3 S.C.R. SUPREME COURT REPORTS 549·

SIR CHUNILAL V. MEHTA AND SONS, LTD.

v.

THE CENTURY SPINNING AND MANUFAC·

TURING CO., LTD.

(B. P. SmHA, C.J., J. L. KAPUR, M. HIDAYATULLAH,

J. C. SHAH and J. R. MuDHOLKAR, JJ.)

Supreme Court Appellate Jurisdiction of-Appeal against

decree of affirmance-Substantial question of law-Construction

of agreement,

if such a

question-Br.ach of contract-Liquidated

1amages-Constitution of India, Art. 133(1).

The appellants were appointed managing agents of the

respondents for

21 years. Under cl.

10 of the agreement the

appellants were entitled to a remuneration equal to 10% of

the gross profits <if the respondents subject to a minimum of

Rs. 6,000 per month. Clause 14 provided that if the agree·

ment was terminated otherwise in accordance with the provi­

sions thereof the appellants would be entitled to liquidated

damages "of not less than Rs. 6,000" per month for the

unexpired portion of the agreement. The respondent wrong­

fully terminated the agreement before the expiry of the

stipulated period.

The appellants filed a suit for recovery of

damages for breach of contract

cin the basis of 10% of the

gross profits

of the respondents. The trial Judge granted a

decree for Rs.

2,34,000 calculating the amount at.Rs. 6,000

per month. On appeal by the appellants the High Court

affirmed the decree.

The appellants applied to the High

Court for a certificate

of fitness for appeal to the

Supreme

Court but it declined to grant the same on the ground that

though the question involved in the case relating to the inter­

pretation of the agreement was a question of law it was not a

substantial question of law as required by Art. 13(1) of the

Constitution.

Held, that the case involved a substantial question of

law and the appellants were entitled to the certificate as of

right. A substantial question of law is one which is of

general public importance or which directly and substantially

affects

_the rights of the parties and which

have riot been

finally settled·by the Supreme Court, the Privy Council or the

Federal Court or which

is not free from difficulty or which

calls for discussion

of alternative views. The question invol­

ved in the present ca'3e as to the construction of the agreement

was not only one of Jaw but it was neither simple nor free

from doubt and was a substantial questiop of l'!'Y wi!hin th~

fllCi!nin? of Art, 133(1). · · ·

•

1962

March {J,

1961

Sir Chunilol

V. Afehta d: Som,

Ltd.

...

Tht Ctnli..17 SpiMing

d.: JI 4nrifa<turing

Co, Ltd.

M:Jdho/l;(l' J.

550 SUPREME COURT REPORTS (1962] SUPP.

Kaiklw.shroo Pirojsha Glzaira v. C.P. Syndicate Ltd.,( 1948)

I. Born. L. R. 741; R~~thunath Prasrul Singh v. Depuly Com­

missioner~( ParlaPVarh, ',1927) 54 l. A. 126 and Dinkarrrw v.

R'lllansey, I. L. R. ( 1949) Nag. 224, referred to. .

Rimmalap>;di Subb<1 Rtw v .• Voony l'eeraju, [. L. R. 1952

~fad. 264, approved.

lleld, further that upon a proper construction of cl. 14

of the agreement the

appellant; were entitled to damages

at the rate of Rs.

6,000 per month only. The words "not

le<S than Rs. 6,000" in cl. 14 could not be construed

as meaning 10% of the gross profits as provided in cl. 10.

When in cl. 14 the parties named a sum of money to be paid ....,.

as liquidated damages, it excluded the right to claim an

unascertaincrl sum as darnages.

Crvn. APPELLATE JURISDICTION : Civil Appeal

.No. 417 of 19:ii.

Appeal by sp~cial leave from the judgment

and dceree tlatBd .arch 14, 19.56, of tho Bombay

High Court in Appeal No. 94 of 1955.

N. A. Palkhivala, J. B. Dadachanji, 8. N. Andie)/,

R1tm.eshwar .l\'ath and P. L. Vohm, for the appellants.

