XII [Road Transport Contract]. Recovery of losses suffered by the Corporation (a) The Corporation shall be at liberty to reimburse themselves for any damages, losses, charges, costs or expenses suffered or incurred by them, or any amount payable by the Contractor as Liquidated Damages as provided in Clauses X above…
Interpretation of contracts concerns the discernment of the true and correct intention of the parties to it. Words and expressions used in the contract are principal tools to ascertain such intention. While interpreting the words, courts look at the expressions falling for interpretation in the context of other provisions of the contract and also in the context of the contract as a whole. These are intrinsic tools for interpreting a contract. As a principle of interpretation, courts do not resort to materials external to the contract for construing the intention of the parties. There are, however, certain exceptions to the rule excluding reference or reliance on external sources to interpret a contract. One such exception is in the case of a latent ambiguity, which cannot be resolved without reference to extrinsic evidence. Latent ambiguity exists when words in a contract appear to be free from ambiguity; however, when they are sought to be applied to a particular context or question, they are amenable to multiple outcomes.
It was observed that “… Extrinsic evidence, in cases of latent ambiguity, is admissible both to ascertain where necessary, the meaning of the words used, and to identify the objects to which they are to be applied.”
The Corporation in the present contract has chosen not to include the power to recover demurrages and as such the expression “charges” cannot be interpreted to include demurrages. Demurrage is undoubtedly a charge, however, such a textual understanding would not help us decipher the true and correct intention of the parties to the present contract. After examining the contract in its entirety, including its nature and scope, the Court concluded that the contractors’ liability in the present contract was clearly distinguishable from other contracts entered into by the Corporation in 2010 and 2018, which included loading and unloading of foodgrains from the railway wagons within the scope of contractors’ duties, thereby necessitating the inclusion of demurrages as a penalty for non-performance of contractual duties.
[Extracted from: Food Corporation of India v. Abhijit Paul, (CA 8572-8573/2022), Judgment of Justices A.S. Bopanna and P.S. Narasimha, 18 November 2022]
According to the Court, how was this Road Transport Contract different from FCI’s earlier contracts with transport contractors?
Show Hint
- FCI’s earlier contracts had expired
- The present contract did not include loading and unloading of foodgrains from the railway wagons within the scope of contractor’s duties
- Earlier contracts were executed by FCI with contractors who were both handlers and transporters
- Earlier contracts were not validly executed
The Correct Option is B
Solution and Explanation
The Court compared the present Road Transport Contract with FCI’s earlier Handling and Transport Contracts of 2010 and 2018. Those earlier contracts included loading and unloading foodgrains from railway wagons as part of the contractor’s scope of duties.
Step 2: Key distinction.
The present contract omitted these loading/unloading duties. As a result, penalties such as demurrages for non-performance in those areas were not relevant or recoverable under the present contract.
Step 3: Elimination.
(A) Incorrect — The question is about the difference in scope, not contract expiry.
(C) Incorrect — Although earlier contracts did involve handling and transport, the Court’s emphasis was on the omission of loading/unloading duties.
(D) Incorrect — There is no indication earlier contracts were invalid.
\[ \boxed{\text{B}} \]
What is the extrinsic evidence that the Court used?
Show Hint
- Work order under the Road Transport Contract
- FCI’s Handling and Transport Contracts of 2010 and 2018
- Tender documents filed by the contractors
- FCI’s Handbook on Movement Operations
The Correct Option is B
Solution and Explanation
The judgment explains that while courts generally interpret contracts using intrinsic evidence, they may use extrinsic evidence to resolve latent ambiguities — where terms seem clear but their application to facts is uncertain.
Step 2: Application in this case.
The Court faced ambiguity over whether “charges” in the present contract included demurrages. To clarify, it compared the present contract with earlier Handling and Transport Contracts (2010, 2018), which explicitly included loading/unloading duties and thus a direct link to demurrage penalties.
Step 3: Elimination.
(A) Incorrect — Work orders are operational documents, not cited here as interpretive evidence.
(C) Incorrect — Tender documents were not the reference for resolving the ambiguity.
