This would be sufficient to keep the application of section 94 of the Evidence Act out of harm’s way. However, on the footing that the principle contained in section 94 of the Evidence Act, as to extrinsic evidence being inadmissible in cases of “patent ambiguity”, is fundamental to Indian jurisprudence, we proceed to examine whether section 94 of the Evidence Act has been correctly applied by the Division Bench to non-suit the Appellant.
Section 94 appears in Chapter VI of the Evidence Act titled, “OF THE EXCLUSION OF ORAL BY DOCUMENTARY EVIDENCE”. In this regard, proviso (6) to section 92 of the Evidence Act is important and states as follows:
“92. Exclusion of evidence of oral agreement. –– When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms:
xxx xxx xxx Proviso (6). –– Any fact may be proved which shows in what manner the language of a document is related to existing facts.” Illustration (f), then states:
“Illustrations xxx xxx xxx
(f) A orders goods of B by a letter in which nothing is said as to the time of payment, and accepts the goods on delivery. B sues A for the price. A may show that the goods were supplied on credit for a term still unexpired.” Followed by this, are sections 94 and 95 of the Evidence Act, which state:
“94. Exclusion of evidence against application of document to existing facts. –– When language used in a document is plain in itself, and when it applies accurately to existing facts, evidence may not be given to show that it was not meant to apply to such facts.”
95. Evidence as to document unmeaning in reference to existing facts. –– When language used in a document is plain in itself, but is unmeaning in reference to existing facts, evidence may be given to show that it was used in a peculiar sense.”
Importantly, section 92 of the Evidence Act refers to the terms of a “contract, grant or other disposition of property or any matter required by law to be reduced to the form of a document”. In all these cases, under proviso (6) read with illustration (f), any fact may be proven which shows in what manner the language of a document is related to existing facts. Illustration (f) of section 92 of the Evidence Act indicates that facts, which may on the face of it, be ambiguous and vague, can be made certain in the contextual setting of the contract, grant or other disposition of property. Section 94 of the Evidence Act, then speaks of language being used in a document being “plain in itself”. It is only when such document “applies accurately to existing facts”, that evidence may not be given to show that it was not meant to apply to such facts. Likewise, the obverse situation is contained in section 95 of the Evidence Act, which then states that when the language used in a document is plain in itself, but is “unmeaning in reference to existing facts”, only then may evidence be given to show that it was used in a peculiar sense.
When sections 92, 94 and 95 of the Evidence Act are applied to a string of correspondence between parties, it is important to remember that each document must be taken to be part of a coherent whole, which happens only when the “plain” language of the document is first applied accurately to existing facts.
In Woodroffe and Ali’s Law of Evidence, the learned authors opine that whereas sections 93 and 94 of the Evidence Act deal with cases of patent ambiguity, sections 95 to 97 of the Evidence Act deal with cases of latent ambiguity (see pages 3119-3120). A “patent ambiguity” is explained in the following terms in Starkie on Evidence [Starkie, T., A Treatise on the Law of Evidence, 7th Edition, 1829, William Benning, London] .
“By patent ambiguity must be understood an ambiguity inherent in the words, and incapable of being dispelled, either by any legal rules of construction applied to the instrument itself, or by evidence showing that terms in themselves unmeaning or unintelligible are capable of receiving a known conventional meaning, the great principle on which the rule is founded is that the intention of parties, should be construed, not by vague evidence of their intentions independently of the expressions which they have thought fit to use, but by the expression themselves. Now, those expressions which are incapable of any legal construction and interpretation by the rules of art are either so because they are in themselves unintelligible, or because, being intelligible, they exhibit a plain and obvious uncertainty. In the first instance, the case admits of two varieties; the terms though at first sight unintelligible, may yet be capable of having a meaning annexed to them by extrinsic evidence, just as if they were written in a foreign language, as when mercantile terms are used which amongst mercantile men bear a distinct and definite meaning, although others do not comprehend them; the terms used may, on the other hand, be capable of no distinct and definite interpretation. Now, it is evident that to give effect to an instrument, the terms of which, though apparently ambiguous are capable of having a distinct and definite meaning annexed to them is no violation of the general principle, for, in such a case, effect is given, not to any loose conjecture as to the intent and meaning of the party, but to the expressed meaning and that, on the other hand, where either the terms used are incapable of any certain and definite meaning, or, being in themselves intelligible, exhibit plain and obvious uncertainty, and are equally capable of different applications, to give an effect to them by extrinsic evidence as to the intention of the party would be to make the supposed intention operate independently of any definite expression of such intention. By patent ambiguity, therefore, must be understood an inherent ambiguity, which cannot be removed, either by the ordinary rules of legal construction or by the application of extrinsic and explanatory evidence, showing that expressions, prima facie, unintelligible, are yet capable of conveying a certain and definite meaning.” (page 653)