. llf. C. 8r1alvad; Attorney General of India, R .• !.

Joshi and R. P. Malteshwari, for the respondont.

Pon1!3 A. Melita and R. H. Dliehar, for the

r ntervencr.

1962. March 5, The Judgment of the Court

1va~ delivered by

MuDIIOLll:AR, J.-This is an appeal by special

lerive iigainst. tho Judgment of the High Court of

Bomh11.y in an appeal from the jud~ment of a single

.Judge of that Court. The claim in appeal before

tho High Court was for a.bout 26 lakhs of rupees.

Being aggrieved by the decision of the High Court,

'h<> n.npelliint a.pp lied for a. certificate under Art.

I !l3(l )la) of the Con•titution. The ju :lgment of the

High Court in appeal was in affirma.nco of the judg­

ment of the learned single ,Judge dismissing the

~ppellant's suit. for qamages and therefore, it wa~

1

3 S.C.R. SUPREME COURT REPORTS 551

necessary for the appellant to establish that a sub­

stantial question of law was involved in the appeal.

On behalf of the appellant it was contended that

the question raised concerned the interpretation to

be placed on certain clauses of the mrmaging agency

agreement upon which their claim in

the suit was

founded

and that

· as the interpretation placed by

the appeal court on those clauses was erroneous and

thus deprived them of the claim to a substantial

amount the matter deserved to be certified by the

High Court under Art. 133(l)(a) of the Constitution.

The learned Judges,dismissed the 11.pplication with­

out a judgment apparently following their previous

decision in

KaikhushrooPirojsha Ghaira v.

C.P. Syndi­

cate Ltd. (1). The appellants, therefore, moved this

Court under Art. 136 of the Constitution for grant

of special leave which was granted. In the applica­

tion for special leave the appellant had raised a

specific contention

to the effect that the view taken

by the High

Court with regard to the application for

certificate under Art.

133 (1) (a) of the Constitution

was wrong,

that the appellant was entitled to

appeal to this

Court as a matter of right and that

while considering the appeal this question should

also be decided. The appellant pointed out that

tho· view taken by the Bombay High Court on the

point as to what is a substantial question of law

runs

contrary to the decision of the

Privy Council

in Raghunath Prasad Singh v. Deputy Commissioner of

Partabgarh (

2

)

and the decision of some High

Courts

in India and that therefore, it is desirable that this

Court should pron0unce upon the question in this

appeal

and set the matter at rest. We think that it

is eminently desirable that the point should be

con­

sidered in this appeal.

It is not dijputed before us that the question

raised by the appellant in the appeal is one of Jaw

because wh11t the appellant is challenging is the

interpretation placed upon cert,ain clauses

of the

(1) (\948)

L. Born. LR. 744. (2) (1927) 54 I.A. 126, 12&,

. . '

1962

Sir Chunilal

V. Mehta cf! Sons,

Ltd.

v.

The Century Spinning

& Manufacturing

Co, Ltd.

Mu<l~olkaf' J,

•

1962

Sir Churiilal

J', .l[rli.t.1 ((_·Sons,

' Lid.

v.

Tht Ctnt11 )' ·"Pi1lni'ffg

&: .lloriuf1cturing

Co., I.id,

.udhr,,l!:ar J.

' .

552 SUPREME COURT REPORTS [1962) SUPP.

ma.naging agency a.greement which a.re the founda.­

tion of the claim in suit. Indeed it is well settled

that the construction of a decument of title or of a

dooument which is the foundation of the rights of

parties necessarily raises a question of law.

The next question is whether the interpretation

of a document of the kind referred to abov11 raises

a substantial question

of la.w. For, Art. I

:~3( I)

provides that where the judgment, decree or final

order appealed from affirms the decision

of the

conrt immediately below in any case other than a. case referred to in sub-cl. ( c) an a.ppea.I sh&U lie to

this Court if the High Court oertifics that tbe appeal

involves some substantial question of law. To tho

same effect

are the provisions of s.

