24 April 1996
Supreme Court


Case number: C.A. No.-007496-007496 / 1996
Diary number: 15092 / 1995






DATE OF JUDGMENT:       24/04/1996


CITATION:  1996 AIR 2025            1996 SCC  (4) 551  JT 1996 (6)    14        1996 SCALE  (4)180



JUDGMENT:                       J U D G M E N T PATTANAIK. J.      Leave granted.       This  appeal by  special leave is directed against the Judgment of  the Division  Bench of  the Madras  High  Court dated 6.9.1995 in O.S.A. No. 112 of 1987. The plaintiffs who are the  respondents in  this appeal  filed the  suit on the original side of the High Court for recovery of a sum of Rs. 46,08,820/- together  with interest at 18% per annum. It was alleged in the plaint that the defendants who are appellants in this  appeal invited  tenders for  transportation of iron and  steel  materials  including  unloading,  weighment  and stocking from  various stockyards  of the  suppliers to  the destination stores  during the period 1.9.1978 to 31.8.1979. In pursuance  of the  aforesaid advertisement  the Plaintiff No. 1  submitted his  tender on  13.7 .1978  and along  with tender submitted  a letter  was also enclosed. This offer of the plaintiff  was accepted  and an  agreement  was  entered into.  In   accordance  with  the  agreement  the  plaintiff furnished a  bank  guarantee  and  deposited  the  necessary earnest  money  and  commenced  the  work  of  transport  of materials.  It  was  further  alleged  that  the  plaintiffs carried the  material and  delivered  the  same  at  various destinations as per the direction given from time to time by the defendants.  In all  a  total  quantity  of  1,73,78,821 metric tones  of iron  and steel  were transported  and  the necessary bills  were submitted  in November,  1979. But the defendant instead  of making the payments in accordance with the terms  of the  contract postponed  the  payment  of  the bills. It  was averred  in the  plaint  that  the  defendant agreed to  pay on  multi slab  basis which  is apparent from letter of  the plaintiff attached to the tender submitted by him and  that was  also the  trade practice.  The  plaintiff finally issued  a  notice  on  28.3.1980  calling  upon  the defendants to settle the bills but the defendants replied on



7.5.1980  making   several  misleading   averments.  As  the plaintiffs’ bills  were not  settled, the suit was filed for recovery of the amount as already stated.      The defendants  in their  written statement  denied the allegations made  in the plaint. The specific stand taken in the written  statement  was  that  the  plaintiffs  are  not entitled to  claim multi  slab basis  and on  the other hand they are  entitled to  single slab basis. It was stated that the multi slab rates had never been accepted and not covered by the agreement executed by the parties. It was also stated that on  the basis  of instructions  from  headquarters  the Superintending Engineers  have been  passing  the  bills  on single slab  basis and the plaintiffs remained silent during the entire  tenure of  the contract  period but  raised this issue after  the contract  period was  over.  The  defendant further averred  that the  plaintiffs have not delivered the materials correctly  at some  destinations. In  reply to the aforesaid written  statement the  plaintiffs  also  filed  a reply statement  denying the allegations made in the written statement and  reiterated the  stand taken in the plaint. On these pleadings the learned Single Judge framed three issues and on  Issue No. 1 came to hold that the rates mentioned in Exhibit D-8  will have to be calculated on single slab basis and not  on multi slab basis as contended by the plaintiffs. So far  as the  letter Exhibit P-1 dated 11.7.1978 which was enclosed to  the tender form Exhibit P-2, the learned Single Judge negatived  the contention of the defendant and came to hold that the words written in ink in Exhibit P-1 were there at the  time of  submission of the tender. The words were "I have quoted  my rates  for each slab and add for every extra one and  part thereof".  The plaintiffs’ case is essentially based on  the aforesaid  expression in  the letter which was enclosed to the tender and which according to the plaintiffs was ultimately  accepted. The learned Single Judge, however, construed  the  expression  "for  each  slab"  mentioned  in Exhibit D-6  and came  to hold  that the  tender was  not on multi slab  basis. The  learned Judge  also held that merely because the  tender conditions  are  not  clear  one  cannot accept the contention of the plaintiff that the rates agreed upon is on multi slab basis. Further taking into account the terms and  conditions of  Exhibit D-1 the learned Judge came to hold  that the  irresistible conclusion  is that what was intended is only a single slab basis. The learned Judge also examined  several  other  tenders  and  then  negatived  the plaintiff’s contention  that the agreement was on multi slab basis. On  an analysis  of the pattern of the working of the rates in  several tenders  the learned  Judge  rejected  the plaintiffs contention  that the  contract was  on multi slab basis.   Though   the   plaintiffs   relied   upon   several recommendations  of  the  Superintending  Engineer  but  the learned Judge on consideration of the same came to hold that those recommendations  will have to be rejected. It was also held that  the terms and conditions of a contract have to be decided on  its own  and production  of other contracts will not be  of any  help in  deciding what  are the terms of the present contract. He also held that the defendants failed to produce any  other contemporarius  contract which  has  been granted on  multi slab  basis. On  issue No.  2 the  learned Single Judge  on consideration  of entire evidence on record came to  hold that  the shortages  alleged by the defendants had not  been established. On Issue No. 3 the learned Single Judge came  to hold  that there is considerable delay in the matter of  payment of bills though such delay had occasioned on account  of difference in the interpretation of the terms of the  contract and  the  delay  is  on  the  part  of  the



