Doctrine Of Harmonious Construction - Ambiguous Clauses In Deed Must Be Interpreted Consistent With Other Clauses & With Intent Of Parties : Supreme Court

The Supreme Court recently applied the doctrine of harmonious construction in a case related to ambiguity in consent terms between parties recorded by the High Court in relation to an award in a land acquisition matter.

"As per the rules of doctrine of harmonious construction, the document has to be read as a whole and in its totality. If there is any ambiguity either patent or latent, in any of the clauses of the document, the courts should interpret such clause in such manner which is consistent with the other clauses and with the purpose and intent of the parties executing it", the Court observed.

The Supreme Court bench comprising Justices Bela M Trivedi and Justice Dipankar Dutta was hearing an appeal against a judgment of the Bombay High Court which had set aside the entire award and remanded the matter back to the Reference Court for deciding it afresh in a land acquisition matter.

Here, the lands belonging to the appellants were acquired for the purposes of the Agricultural Produce Market Committee(respondent).

The parties had reached consent terms on October 20, 1997, subsequent to an award made under Section 11 on January 12, 1996. These consent terms covered various aspects of their agreement, including the determination of compensation and the transfer of possession. Notably, the respondent had agreed to pay the compensation awarded under Section 11 and to take over possession of the disputed lands. Additionally, both parties had consented to making a reference to the District Court for the valuation of the lands as of December 17, 1994.

The Court noted that the consent terms and High Court's order failed to provide a specific timeline within which the appellant was required to make an application to the respondent seeking a Reference under Section 18 of the Land Acquisition Act, 1894(Act)

The Court opined that the respondent leveraged this ambiguity to its advantage and its plea questioning the timing of the appellant's application was not in the spirit of the consent terms.

It underscored that the requirement to make such an application to the Collector was a procedural formality rather than a contentious issue, considering that the agreed-upon date for the determination of the market value was already established and entrusted to the District Court as per the order of HC which recorded the consent terms.

The court observed “Such a plea raised after taking over the possession of lands in question from the appellant was not only not in consonance with the tenor of the consent terms but it smacked of ulterior motive on the part of the respondent. The High Court had given directions in terms of the consent terms, and both the parties were expected to act accordingly. In view of said directions given by the High Court, the issue of limitation contained in Section 18 of the Act had clearly paled into insignificance, and the respondent could not have raised such a plea before the Reference Court or before the High Court.”

The court added “Since the market value of the lands as on 17.12.1994 which was the reckonable date agreed by the parties, was required to be determined by the District Court, Nashik, making of an application to the Collector seeking a Reference under Section 18 was a sheer procedural formality required to be followed by the appellant.”

Given these explicit agreements between the parties, the Supreme Court pointed out that the respondent could not reasonably assert that the application made by the appellant-trust for reference to the District Court was beyond the prescribed limitation period under Section 18.

It observed “respondent having specifically agreed to pay the compensation awarded under Section 11 and take over the possession of the lands as also having agreed to make reference to the District Court, Nashik, it did not lie in the mouth of the respondent- Committee to say that the application made by the appellant- trust seeking reference to the District Court, Nashik was beyond the period of limitation prescribed under Section 18 or was not in consonance with the consent terms arrived at between the parties.”

The Supreme Court allowed the appeal and held that the High Court had committed a significant error by interfering with the Reference Court's findings and setting aside the entire award.

Case title: Shri Nashik Panchavati Panjarpol Trust v. The Chairman

Citation: 2023 LiveLaw (SC) 711; 2023 INSC 750

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