IIO of tho Code

of Civil Procedure. In the old Judicial Commis­

sioner's Court of Oudh tho view was taken that a

substantial question of law meant a question of

general importance. Following that view its succes­

sor, the Chief Court of Oudh, refused to grant a

cortificat~ to one Rcghunath Prasad Singh whose

appeal

it had dismissed. The appellant, therefore,

moved tho

Privy Council for special leave on the

ground

that the

appeal raised a substantial question

of law. The Privy Council grant<,>d speoial leave to

the appellant ai1d while granting it ma.do the follow.

ing observation

in their judgment:

"Admittedly here the decision of the

Court affirmed tho decision of tho Court imme­

dia.tely below, and, thert>foro, the whole ques­

tion turns upon whether there is a substantial

question

of law. Thero seems to have been

somo doubt,

at any rato in the old

Court of

Oudh, to which the present Court succeeded,

as to whether a. substantial questinn of law

meant

a. question of genera.I importance. Their

J,ordshi

ps think it is quite clear and indeed

it was conceded by !r. De Gruyther t.ha.t that

fS not the meaning, but that "substantiai

3 S.C.R. SUPREME COURT REPORTS 553

question of law" is a substantial question of

law as between the parties in the case invol­

ved."

Then their Lordships observed that as the case had

occupied the High Court for a very long time and

on whieh a very elaborate judgment was delivered

the appeal

on its face raised as between the parties

a substantial question

of law. This case is reported

in

Raghunath

Prashad Singh v. Deputy Commissioner of

Partabgarh(l). What is a substantial question of law

as between the parties would certainly depend upon

the facts and circumstances

of every case. Thus

for instance,

if

a question of law had been settled

by the highest court of the country the question of

law however important or diffi<'ult it may have been

regarded in the past and however much

it may affect

any of the parties would cease to be a substantial

question

of law. Nor again, would a question of

law which is palpably absurd be a subsLantial

ques­

tion of law as between the p1rties. The Bombay

High Court, however, in their earlier decision al­

ready adverted to have not properly appreciated

the test laid down by the Privy Council for ascertai­

ning what is a substantial question of law. Apparen­

tly the judgment of the Privy Council was brought

to their notice though

they do not make a direct

reference to it,

they have observed as follows:

"The only guidance that we have had

from the Privy Council is that. substantial

question

is not necessarily a question which is

of public importance. It must be a

substan­

tial question of law as between the parties in

the case involved.

But here again it must

not be forgotten that what is contemplated is

not a question of law alone ; it must be a

sub­

stantial question. One can define it nega-

. tively. For instance, if there is a well esta­

blished principle of law aIJq that principle i~

(I) (1927) 54!. A. 126

1

12a.

1961

Sir' Chunilal

V. MtAta & Sons,

Ltd

••

TAe C1ritur1 Spinning

ch Manufacturing

Co., Ltd.

Mudholkar J.

Sir Chunil~

V. MtlUtJ &, Soru,

Ltd.

••

r,,_ C.nM.1 Spio•;,,g

<6 Monufocturing

Cn., Ltd.

.udholk1r J,

554 SUPREME COURT REPORTS [1962] SUPP.

applied to a. given set of fa.ots, tha.t would

certainly

not be a

substantial question of la.w.

Where tho que8tion of law is not well settled

or where there is some

doubt

as to the princi­

ple of law involved, it certainly would ra.ise

a substantial question of la.w which would

require a final adjudication

by the highest Court."

One of the. points which the learned judges of the

Bombay High Court had to consider in this case

was whether the question of construction to be

placed upon a. decree was a substantial question of

law. The learned Judges said in their judgment

that the decree was undoubtedly of a complicated

cha.racte r

but

even so they refused to grant a certi­

ficate under s. I IO of the Code of Civil Procedure

for appeal to the Federal Court because the cons­

truction which the Court was called upon to place

on the decree did

not raiAe substantial question of

law.