On the other hand, a “latent ambiguity” is described in Woodroffe and Ali’s Law of Evidence, as follows:
“Latent ambiguity, in the more ordinary application, arises from the existence of facts external to the instrument, and the creation by these facts of a question not solved by the document itself. A latent ambiguity arises when the words of the instrument are clear, but their application to the circumstances is doubtful; here the ambiguity, being raised solely by extrinsic evidence, is allowed to be removed by the same means. In strictness of definition, such cases, as those in which peculiar usage may afford a construction to a term different from its natural one as can be seen in s 98, would be instances of latent ambiguity, since the double use of the term would leave it open to the doubt in which of its two senses it was to be taken. It is not, however, to this class of cases that reference is now made, but to those in which the ambiguity is rather that of description, either equivocal itself from the existence of two subject matter, or two persons, both falling within its terms as can be seen in s 96, or imperfect when brought to bear on any given person or thing as per ss 95 and 97.” (pages 3132-3133)
At this stage, it is also important to advert to the definition of “fact” in section 3 of the Evidence Act, which is set out hereinbelow:
“3. Interpretation-clause.––In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context: –– xxx xxx xxx “Fact”.–– “Fact” means and includes ––
(1) anything, state of things, or relation of things, capable of being perceived by the senses;
(2) any mental condition of which any person is conscious.
Illustrations
(a) That there are certain objects arranged in a certain order in a certain place, is a fact.
(b) That a man heard or saw something, is a fact.
(c) That a man said certain words, is a fact.
(d) That a man holds a certain opinion, has a certain intention, acts in good faith or fraudulently, or uses a particular word in a particular sense, or is or was at a specified time conscious of a particular sensation, is a fact.
(e) That a man has a certain reputation, is a fact.”
The picture that emerges, therefore, is that a “patent ambiguity” provision, as contained in section 94 of the Evidence Act, is only applicable when a document applies accurately to existing facts, which includes how a particular word is used in a particular sense. Given that, in the facts of the present case, there was no mention of the price at which coal was to be supplied in the three “crucial” emails, these emails must be read as part of the entirety of the correspondence between the parties, which would then make the so-called “admissions” in the aforementioned emails apply to existing facts.
Once this is done, it is clear that there is no scope for the further application of the “patent ambiguity” principle contained in section 94 of the Evidence Act, to the facts of the present case.
However, section 95 of the Evidence Act, dealing with latent ambiguity, when read with proviso (6) and illustration (f) to section 92 of the Evidence Act, could apply to the facts of the present case, as when the plain language of a document is otherwise unmeaning in reference to how particular words are used in a particular sense, given the entirety of the correspondence, evidence may be led to show the peculiar sense of such language. Thus, if this provision is applied, the Majority Award cannot be faulted as it has accepted the evidence given by Mr. Wilcox, wherein he explained that the three emails would only be meaningful if they were taken to refer to “mixed” supplies of coal, and not supplies of coal at the contractual price.
A judgment of the Court of Appeal in Singapore, in Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd, [2008] SGCA 27, discussed section 96 of the Evidence Act of Singapore, which is the equivalent of section 94 of the Indian Evidence Act. The Singapore Court of Appeal, after setting out the section, held:
“77 … The somewhat narrow wording of s 96, which refers to the specific situation where the language in a document “applies accurately to existing facts”, is probably attributable to its provenance as a rule of interpretation pertaining to wills. This section should therefore not be read too restrictively. Like s 95 of the Evidence Act, s 96 should be viewed as prescribing a common-sense limit on the use of extrinsic evidence which has been admitted under proviso (f) to s 94. In Butterworths’ Annotated Statutes, it is stated (at p 275) that:
The earlier section [ie, s. 95] and the present section [ie, s 96] lay down the outer limits of interpretation in the sense that they mark the place where the language used by the writer must prevail over any extrinsic evidence and the place where extrinsic evidence may prevail over the language. So just as where the language is patently ambiguous it cannot be cured by extrinsic evidence, so where the language used is plain on its face, it must be given effect to, although it can be shown that the writer has made a mistake.