(D) Incorrect — Handbook not cited in this context.
\[ \boxed{\text{B}} \]
The Court referred to Union of India v. Raman Iron Foundry (1974) to explain that contractual terms cannot be interpreted in isolation, following strictly etymological rules or be guided by popular connotation of terms, at variance with the contractual context. This principle of interpretation of contracts is known as:
Show Hint
- Ejusdem generis
- Mischief rule
- Literal rule
- Rule of contextual interpretation
The Correct Option is D
Solution and Explanation
The case illustrates that meaning must be drawn from the context of the entire contract, not from isolated word meanings or popular definitions. Step 2: Eliminate incorrect principles.
(A) Ejusdem generis applies to interpreting lists of words of the same class.
(B) Mischief rule focuses on remedying the defect the law sought to address.
(C) Literal rule applies the ordinary meaning of words without context.
Step 3: Match with correct principle.
The method used here matches the rule of contextual interpretation. \[ \boxed{\text{D}} \]
In Clause XII (Road Transport Contract), discussed above, the FCI may reimburse itself for damages etc., as Liquidated Damages. What does the term ‘liquidated damages’ mean?
Show Hint
- Stipulated amount payable on breach of contract
- Amount payable for actual damage caused due to breach
- Amount intended to secure performance of contract
- Damages payable for breach, where the exact amount is not pre-agreed
The Correct Option is A
Solution and Explanation
Step 1: Legal definition.
Liquidated damages are a sum fixed in advance by the contract, payable upon breach, regardless of actual damage.
Step 2: Eliminate wrong options.
(B) refers to unliquidated damages (based on proven loss).
(C) is a performance bond or security, not liquidated damages.
(D) contradicts the “pre-agreed” nature of liquidated damages.
\[ \boxed{\text{A}} \]
The High Court had held that the Corporation was only entitled to recover losses incurred due to the contractor’s dereliction of duties under Section 73 of the Indian Contract Act, 1872. What does Section 73 provide for?
Show Hint
- Obligation of parties to perform their promise
- Compensation for breach of contract where penalty stipulated for
- Compensation for loss or damage caused by breach of contract
- Effect of refusal of party to perform promise wholly
The Correct Option is C
Solution and Explanation
Step 1: Wording of Section 73.
Section 73 states that a party suffering from breach is entitled to receive compensation for loss/damage naturally arising from the breach or likely to arise in the usual course.
Step 2: Eliminate distractors.
(A) relates to Section 37.
(B) overlaps with Section 74 (penalty clause).
(D) relates to Section 39 (refusal to perform).
\[ \boxed{\text{C}} \]
The Court used the expression “Ex praecedentibus et consequentibus optima fit interpretatio”. What does this mean?
Show Hint
- Of the same kind
- The best interpretation is made from the context
- An exception proves the rule
- No action arises on an immoral contract
The Correct Option is B
Solution and Explanation
Step 1: Translation.
The Latin phrase means “The best interpretation is made from what goes before and after” — i.e., context is key.
Step 2: Application.
The Court invoked it to stress reading contract clauses in relation to the whole contract. \[ \boxed{\text{B}} \]
In the case excerpted above, the Court used the following as an internal aid to interpret the contract:
Show Hint
- Schedules
- Title
- Words and expressions
- Proviso
The Correct Option is B
Solution and Explanation
In the case of Food Corporation of India v. Abhijit Paul, the key focus was on the interpretation of contractual terms to determine whether certain liabilities, specifically demurrages, could be recovered under a particular clause of the contract. The court's task was to ascertain the true intention of the parties as expressed within the contract itself. When interpreting contracts, words and expressions used therein are essential tools. These are examined in the context of the entire contract. Intrinsic aids like titles, headings, and clauses are pivotal in understanding the parties' intentions.
The court in this scenario relied on the Title of the contract as an internal aid. Titles can offer insight into the content and purpose of the document sections, providing clarity on disputed areas. Hence, while interpreting clause XII (a) concerning the recovery of charges, the court utilized the title of the contract, aiding in the understanding that demurrages were not intended to be included under "charges" as interpreted in this particular agreement.
Understanding the contract's structure, including clause titles and their implications, helped clarify the liabilities reasonably expected under this contract. Therefore, in this case, the correct internal aid used by the Court to interpret the contract was the Title.
What was the latent ambiguity in the contract discussed in the case excerpted above?
Show Hint
- if the parties had capacity to perform the contract
- if the parties intended to execute the contract
- whether the term “charges” was exclusive of liability for demurrages
- whether the Corporation can recover charges under the contract
The Correct Option is C
Solution and Explanation
Step 1: Identifying the specific uncertainty.