Thny have obRerved tllat even though a decree

may

be of a complicated character what the

Court

ha.a to <lo is to look at its variolli! provisions and

draw its inference therefrom. Thus according to the

learned Judges merely because the inference to

be drawn is from a complicated decree no subtan.

tia.l question of law· would arise. Apparently in

coming

to this conclusion thoy omitted to a.ttach

sufficient weight

to the view of the

Privy Council that

a question of la.w is "a substantial question of law"

when it affects tho rights of the parties to tho pro­

ceeding. Further the learned Judges seem to have

taken the viow that there should be a doubt in the

mind of the Court as to the principle of law invol­

ved and unless there is such doubt in it8 mind the

question of law decided by it ca.nnot be said to be

"a substantial qu,,stion of law" 80 as to entitle n

party to a. certificat.o under s. 110 oft.he Code of

Civil Pro~ure. It is trqo that the~ have µot sa\d

.3 S.C.R. SOPREME COURT REPORTS 555

in so many words that such a doubt must be enter­

tained by the Court itself but that is what we under­

stand their judgment to mean and in particular the

last sentence in the portion

of their judgment which

we have quoted above.

As against the view taken

by the Bombay High

Court there are two decisions of the High Courts in

India to which reference was made before us. One

is Dinkarrao v. Rattansey ('). !n that case applying

the Privy Council's decision the High Court held that

a question of law· is substantial as between the

parties if the decision turns one way or another on

the particular view taken

of the law. If the view

taken does

not affect the decision then it cannot be

substantial as between the parties ; but it would be

otherwise

if it did, even though the question may be

wholly

unimportant to others. It was argued

before

the High

Court on the basis of certain deci­

sions that no question of 111,w can be substantial

within the meaning

of s. llO of the

Code of Civil

Procedure unless the legal principles applied in the

case are not well defined or unless there can be

some reasonable divergence

of opinion about the

correctness

of the view taken and unless the case

involves a point

of

law such as would call for fresh

definition

and enunciation. Adverting to those

cases Bose

C. J., (as he then was) who delivered the

judgment of the Court observed as follows :

"In the first case cited; it was also .held

that a misapplication of principles of law does

not raise any substantial question of law so

as

to attract the operation of s. llO ........ ..

There can be no doubt that that is a view which has been held by various High Courts

in India, but the decision cited omit to consi­

der two· decisions of their Lordships of the

Privy Council on this very point which, in o~r

(!) J. L. R. (1949) N•B· 22~.

. ~ .

196B

Sir Chunilol

V. M•hta &

Sons, Ltd.

v.

Thi Cmtur1' Spinnin_f

&: M onufacturing

Co., Ltd

tUudholkar J.

1961

Si< Chuni/.J V.

,,hla ti' Stma, Lld

••

Tiu Centur.1 Spitm;ng

<i· :\-f an1ifacturinr

Co., Lid.

,.\1 udltolkar J .

556 SUPRE~fE COURT REPORTS [1962] SUPP.

opinion, very largely modify the views taken in

the cases cited and which of course it is impos·

sible for us to ignore." (p. 226)

Referring to th11 Privy C'-<mncil case the learned

Chief Justic:e observed as follows :

"In the Lucknow case the only question

was whether the defendant

there obtained

an

absolute interest or a limited interest under I

will. That again was a question which was

of no interest to anyone outside the parties to

the suit. Nevertheless, their Lordships con·

sidered in both cases that the questions were

substant.ial questions of law bec:iuse they were

rnbstantial as between the parties. We can

only consider this to mean that a question of

law is substantial as between the parties if

the decision turns one way or another on the

particular view taken of the law. If it docs not

affect the decision t.hen it cannot be su bstan­

tial as between the parties. But if it substa.11·

tially affects the decision then it is substan·

tial as between the parties though it may be

wholly unimportant to others." (p. 228)

It may be that in the case before it, the Nai?pur

High Court was justified in granting certificate

because

of the points involved was the construction

of

a deed of compromise and the High Court had

interpreted

that deed differently from the court

below.

