Imp. Rulings - Interpretation of Documents.

 Imp. Rulings - Interpretation of Documents.

Index;

1. SCI (2024.12.20) in China Development Bank Vs. Doha Bank Q.P.S.C. and Ors.  [(2024) ibclaw.in 340 SC, Civil Appeal No.7298 of 2022 with Civil Appeal No. 7407, 7615 and 7328 of 2022 and Civil Appeal No. 7434 of 2023]

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1). SCI (2024.12.20) in China Development Bank Vs. Doha Bank Q.P.S.C. and Ors.  [(2024) ibclaw.in 340 SC, Civil Appeal No.7298 of 2022 with Civil Appeal No. 7407, 7615 and 7328 of 2022 and Civil Appeal No. 7434 of 2023] held that;

# 53. Only the title of a document cannot be a decisive factor in deciding the nature of the document or the transactions affected by the document. In the case of C.C., C.E. and S.T. Bangalore (Adjudication) & Ors. v. Northern Operating Systems Pvt. Ltd.14, in paragraphs 53 to 55, this Court held thus:

• “53. From the above discussion, it is evident, that prior to July 2012, what had to be seen was whether a (a) person provided service, (b) directly or indirectly, (c) in any manner for recruitment or supply of manpower, (d) temporarily or otherwise. After the amendment, all activities carried out by one person for another, for a consideration, are deemed services, except certain specified excluded categories. One of the excluded category is the provision of service by an employee to the employer in relation to his employment.

• 54. One of the cardinal principles of interpretation of documents, is that the nomenclature of any contract, or document, is not decisive of its nature. An overall reading of the document, and its effect, is to be seen by the courts. Thus, in State of Orissa v. Titaghur Paper Mills Co. Ltd. [State of Orissa v. Titaghur Paper Mills Co. Ltd., 1985 Supp SCC 280] it was held as follows : (SCC p. 371, para 120)

• “120. It is true that the nomenclature and description given to a contract is not determinative of the real nature of the document or of the transaction thereunder. These, however, have to be determined from all the terms and clauses of the document and all the rights and results flowing therefrom and not by picking and choosing certain clauses and the ultimate effect or result as the Court did in the Orient Paper Mills case [State of M.P. v. Orient Paper Mills Ltd., (1977) 2 SCC 77].” 

• This principle was reiterated in Prakash Roadlines (P) Ltd. v. Oriental Fire & General Insurance Co. Ltd. [Prakash Roadlines (P) Ltd. v. Oriental Fire & General Insurance Co. Ltd., (2000) 10 SCC 64]

• 55. The task of this Court, therefore is to, upon an overall reading of the materials presented by the parties, discern the true nature of the relationship between the seconded employees and the assessee, and the nature of the service provided — in that context — by the overseas group company to the assessee.”

• (emphasis added)

As held in the case of B.K. Muniraju v. State of Karnataka & Ors.7, a sentence or a term in a contract does not determine the real nature of the contract. It is true that the Courts should not rewrite the contract while making an attempt to interpret it. However, in the case of D.N. Revri & Co.8, in paragraph 7, this Court held thus:

• “7. It must be remembered that a contract is a commercial document between the parties and it must be interpreted in such a manner as to give efficacy to the contract rather than to invalidate it. It would not be right while interpreting a contract, entered into between two lay parties, to apply strict rules of construction which are ordinarily applicable to a conveyance and other formal documents. The meaning of such a contract must be gathered by adopting a common sense approach and it must not be allowed to be thwarted by a narrow, pedantic and legalistic interpretation.
  .. .. .. .. .. .. .. .. .. .. .. . .. .. .. . .. … . ..”      (emphasis added)

Therefore, the name of the document is not a decisive factor. Only because the title of the document contains the word hypothecation, we cannot conclude that guarantee is not a part of this document.

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