Similarly, in Woodroffe at p 3510, the explanation of s 94 of the Indian Act (which is in pari materia with s 96 of the Evidence Act) makes clear that:
When a court is asked to interpret a document, it looks at its language. If the language is clear and unambiguous and applies accurately to existing facts, the court accepts the plain and ordinary meaning … When it is said that a court should look into all the circumstances to find an author’s intention, it is only for the purpose of finding out whether the words apply accurately to existing facts. If, however, the words are clear in the context of the surrounding circumstances, the court cannot rely on them to attribute to the author an intention contrary to the plain meanings of the words used in the document.”” (emphasis supplied) “108 It is evident from the Court of Appeal’s reasoning in Sandar Aung [2007] 2 SLR 89 that in Singapore, the parol evidence rule (as statutorily embedded in s 94 of the Evidence Act) still operates as a restriction on the use of extrinsic material to affect a contract. However, extrinsic material is admissible for the purpose of interpreting the language of the contract. In this respect, Sandar Aung acknowledges that extrinsic material is admissible even if no ambiguity is present in the plain language of the contract. However, ambiguity still plays an important role, in that the court can only place on the relevant contractual word, phrase or term an interpretation which is different from that to be ascribed by its plain language if a consideration of the context of the contract leads to the conclusion that the word, phrase or term in question may take on two or more possible meanings, ie, if there is latent ambiguity. In Sandar Aung, after the Estimate was taken into account, the phrase “all charges, expenses and liabilities incurred by and on behalf of the Patient” could plausibly be taken to mean all charges, expenses and liabilities incurred by and on behalf of the Patient in respect of the envisaged angioplasty. Thus, the court had a legitimate basis to place a narrower interpretation on the contractual term (or, in more informal parlance, to “read down” that term) which would not otherwise have been warranted by its broad and general language. It may be possible to argue that what the court did in Sandar Aung in fact constituted variation of the relevant contractual terms in contravention of s 94 of the Evidence Act. This issue shall be addressed in greater detail at [122]–[123] below. It remains to be noted that proviso (f) to s 94 was not discussed in Sandar Aung. Thus, the issue of whether ambiguity was a prerequisite for the application of this proviso and its relationship with the common law contextual approach to contractual interpretation was left open.” “(B) THE PAROL EVIDENCE RULE 111 As mentioned earlier, in Singapore, the parol evidence rule lives on in s 94 of the Evidence Act and has been applied assiduously by the courts in case law. The Singapore courts have always been mindful of the need for contractual certainty, especially in commercial agreements (such as the Policy in the present case). In Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd [2006] 1 SLR 927, the High Court emphasised that not only is “sanctity of contract … vital to certainty and predictability in commercial transactions”, but also:
The perception of the importance of commercial certainty and predictability is deeply entrenched within the commercial legal landscape in general and in the individual psyches of commercial parties (and even non-commercial parties, for that matter) in particular.
However, the parol evidence rule only operates where the contract was intended by the parties to contain all the terms of their agreement. Where the contractual terms are ambiguous on their face, it is likely that the contract does not contain all the terms intended by the parties.
Furthermore, in order to ascertain whether the parties intended to embody their entire agreement in the contract, the court may take cognisance of extrinsic evidence or the surrounding circumstances of the contract.
Assuming that the contract is one to which the parol evidence rule applies, no extrinsic evidence is admissible to contradict, vary, add to or subtract from its terms (see s 94 of the Evidence Act).” (emphasis supplied) Finally, in a synopsis at the end, the Court of Appeal held:
“132 To summarise, the approach adopted in Singapore to the admissibility of extrinsic evidence to affect written contracts is a pragmatic and principled one. The main features of this approach are as follows:
(a) A court should take into account the essence and attributes of the document being examined. The court’s treatment of extrinsic evidence at various stages of the analytical process may differ depending on the nature of the document. In general, the court ought to be more reluctant to allow extrinsic evidence to affect standard form contracts and commercial documents.
