contract?

 In M.R. Engineers and Contractors Private Limited case, this Court considered the true intent and scope of Section 7 of the Act which deals with 'arbitration agreement'. Relevant portion of Section 7 reads as under:

7. Arbitration agreement.--(1) In this Part, 'arbitration agreement' means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

xxx xxx xxx

(5) The reference in a contract to a document containing an arbitration Clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration Clause part of the contract.

16. As per Sub-section (5), an arbitration Clause contained in an independent document can also be imported and engrafted in the contract between the parties, by reference to such independent document in the contract, even if there is no specific provision for arbitration. However, the Court noted that such a recourse can be adopted only 'if the reference is such as to make the arbitration Clause in such document, a part of the contract.' This interpretation to Sub-section (5) of Section 7 was elaborated in the following manner:

14. The wording of Section 7(5) of the Act makes it clear that a mere reference to a document would not have the effect of making an arbitration Clause from that document, a part of the contract. The reference to the document in the contract should be such that shows the intention to incorporate the arbitration Clause contained in the document, into the contract. If the legislative intent was to import an arbitration Clause from another document, merely on reference to such document in the contract, Sub-section (5) would not contain the significant later part which reads: "and the reference is such as to make that arbitration Clause part of the contract", but would have stopped with the first part which reads:

7. (5) The reference in a contract to a document containing an arbitration Clause constitutes an arbitration agreement if the contract is in writing....

15. Section 7(5) therefore requires a conscious acceptance of the arbitration Clause from another document, by the parties, as a part of their contract, before such arbitration Clause could be read as a part of the contract between the parties. But the Act does not contain any indication or guidelines as to the conditions to be fulfilled before a reference to a document in a contract can be construed as a reference incorporating an arbitration Clause contained in such document into the contract. In the absence of such statutory guidelines, the normal Rules of construction of contracts will have to be followed.

16. There is a difference between reference to another document in a contract and incorporation of another document in a contract, by reference. In the first case, the parties intend to adopt only specific portions or part of the referred document for the purposes of the contract. In the second case, the parties intend to incorporate the referred document in entirety, into the contract. Therefore when there is a reference to a document in a contract, the court has to consider whether the reference to the document is with the intention of incorporating the contents of that document in entirety into the contract, or with the intention of adopting or borrowing specific portions of the said document for application to the contract.

17. After some further discussion on this aspect with reference to the existing case law as well as extracts from Russell on arbitration, the Court summed up the position as under:

24. The scope and intent of Section 7(5) of the Act may therefore be summarised thus:

(i) An arbitration Clause in another document, would get incorporated into a contract by reference, if the following conditions are fulfilled:

(1) the contract should contain a clear reference to the documents containing arbitration clause,

(2) the reference to the other document should clearly indicate an intention to incorporate the arbitration Clause into the contract,

(3) the arbitration Clause should be appropriate, that is capable of application in respect of disputes under the contract and should not be repugnant to any term of the contract.

(ii) When the parties enter into a contract, making a general reference to another contract, such general reference would not have the effect of incorporating the arbitration Clause from the referred document into the contract between the parties. The arbitration Clause from another contract can be incorporated into the contract (where such reference is made), only by a specific reference to arbitration clause.

(iii) Where a contract between the parties provides that the execution or performance of that contract shall be in terms of another contract (which contains the terms and conditions relating to performance and a provision for settlement of disputes by arbitration), then, the terms of the referred contract in regard to execution/performance alone will apply, and not the arbitration agreement in the referred contract, unless there is special reference to the arbitration Clause also.

(iv) Where the contract provides that the standard form of terms and conditions of an independent trade or professional institution (as for example the standard terms and conditions of a trade association or architects association) will bind them or apply to the contract, such standard form of terms and conditions including any provision for arbitration in such standard terms and conditions, shall be deemed to be incorporated by reference. Sometimes the contract may also say that the parties are familiar with those terms and conditions or that the parties have read and understood the said terms and conditions.

(v) Where the contract between the parties stipulates that the conditions of contract of one of the parties to the contract shall form a part of their contract (as for example the general conditions of contract of the Government where the Government is a party), the arbitration Clause forming part of such general conditions of contract will apply to the contract between the parties.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 2439 of 2018 (Arising out of SLP (Civil) No. 29519 of 2015)

Decided On: 23.02.2018

Elite Engineering and Construction (Hyd.) Private Limited Vs. Techtrans Construction India Private Limited

Hon'ble Judges/Coram:

A.K. Sikri and Ashok Bhushan, JJ.

Citation: 2018(5) MHLJ 594 (SC).

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When interpretation of document will be question of law?

 As observed supra, we do not agree with the
reasoning and the conclusion arrived at by the High
Court in the impugned order. In our considered
view, the appeal did involve the substantial
questions of law and, therefore, the High Court
should have admitted the appeal by first framing
substantial questions of law arising in the case and
then after giving notice to the respondents for its
final hearing as provided under Section 100 of the
Code of Civil Procedure, 1908 (hereinafter referred
to as “the Code”) decided the appeal on merits.

16) As a matter of fact, in our view, having regard
to the nature of controversy and the issues involved
regarding ownership based on interpretation of
documents (exhibits), the questions did constitute
substantial questions of law.
17) The questions as to whether the suit property
is self-acquired property of late Sk. Noor
Mohammad and, if so, whether respondent No.1
was entitled to inherit the same as his legal
representative in accordance with the shares defined
in the Mohammedan Law and secondly, whether the
suit property is self-acquired property of the
appellant (defendant No.1) on the strength of
documents filed by him and, if so, whether it has
resulted in excluding respondent No.1 to claim any
share in such property as an heir of Sk. Noor
Mohammad, was required to be decided by framing
substantial questions of law in the light of proved
documents filed by defendant No.1 because it was
his case that the suit property was his self-acquired

property. The High Court unfortunately did not
examine any document for deciding the ownership
issue in relation to the suit property.
18) When the Court is called upon to interpret the
documents and examine its effect, it involves
questions of law. It is, therefore, obligatory upon
the High Court to decide such questions on merits.
In this case, the High Court could do so after
framing substantial questions of law as required
under Section 100 of the Code. It was, however, not
done.
19) The High Court thus, in our view, committed
jurisdictional error when it dismissed the second
appeal in limine. We cannot countenance the
approach of the High Court.
20) In view of foregoing discussion, the appeal
succeeds and is allowed. The impugned order is set
aside. The case is now remanded to the High Court
for deciding the appeal on merits in accordance with
law.
 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 3048 OF 2017
(ARISING OUT OF SLP (C) No.27887/2010)
Sk. Bhikan
S/o Sk. Noor Mohd
V
Mehamoodabee
w/o Sk. Afzal & Ors
Dated:February 20, 2017

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