defendants in settling the bills. With these conclusions and on calculating on single slab basis the learned Single Judge passed a decree for Rs. 9,31,157.63 with interest at 12% per annum from  1.1.1980 till  the date of decree and thereafter at 6%  per annum.  The suit  was thus  decreed in  part. The plaintiffs challenged the decree by filing an appeal and the defendants also  filed a  cross-objection  challenging  that part of the decree in favour of the plaintiffs. The Division Bench of  the High  Court  relying  upon  the  hand  written portion of Exhibit P-1 and the conduct of the Superintending Engineer in  passing the  plaintiffs’ bills  on  multi  slab basis as  well as  relying upon some other contracts came to hold that  the plaintiffs are entitled to freight charges on multi slab  basis. The  Division Bench  also held  that  the interpreation of  the learned Single Judge of the expression ’for each  slab’ is  wholly erroneous and it could only mean that  the   rate  was   on  multi  slab  basis.  With  these conclusions  the  Division  Bench  allowed  the  plaintiffs’ appeal and  dismissed the  defendants’  cross-objection  and hence the present appeal by special leave.      Mr.  V.R.   Reddy.  the  learned  Additional  Solicitor General appearing for the appellants contended that the hand written portion  in the plaintiff’s letter Exhibit P-1 dated 11.7.1978 which  was enclosed to the tender form Exhibit P-2 is  nothing  but  a  subsequent  interpolation  inasmuch  as neither there is any signature either of the plaintiff or of the receiving  officer on the same and further it was really astonishing  that   though  the   tender  was  submitted  on 12.7.1978 but according to the plaintiff an attested copy of the letter  could be  obtained from the departmental officer on 11.7.1978.  Mr. Reddy  further argued that the acceptance of the  tender by  the contractor  clearly indicates that it was on  single slab  basis as  the note  to the  same states "only one  rate should  be quoted  for various  lengths  and sizes and  not different  rates for  different lengths". Mr. Reddy further  urged that  the very fact that the plaintiffs did not submit any bills till the end of the contract period and started  to submit  the bills during the extended period of the  contract would indicate that with an obvious illegal design the bills were not being submitted in time. Repelling the reasonings  advanced by  the Division  Bench of the High Court Mr.  Reddy urged that passing of some bills by some of the Superintending  Engineers on  multi slab  basis  is  not determinative of  the terms  and conditions  of the contract particularly  when   the  contract  is  a  written  one  and consequently the  Division  Bench  erred  in  law  that  the contract was on multi slab basis.      We find  sufficient force  in each  of the  contentions advanced by the learned counsel for the appellants.      Mr.  Sivasubramanaim,   the  learned   senior   counsel appearing for  the  respondents  repelling  the  contentions advanced by  Mr. Reddy  urged that there was no issue at all on the  question as  to whether  hand  written  portion  was subsequently inserted with the connivance of the officers of the Board and therefore it would not be appropriate for this Court to  interfere with the same at this stage. The learned counsel also  contended that the very admission of DW-1, one of the  witnesses of the defendants to the effect that after submission of  the tender,  discussions were  made with  the contractor and  the contractor  explicitly expressed to have the work  done on  multi slab basis, clinches the matter and it is  not open  for the  defendants to give a go bye to the said admission  of the  witness. The  learned  counsel  also urged that  the defendants  in fact  accepted and  acted  on multi slab basis as is apparent from the letter Exhibit P-39



