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TMI Blog1974 (9) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... icence by notification dated November 16, 1922, under S. 3 of the Act known as the 'Godhra Electric Licence, 1922' in favour of Lady Sulochana Chinubhai and Company, Ahmedabad. The licence was signed on November 17, 1922 and the notification granting it was published in the Bombay Government Gazette dated November 23, 1922 The licence was transferred to the ist appellant-company viz., the Godhra Electricity Co. Ltd. The licence was for a period of 50 years initially from its commencement. The initial period of 50 years, according to the respondents, was to expire on the midnight intervening between the 15th and 16th November, 1972. The second respondent exercised the option to purchase the undertaking of the 1st appellant company by a notice dated November 8, 1971, under s. 6(1) of the Act by calling upon the appellants to sell the undertaking to it on the midnight intervening between the 15th and 16th of November, 1972. Thereafter. the Government of Gujarat issued a notification under rule 115(2) of the Defence of India Rules taking over the management of the undertaking on November 18.1973. On December 21, 1973 of the State Government handed over the undertaking to the 2n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act are invalid as they ,abridge the right guaranteed under Article 19(1)(f) and 19(1)(g). Section 6(1) of the Act provides that where a licence has been granted to any person, not being a local authority, the State Electricity Board shall (a) in the case of a licence granted before the commencement of the Indian Electricity (Amendment) Act 32 of 1959, on the expiration of such period as is specified in the licence, and (b) in the case of a licence granted on or after the commencement of the said Act, on the expiration of such period not exceeding twenty years, and of every such subsequent period, not exceeding ten years, as shall be specified in this behalf in the licence; -have the option of purchasing the undertaking and such option shall be exercised by the State Electricity Board serving upon the licensee a notice in writing of not less than one year requiring the licensee to se the undertaking to it at the expiry of the relevant period referred to in this sub-section. The ruling of this Court make it clear that when the State or the 'State Electricity Board exercises its statutory option to purchase the undertaking of a licensee, it must in all respects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication........ in the Bombay Government Gazette that this licence has been granted it postulates that the licence has already been signed and granted and, therefore, the date of the notification granting the licence can never be November 16, 1922 when it is seen that the licence has been signed on November 17, 1922. We have already seen that rule 18 provides that the date of the notification shall be deemed to be the date of commencement of the licence. We have to read clause 2(e) of the licence in the light of the provisions of r. 18. Therefore, there is nothing strange in making the date of the notification in the Gazette that the licence has been granted, though anterior in point of time to the date of signing the licence, as the date of commencement of the licence. In other words, clause 2(e) of the licence will have to be read in Harmony with rule 18 and if so, read, it will be found that the date of the notification is only deemed to be the date of the commencement of the licence. The Additional Solicitor General also submitted that there is a distinction between the date of a notification and the date of the publication of the notification in the Gazette and that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f construction, from the words they have used and that it is one and the same principle which excludes evidence of statements or actions, during negotiations, at the time of the contract, or subsequent to the contract, any of which to the lay mind might at first sight seem to be proper to receive. Lord Simon said, after referring to the case of Whitworth Street Estates (supra) it is true that, on strict analysis, what was said by Lord Hodson, Viscount Dilhorne and Lord Wilberforce cannot be regarded as a vital step towards their conclusions; but, as I have already ventured to demonstrate, the point was directly in issue between the parties in your Lordship's House. I am therefore firmly of the opinion that what was said should be regarded as settling the law on this point. I am reinforced in this opinion because, in my view, Whitworth Street Estates was a correct decision on the point for reasons additional to those given in the speeches. He then said : Sir Edward Sugden's frequently quoted and epigrammatic dictum in Attorney General v. Drurmmond (1842, Dr. War 353, at 368) :...... tell me what you have done under such a deed, and I will tell you what that dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Italy, Art. 1362(2) provides in impressively succinct language. The Vienna convention on the law of Treaties of 1969 (which to a large extent merely codifies earlier international practice) enjoins the interpreter of a treaty to take into account 'any subsequent practice in the application of the treaty which establish the agreement of the parties regarding its interpretation', Art. 31(3)(b) (see Notes by F. A Mann on L Schuler A. G. v. Wickman Machine Tool Sales Ltd. (1973) 2 W. L. R. 683), Law Quarterly Review, Vol. 809, pp. 464-465). The real reason against taking into account the