But it

seems to us that some of the obser­

vations of Boso C. J., are a lit.tlo too wide. We

are prepared to assume that the learned Chief

.Justice did not intend to say that where a question

of law raised is palpably absurd it would still be

regarded as a substantial question of law merely

because it affects the decision of the case one way

or the other, But at the s:ime time his observation

that the view taken in the cases cited before him

requires

to be modified in the light of the

Privy

9oµncjl decj.sjOIJ woulq imply t~at a ~uestiop of l!i-1f

3 S.C.R. SUPREME OOURT REPORTS 557

is deemed to be a substantial question of law even

though the legal principles applicable

to the case

are well defined and there can be no reasonable

divergence

of opinion about

the correctness of

the view taken by the High Court. If we have

understood

the learned

Chief Justice right, we

think that he has gone further than was warranted

by the decision of the Privy Council in Raghunath

Prasad Singh's case (1).

The other case relied upon was Rimma"lapudi

Subba Roo v. Noony Veeraju (

2

). In that case the

test of the kind · suggested by Bose C.J., was

rejected on the ground that logically it would lead

to the position that even a palpably absurd plea

raised by a party would involve a substantial

question

of law because the decision. on the merits

of the case would be directly affected by it. What

was, however, said was that when a question of law

is fairly arguable, where there is room for difference

of opinion on it or where the

Court thought it neces­

sary to deal with that question at some length and

discuss alternative view, then the question would

be a sabstantial question of law. · On the other

hand if the question was practically covered by

the decision of the highest court or if the general

principles

to

be applied in determining the question

are well settled and the only question was of

applying those principles to the particular fact of

the case it would not be a substantial question of

Jaw.

We a.re in general agreement with the view

taken

by the Madras High

Court and we think that

while the view taken by the Bombay High Court

is rather narrow the one taken by the former High

Court of Nagpm~ is too wide. The proper test for

determining whether a question

of law raised in the

case is substantial would, in our opinion, be whether

it is of general public importance or whether it

(!) (1927)

541.A.126, 128. (2J I.L.R. 1952 Mad. 264.

1962

Sir Chunilal V.

M1hl a&: 'Sone, Ltd.

v.

l'lu Century Spinning

dJ M oii.ufacturinz,

Co., ltd.

Mudho/l:arJ.

11

S;, Chunil o1 Y.

JI eh ta &: Sons. W.

i

Tiu Cmlu'' ,.,,,.ing

d· Manujacluf'int

Co., Ltd.

MudhtlkM J.

~GS st;PhEME COURT REPORTS [1962J.St1Pt.

directly and substantially affects the rightR of th~

parti<'S and if so whether it is either an open ques·

tion in the sense that it is not finally settled hy

this Court or hy the Privy Council or by the Fede.

ral Court or is not free from difficulty or calls for

discussion

of

alternative views. If the question is

settled by the· highest Court or the general princi­

ples to be applied in determining the question aro

well settled and there is a mero queation of apply­

ing those principles or that the plea raised is palpa­

bly absurd the question would not be a substantial

question

of law.

Applying these tests it would

be clear that tho

·question involved in this appeal, that is, the cons­

truction of tho Managing Agency agreement is not

only one of law but also it is neither simple nor

free from doubt. In the circumstances we have no

hesitation in saying

that the High Court was in error in refusing to grant the appellant a certificate

that tht~ appeal involves a substantial question of

law. It has to ho borne in mind that upon the

success or the failure of tho contention of the

parties, thoy stand

to

succeed or fail with respect to

their claim for nearly 26 lakhs of rupees.