dated 18.4.80  from  the  Superintending  Engineer,  General Construction  Circle/South,   Tirunelvalli  to   the   Chief Engineer, Materials  Management,  whereunder  not  only  the Superintending  Engineer  has  candidly  admitted  that  the system of  payment of  multi slab basis has been in vogue in several circles  but also stated that the single slab system will not give a workable practical solution. Learned counsel lastly urged  that the  single slab system is on the face of it wholly  unreasonable and  to sustain  the  said  argument placed before  us certain  calculations  made  in  different documents. We are unable to persuade ourselves to agree with the contentions  advanced by  the learned  counsel  for  the respondents.      At the  outset it  must  be  borne  in  mind  that  the agreement between  the parties  was a  written agreement and therefore the  parties are bound by the terms and conditions of the  agreement. Once a contract is reduced to writing, by operation of  Section 91  of the Evidence Act it is not open to any  of the  parties to  seek to  prove the  terms of the contract with  reference to  some oral  or other documentary evidence to  find out  the intention  of the  parties. Under Section 92  of the Evidence Act where the written instrument appears to  contain the  whole terms  of the  contract  then parties to  the contract  are not  entitled to lead any oral evidence to  ascertain the terms of the contract. It is only when the  written contract does not contain the whole of the agreement between  the parties  and there  is any  ambiguity then  oral  evidence  is  permissible  to  prose  the  other conditions which  also must  not be  inconsistent  with  the written contract.  The case  in  hand  has  to  be  adjudged bearing in  mind the aforesaid principles and the plaintiffs being conscious  of this  position  along  with  the  tender appended a  letter and in that letter inserted certain terms by writing  in ink to establish the case that the acceptance of the plaintiffs’ tender would tantamount to the acceptance to the  terms contained  in the  letter in  which there  was insertion in writing to the effect that it was on multi slab basis. It  is in this context the question whether such hand written portion  was originally  there or  was  subsequently inserted assumes great significance. We are unable to accept the stand  taken by  the learned counsel for the respondents that there  was no  such issue  on this question inasmuch as this question  was considered  by the  learned  Trial  Judge while discussing  Issue No.  1 on the basis of evidence laid and the  Trial Judge  had given  a finding  in favour of the plaintiffs. The  said finding,  however, on  the face  of it appears to us to be wholly unsustainable. As has been stated earlier  there  was  no  signature  either  by  the  persons submitting the  tender or  by the persons receiving the same on the hand written portion of the letter. The learned Trial Judge had  noticed that  the certified copy which was issued by the  Board on  11.7.1978 of  the aforesaid letter clearly contains the  hand written  portion and therefore he came to the conclusion  that the  hand written  portion was there at the time  of submission of the tender. The tender itself was submitted on  12.7.1978 and  we fail  to understand  how the Board  could  grant  a  certified  copy  of  the  letter  on 11.7.1978 when  the plaintiffs’  case itself  is that  along with the  tender he  had appended the letter in question. On this ground  alone it  can be  safely held that hand written portion in  Exhibit  P-1  was  not  there  at  the  time  of submission of  the  tender  but  was  subsequently  inserted obviously with  the connivance of the officers of the Board. The Board in its rejoinder affidavit filed in this Court has stated that  the attested  copy  was  actually  received  on