subsequent conduct of the parties is the rule which excludes extrinsic evidence in the construction of written contract. In Watchman v. East Africa Protectorate() [1919] A.C. 533) the question arose as to whether the land intended to be conveyed was that described by the boundaries in the certificate issued by the Government or the area marked on the plan, which disagreed. The parties bad always treated the latter as the, true area conveyed. It was held by the Privy Council that evidence of user may be given in order to show the sense in which the parties construed the language employed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties was from the language used. And, why is it that parties cannot clear the latent ambiguity in the language by a subsequent interpreting statement ? If the meaning of the word or phrase or sentence is clear, extrinsic evidence is not admissible. It is only when there is latent ambiguity that extrinsic evidence in the shape of interpreting statement in which both parties have concurred should be admissible. The parties themselves might not have been clear as to the meaning of the word or phrase when they entered into the contract. Unanticipated situations might arise or come into the contemplation of the parties subsequently which would sharpen their focus and any statement by them which would illuminate the darkness arising out of the ambiguity of the language should not be shut out. In the case of an ambiguous instrument, there is no reason why subsequent interpreting statement should be inadmissible. The question involved is this : Is the fact that the parties to a document, and particularly to a contract, have interpreted its terms in a particular way and have been in the habit of acting on the document in accordance with that interpretation, any admissible guide to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the parties, particularly, when acts are. done shortly after the date- of the instrument. The point then for consideration is whether s. 6(6) of the Act is violative of the fundamental right under Articles 19(1) (f) and 19(1) (g). Section 6(6) reads : Where a notice exercising the option of purchasing the undertaking has been served upon the licensee under this section, the licensee shall deliver the undertaking to the State Electricity Board, the State Government or the local authority, as the case may be, on the expiration of the relevant period referred to in sub-section (1) pending the determination and payment of the purchase price . The appellants submitted that the provision of S. 6(6) which postpones the payment of the purchase price till after the determination, of the quantum of the purchase price by the arbitrator is an unreasonable restriction upon the fundamental right of citizens to carry on business under Article 19 (1) (g) and also violative of their fundamental right under Article 19(1) (f). They submitted that before the amendment in 1959 to the Act, the State Electricity Board was bound to pay the purchase price before they could take delivery o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion v. Toronto Railway Corporation([1925] A. C. 177 at pp. 193-194.), the Privy Council held that the general rule under which a purchaser who takes possession is charged with interest on his purchase money from that time until it is paid was well established, and had on many occasions been applied to compulsory purchases but the duty of the arbitrators in that case was not to determine all the rights of the company, but only to ascertain the actual value of certain property at a certain time and that it was a truism to say that such value could not include interest upon it and that the liability for interest lay outside of the arbitration for its enforcement. In M.P. Electricity Board v.Central India Electric Supply Co.( A. I. R. 1972 M. P. 47.) the Madhya Pradesh High Court and in Upper Jammuna Valley Electricity Supply Co., Ltd. v. Municipal Corporation of Delhi(Unreported decision. ) decided on April 3, 1972, the Delhi High Court, took the view that the arbitrator functioning under the Act has no jurisdiction to award interest on the purchase price. The position therefore, is that although the State Electricity Board is liable to pay interest under the general law for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the undertaking is to be taken by the State. Electricity Board, the purchase price must be paid before the delivery or, there must be a provision for payment of interest on the purchase price for the period during which payment is withheld. Otherwise, the licence will not cease to have operation and the licensee will be entitled to carry on the business. If the arbitrator could have awarded the interest for the period between the date of delivery of the undertaking and the payment of the purchase price, probably it could have been said that the provision for delivery without payment of the purchase price would not be reasonable. But, to deprive the licensee of his undertaking without payment of the purchase price and then ask him or it to go to a court to enforce the liability for interest for the period for which the purchase price has been withheld is unreasonable. We hold that S. 6(6) violates the fundamental right under Art. 19(1)(g) and 19(1)(f) of the 2nd appellant. The undertaking, no doubt, belonged to the 1st appellant, a corporation. Not being a citizen, it has no fundamental right under Art. 19. The 2nd appellant is a shareholder and the Managing Director of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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