(b) If the court is satisfied that the parties intended to embody their entire agreement in a written contract, no extrinsic evidence is admissible to contradict, vary, add to, or subtract from its terms (see ss 93–94 of the Evidence Act). In determining whether the parties so intended, our courts may look at extrinsic evidence and apply the normal objective test, subject to a rebuttable presumption that a contract which is complete on its face was intended to contain all the terms of the parties’ agreement. In other words, where a contract is complete on its face, the language of the contract constitutes prima facie proof of the parties’ intentions.
(c) Extrinsic evidence is admissible under proviso (f) to s 94 to aid in the interpretation of the written words. Our courts now adopt, via this proviso, the modern contextual approach to interpretation, in line with the developments in England in this area of the law to date. Crucially, ambiguity is not a prerequisite for the admissibility of extrinsic evidence under proviso (f) to s 94.
(d) The extrinsic evidence in question is admissible so long as it is relevant, reasonably available to all the contracting parties and relates to a clear or obvious context. However, the principle of objectively ascertaining contractual intention(s) remains paramount. Thus, the extrinsic evidence must always go towards proof of what the parties, from an objective viewpoint, ultimately agreed upon. Further, where extrinsic evidence in the form of prior negotiations and subsequent conduct is concerned, we find the views expressed in McMeel’s article and Nicholls’ article persuasive. For this reason, there should be no absolute or rigid prohibition against evidence of previous negotiations or subsequent conduct, although, in the normal case, such evidence is likely to be inadmissible for non-compliance with the requirements set out at [125] and [128]–[129] above. (We should add that the relevance of subsequent conduct remains a controversial and evolving topic that will require more extensive scrutiny by this court at a more appropriate juncture.) Declarations of subjective intent remain inadmissible except for the purpose of giving meaning to terms which have been determined to be latently ambiguous.
(e) In some cases, the extrinsic evidence in question leads to possible alternative interpretations of the written words (ie, the court determines that latent ambiguity exists). A court may give effect to these alternative interpretations, always bearing in mind s 94 of the Evidence Act. In arriving at the ultimate interpretation of the words to be construed, the court may take into account subjective declarations of intent. Furthermore, the normal canons of interpretation apply in conjunction with the relevant provisions of the Evidence Act, ie, ss 95–100.
(f) A court should always be careful to ensure that extrinsic evidence is used to explain and illuminate the written words, and not to contradict or vary them. Where the court concludes that the parties have used the wrong words, rectification may be a more appropriate remedy.” (emphasis supplied)
The approach of the Singapore Court of Appeal has our broad approval, being in line with the modern contextual approach to the interpretation of contracts. When proviso (6) and illustration (f) to section 92, section 94 and section 95 of the Evidence Act are read together, the picture that emerges is that when there are a number of documents exchanged between the parties in the performance of a contract, all of them must be read as a connected whole, relating each particular document to “existing facts”, which include how particular words are used in a particular sense, given the entirety of correspondence between the parties. Thus, after the application of proviso (6) to section 92 of the Evidence Act, the adjudicating authority must be very careful when it applies provisions dealing with patent ambiguity, as it must first ascertain whether the plain language of a particular document applies accurately to existing facts. If, however, it is ambiguous or unmeaning in reference to existing facts, evidence may then be given to show that the words used in a particular document were used in a sense that would make the aforesaid words meaningful in the context of the entirety of the correspondence between the parties.
This approach is also reflected in a recent judgment of this Court in Transmission Corpn. of Andhra Pradesh Ltd. v. GMR Vemagiri Power Generation Ltd., (2018) 3 SCC 716, as follows:
“21. In the event of any ambiguity arising, the terms of the contract will have to be interpreted by taking into consideration all surrounding facts and circumstances, including correspondence exchanged, to arrive at the real intendment of the parties, and not what one of the parties may contend subsequently to have been the intendment or to say as included afterwards, as observed in Bank of India v. K. Mohandas [Bank of India v. K. Mohandas, (2009) 5 SCC 313] : (SCC p. 328, para 28)”
“28. The true construction of a contract must depend upon the import of the words used and not upon what the parties choose to say afterwards. Nor does subsequent conduct of the parties in the performance of the contract affect the true effect of the clear and unambiguous words used in the contract. The intention of the parties must be ascertained from the language they have used, considered in the light of the surrounding circumstances and the object of the contract. The nature and purpose of the contract is an important guide in ascertaining the intention of the parties.”” (page 727)
Refer: Anglo American Metallurgical Coal Pty Ltd v. MMTC Ltd – Supreme Court-CIVIL APPEAL NO.4083 OF 2020