Now as

to the merits. The relevant

facts may

be briofly stated. Chunilal Mehta & Co., Bombay

were appointed Managing Agents

of the respondent

company for a term of

:!l years by an agreement '

dated June 15, 1933. By a resolution passed by

the respondent company in October l!l45, Chunilal

.Mehta. & Co., were permitted to assign the benefits

of the afor<'said agreement to the present appellant,

Sir Chunilal V. Mehta & Sons Ltd. On April 23,

1951, the Board of Directors of the Company termi-

nat<'d the agreement of 1933 and passed a resolu-

tion removing the appellant as Managing Agents on

April

23, 1951. The appellant

thereupon filed a

suit on the original side of the Bombay High Court

-

3 s.c.it. SUPREME COURT REPORTS 559

claiming Rs. 50 lakhs by way of damages for wrong- 1962

ful termination of the agreement. Eventually· with Sir Ch••ilal

the permission of thll Court it amended the plaint V. Mehia &J Soos,

and claimed instead Rs. 28,26,804/-. The company U.,~·

admitted before the Court that the termination of The C•ntur7 SpiMi"t

h 1

,

f l d h

&! Manufacturing

t e appel ants employment was wrong u an so t e Co., IM.

only question which the learned Judge before whom

the

matter went had to decide was the quantum of

MudholkarJ.

damages to which the appellant was entitled. This

question depended upon the construction

to be

placed upon cl.

14 of the Managing Agency agree-

ment.

That clause runs thus :

"fn case the Firm shall be deprived of

the office of Agents of the Company for any

reason or cause other than or except those

reasons

or causes specified in Clause 15 of

these presents the Firm shall be entitled to

receive from the

Company as compensation

or liquidated damages for the loss of such

appointment a. sum equal to the aggregate

amount of the monthly salary of not less than

Rs. 6,000/-which the Firm would have been

entitled

to receive from the

Company, for and

during

the whole of the then unexpired portion

of the said period of 21 years if the said

Agency

of the Firm had not been

deter­

mined."

In order to appreciate the arguments advanced

before us it would, however, be desirable to repro­

duce the two earlier clauses-els. 10 and 12. They

run

thus :

10. The Company shall pay to the Firm

by way of remuneration for the services to be

performed

by

the Firm as such Agents of the

Company under this Agreement a monthly

sum

of

Rs. 6,000/-provided that if at the

1962

Sfr Clwnilol V.

M11tla &.· S01ts Lt4

v.

560 SUPRE~IE COURT REPORTS [1962) SUPP.

T ht Ctn/tu_> SpiNrin g

th, Jlarrufaeluring 1-

Co., /Jd.

clos<· of any y<'ar it shall be found that tho

total remunerat.ion of· the firm receivf'd in

such year shall have been less than IO per

cent of the gross profits of thtJ Company for

such year the Company shall pay to the Firm

in respect of ~uch year such additional sum

by way

of remuneration

as will make the total

sum received by the Firm in and in respect of

such year equal to I 0 per cent of tho groSB

profits of the Company in that year. The

first

payment of such remuneration shall

bf,

made on the first day of August 19:l3.

M,dholkar J.

"12. The said monthly remuneration or

Hillary shall accrue due from day to day but

shall be payable by the company to tho l•'irm.

monthly, on the first day of the month imme­

diatdy ~ucceeding tho month in which it

shall have been earned."

Tho learned trial judge upon the interpreta­

tion placed by him on cl. 14 awarded to the appel­

lant a sum of Rs. 2,:W,OCO/., calculating the amount

at Ha. (),000/-p.m. for the unexpired period of the

term

of the Managing

Agency agreement and also

awarded interest thereon. Kow according t-0 l\Ir.

Palkhivala for the appellants, the interpretation

placed upon cl. 14 by the trial judge and the appeal

Court

is erroneous in that it makes the words

"not

less than" in cl. 14 redundant. Learned counsel

contends

that on a proper construction of cl. 14 the

appellants are entitled to compensation computed

on the basis

of the total estimated remuneration

under

cl. l

0 for the unexpired period. Under that

clause, he contends, the appellants are entitled to

10% of the profits of the <:ompany subject to a

minimum of Rs. 6,0UO/-p.m. Alternatively learned

counsel contends

that cl. 14 is not exhaustive of the appellant's right to compensation and the right to

be compensated in respect of contingent remunera-

-

3 s.c.k. SUPREME COURT REPORTS 56l

tion based oa 10% of profits is left untouched by

that clause.