28.12.1978, much  later than the finalization of the tenders and agreement  and in order to build up a case the aforesaid interpolation has  been made. In the facts and circumstances of the present case the aforesaid stand of the Board appears to us  to be  wholly justified  and at  any rate  we have no hesitation to  come to  the conclusion that the hand written portion in  Exhibit P-1 was not there initially and has been inserted subsequently.  The main  basis of  the  plaintiffs’ case on which a multi slab rate was claimed therefore fails. The written  agreement between the parties nowhere indicates that the rate to be paid to the plaintiffs was on multi slab basis and  the terms  and conditions of the written contract is not susceptible of such a construction.      It is  no  doubt  true  that  DW-1  a  witness  of  the defendants  in   his  evidence   had  admitted   that  after submission of  tender there  was certain discussions between the contractor  and the  authorities and  in that discussion contractor had expressed to charge for the job on multi slab basis and  same was  accepted by  the  authorities.  We  are afraid  a   decree  cannot  be  granted  in  favour  of  the plaintiffs on  the aforesaid statement since the contract in hand was  a written  one. There is no document whatsoever in support of  the aforesaid  so called after tender discussion and the  acceptance of  the terms  in the said discussion to the effect  that rate  would be charged on multi slab basis. Then again  if the  plaintiff had appended the letter to the tender indicating  that he  would be  charging on multi slab basis there  was  no  occasion  to  have  any  after  tender discussion or  to raise  the issue of rate being accepted on multi slab  basis. The so called statement of DW-1 therefore is wholly  unacceptable and in the eye of law also cannot be taken  into  account  to  vary  the  terms  of  the  written contract. The  Division Bench  of the  High Court  committed obvious error  in allowing  variance of  the  terms  of  the written contract  relying upon  such statement  of DW-1  and granted the decree on multi slab basis.      The   only    other   question   which   survives   for consideration  is   whether   the   conduct   of   some   of Superintending Engineers  in passing  some of  the bills  on multi slab  basis can  be pleaded as an estopped against the defendants and  can form  the basis of plaintiffs’ case. The answer  to  this  question  must  be  in  the  negative.  It transpires that  some of the Superintending Engineers passed some of  the bills  on multi  slab basis  and  further  when complaints were  received and  the matter  was  investigated into by  vigilance to  absolve the  concerned officers  from liability, a  recommendation has been made to grant the rate on multi  slab basis.  But such  a  recommendation  or  such passing of  bills on one count or multi slab basis cannot be construed to have conferred a right on the plaintiffs to get the payments  on multi  slab basis,  until and  unless it is proved by the plaintiff that the defendants agreed under the written contract  to pay on multi slab basis. The plaintiffs have utterly  failed to  establish the  same.  A  particular officer for  various reasons  may pass  a bill on multi slab basis or  a contractor  may be  able to get one of his bills passed at  a rate  other than  the  rate  given  in  written contract in  connivance with the passing authority. But when a  dispute   arises  and  the  matter  comes  to  court  for adjudication no  decree can  be granted to the plaintiffs on that basis and the plaintiffs would be required to establish that the  defendants in written contract agreed to grant the rate on  multi slab  basis. That has not been established in the case  in hand.  Therefore, in our considered opinion the Division Bench  of the  High Court  wholly erred  in law  in



allowing the  plaintiffs’ appeal  and  granting  the  decree accepting plaintiffs’  claim that the rate has to be paid on multi slab  basis. In  the aforesaid  premises the  impugned judgment and  decree of  the Division Bench is set aside and that of the learned Single Judge is affirmed. This appeal is allowed but  in the  circumstances there will be no order as to costs.