Contract – Demurrage – Food Corporation of India
(Corporation) entered into a contract with Respondent (Contractor)
for transporting food grains – Subsequently, corporation called
upon contractor to reimburse the amount of demurrages imposed
on it by the railways – As contractor incurred heavy losses on
account of demurrages due to the contractor’s inability to provide
trucks – This unilateral action of corporation was challenged –
Whether the contractual clause enabling the Corporation to recover
“charges” includes the recovery of demurrages – Held: The scope
of the expression “charges” must be understood as intended by the
parties to the contract – The expression charges has to be examined
in the context of its related words in the contract, which are costs,
damages, registeration fees, and expenses – The preamble of the
contract, i.e., the Work Order, reads that the contractor is engaged
for “transportation of foodgrains fromdepots, mandis, rail heads
of Churaibari to various destinations” –It is evident from the
contractual provisions and also the admissions of the Corporation
that the task of loading or unloading of food grains from the railway
wagons was not a part of the contract – Thus, based on interpretation
of the expression “charges” in the contractual context, it did not
include liability on account of demurrages – Hence, the Corporation
cannot impose and collect demurrages from the contractors – Even
by referring to other similar contracts entered by the corporation
in 2010 and 2018, it is ascertained that responsibility of loading
and unloading of foodgrains wagons is absent in the present
contract – Thus the expression “charges” cannot be interpreted to
include demurrages.