A perusal

of cl. 14. clearly shows that the

parties have themselves provided for the precise

amount

of damages that would be payable by the

Company

t::> the Managing Agents if the Managing

Agency agreement was terminated before the expiry

of the period for which

it

was made. The clause

clearly states that the Managing Agent shall receive

from the Company as compensation or liquidated

damages for the loss

of appointment a

sum equal

to the aggregate amount of the monthly salary of

not less than !ts. 6,000/-for and during the whole

of the unexpired portion of the term of Agency.

Now, when parties name a sum

of money to be

paid

as liquidated damages they must be deemed to

exclude the right to claim

an unascertaiued sum of · money as damages. The contention of learned

counsel is

that the words

"not less than" appearing

before "Rs. 6,000/-" in cl. 14 clearly bring in cl. 10

and, therefore, entitle the appellant to claim 10% of

the estimated profits for the unexpired period by way

of damages. But if we accept the interpretation, it

would mean that the parties intended to confer on

the Managing Agents what

is in fact a right conferred

by s.

73 of the

Contract Act and the entire cfause .

would be rendered otiose. Again the right to

claim liquidated damages is enforceable under s.

74

of the

Contract Act and where such a right is

found to exist no question of ascertaining damages .

really arises. Where the parties have deliberately

specified the amount

of liquidated damages there

can be

no presumption that they, at the same time,

intended to allow the

party who

has suffered by the

breach to give a go-by to the sum specified and claim

instead a sum of money which was not ascertained or

ascertainable

at the date of the breach. Learned

counsel contends

that upon this view the words "not

less than" would be rendered otiose. In·our opinion

196>

Sir Chunilal' V.

M1hta &! Sons, Ltd.

••

The Century Spinfting

& Manufaclur inV

1 Co. Ltd.

fl1udholkar J.

1962

Sir Chunilal V.

Mehta~ Sons, Ltd.

v.

Tht Century Spinnint

~ klanufacturinl Co.

Lid

MudhollwJ.

662 SUPREME COURT REPORTs [1962) SUPP. •

the~e wordR, as rightly-pointed out hy the High

Court, were intended only to emphasise the fact

that compensation will be computable at an amount

not less than Rs. fi,000 p.m. Apparently, they

thought

it desirable to emphasise the point that the

amount

of

lts. 6,000 p.m. was regarded by them as

reasonable and intended

that it should not be

re­

duced by the court in its discretion.

Mr. Palkhivah argued that what the appellants

were entitled to was remuneration aud remuneration

meant nothing

but salal'y. The two words, according

to him, have

been used intorchangeahly in the various

clauses

of

the agreement. If, therr.forc, salary in

cl.

14

is the same as remunerat.ion, which according

to him it is, then as indieated in el. JO it would

mean 10% of the gross profits of the Company sub­

ject to a minimum of Rs. 6,00P/-p.m. Jn support

of the argument that the two words wherever used

in the agreement mean one

and the same thing

lea­

rned counsel relies on cl.12 which says that the

monthly remuneration or salary shall accrue due

from

day to day. Then undoubtedly the two words

clearly mean the

same thing. But from a perusal of

the clause it would a.ppear that remuneration there

could mean nothing other than Rs.6,000/·p.m. For,

that clause provides that the amount shall accure

from

day to day and be payable at

the end of the

month immediately succeeding the month in which

it had been earned.

Now, whether a company had

made profits or not and if so what is the extent of

the profits is determinable only at the end of its

accounting year. To say, therefore, that the remu­

neration of 10% of the gross profits accrues from

day to day and is' payable every month would be

to ignore the nature of this kind of remuneration.

Therefore in our opinion, when the remuneration

and salary were equated in cl. 12 nothing else was

meant but Rs.u,OOOf-and when tho word salary was

used in cl. 14 we have no doubt that only that

1

'

as.a.&. sU:PR:EM:E cou&r REPORTS 563

amount was meant and no other. It may be that

under cl. 10 the appellant was entitled to additional

remuneration in case

the profits were high upto a

limit

of

10% of the gross. profits. That was a right

to claim something over and above Rs.6,000/-and

could be characterised properly as additional remu­

neration and not fixed or normal remuneration

which alone was apparently in the minds

of the

par­

ties when they drew up cl. 14. In our opinion,

therefore,

the High

Court was right in the cons­

truction placed by it upon the clause.

Coming to the alternative argument of Mr.

Palkhivala,

we appreciate that the right which the

appellant had of claiming

10% of profits was a

valuable right

and that but for cl. 14 he would have

been entitled

in a suit to claim damages estimated

at

10% of the gross profits. We also appreciate

his argument

that a party in breach should not be

allowed

to gain by that breach and escape liability

to pay damages amounting to a very much larger

sum

than the compensation payable under cl. 14

and that we should so interpret cl. 14 as to keep

alive

that right of the appellants. Even so, it is

difficult, upon

any reasonable construction of cl. 14,

to hold that this right of the appellants were

inten­

ded by the parties to he kept alive. If such were

the intentions

of the parties clearly there was no

need whatsoever

of providing for compensation in

cl.

14. If that clause had not been there the

appel­

lant would indeed have been entitled to claim dama­

ges at the rate of 10% for the entire period aubject

to minimum of Rs. 6,000/-p.m. On the other hand

it seems to us that the intention of the parties was

that if the appellants were relieved of the duty to

work as Managing Agent and to put in their own

money for ~arrying on the duties of managing agents

they should not be entitled to get anything more

than Rs. 6,000/-p.m. by way of compensation.

Clause 14 as it stands deals with one subject only

Sir Chunilol V.

M1hla &t Sons, Ltd.

Vo

The Centu,y Spinning

&: M anuJacturing

Co., Ltd.

Mudholkar J.

i962

Sir Cl11111il4l V.

M1hla 41 Sons

1

Ud.

v.

Tiu Ct11t111y Spinning

4' M"""fact,,.ing

C.. Lid.

M ui!rol /w J.

IHI

Morch 6t>

. , . ~ . . . . . . ' ,.

SUPREME OOURT REPOR1'S [1962] SUPP.

and that is compenation. It does not expreBBly or

by necessary implication

keep alive

the right tu

claim damages under the general law. By provi­

ding for compensation in express terms the right tu

claim damages under the general law is neceBSarily

e~cluded and, therefore, in the face of that clause it

is not open to tho appellant to oontend that that

right is left unaffected. Thero is thus nu substance

in the alternative contention put forward by the

learned counsel.

Accordingly we affirm the decree of the High

Com t and dismiss the appeal with cost.a.

Appe,al di,siniS&li.

KRISli.J.'i"A PRASAD AND .OTHER~

v.

GAURI KUMAR! D.EVl

(P. B. GA.JK'.SDRAGADKAR, A. K. SARKAR and

K. N. w AN CHOO, JJ.)

Bxecution-l'eroonal decree against mortgagor-Mortgaged

e•late i·eBting in t!.t State-Bjject on claim pendiny-Bihar Land

Reform• Act, 19W(Acl 30 oj 1950), s. 4(d).

The appcllan t obtaine<l a preliminary decree, on an

anomalous mortgage

of a

~hare in the Zamindari village of

Sonchari Mouza in the Patna lJistrict and khudkasht land

appertaining to the Mouza, against the mortgaged properties

with

a direction for a personal decree for the

balance and

there followed a final mortgage decr<e on 30.9.1947. An

application for execution against the mortgaged properties was

dismissed on 9.1.1954 as in the meantime the mortgaged pro·

pcrtics \·hich constituted an estate within the meaning of

s. 2(1) of the Bihar Land Reforms Act, 1950, had vested in

the State.

Execution was sought personally against the mortgagor I

. by attachment and sale of other properties of the mortgagor

and it was ultimately ordered by the executing <OUJ t. The