The dispute centered on whether “charges” in Clause XII included railway demurrages. On its face, “charges” seemed clear, but applying it to the factual context created doubt.
Step 2: Why it is latent ambiguity.
Latent ambiguity arises when wording appears clear until it is applied to the facts, revealing multiple possible interpretations. Here, the question was whether “charges” covered demurrages in this specific contract’s scope.
Step 3: Elimination.
(A) and (B) relate to capacity and intention — not relevant. (D) is too broad — the core issue was the meaning of “charges” specifically regarding demurrages. \[ \boxed{\text{C}} \]
What does the term ‘latent ambiguity’ mean?
Show Hint
- A glaring ambiguity, obvious from the face of the contract
- A contractual term is reasonably, but not obviously, susceptible to more than one interpretation
- A contractual term written in plain language and clearly understood
- A contractual term that is illegal and against the public good
The Correct Option is B
Solution and Explanation
Step 1: Definition.
Latent ambiguity exists when a term looks unambiguous until applied in context, where it can lead to different reasonable interpretations.
Step 2: Elimination.
(A) describes “patent ambiguity” (clear on its face).
(C) is the opposite of ambiguity.
(D) concerns illegality, not ambiguity.
\[ \boxed{\text{B}} \]
Which one of the following cases is a key precedent on contextual interpretation of contracts?
Show Hint
- Louisa Carlill v. Carbolic Smoke Ball Company, [1892]
- Dunlop Pneumatic Tyre Co. Ltd. v. New Garage & Motor Co. Ltd., [1914]
- Investors Compensation Scheme Limited v. West Bromwich Building Society, [1997]
- Home Office v. Dorset Yacht Co. Ltd., [1970]
The Correct Option is C
Solution and Explanation
In Investors Compensation Scheme (ICS), Lord Hoffmann set out five principles emphasizing that contract interpretation must consider the background (“matrix of fact”) known to both parties, rather than focusing solely on literal meaning.
Step 2: Eliminating other options.
(A) Carlill is a contract formation case (offer/acceptance).
(B) Dunlop concerns penalty clauses and liquidated damages.
(D) Dorset Yacht concerns negligence by public authorities.
\[ \boxed{\text{C}} \]
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The document presents a critique of the United Nations (UN) organization, arguing that it has failed to carry out its charter-mandated tasks, specifically to ”maintain international peace and security” and ”to achieve international cooperation” in solving global problems. The author notes growing public frustration with catastrophic humanitarian situations and the failure of peace-keeping operations, leading to widespread scepticism about the possibility of ”revitalization”.
UN Reform Approaches
Discussions on UN reform are divided into two main categories: the conservative approach and the radical approach.
1. Conservative Approach:
The conservative view considers the existing Charter ”practically untouchable” and believes in improving ”collective security” as defined in Chapter VII. Key positions include:
- US Position: Prioritizes its own interests, supports better management and the creation of an Inspector General, favours enlarging the Security Council (to include Germany and Japan, mainly for financing peace-keeping), and associates the UN with regional organizations like NATO for peace enforcement. The US remains reluctant to allow full application of Chapter VII and views collective security restrictively.
- Secretary-General’s Position (Boutros Ghali): Advocated for the full implementation of ’collective security’ as envisaged in 1945, including the use of the Military Staff Committee (Article 47) and the conclusion of special agreements (Article 43) for providing armed forces. He also proposed ’peace enforcement units’ under the command of the Secretary-General and wider use of ’preventive diplomacy’. The report candidly recognized the Security Council’s incapacity to deal with threats from a major power.
2. Radical Approach:
The radical approach criticizes the principles of the present system and proposes an overhaul. It reflects increasing doubts about the value of the Charter’s collective security system, especially in intra-State conflicts. Radical proposals include:
- Establishing an Economic Security Council.
- Modifying the Charter with less reluctance.
- Reforming the IMF and World Bank.
- Developing a new global security system .
- The creation of a consultative parliamentary assembly at the world level.
Future Outlook:
The author asserts that no major or minor reform has any chance of being implemented now, primarily because the Charter’s amendment procedures (requiring a two-thirds majority including all five permanent Security Council members) preclude agreement. However, he concludes that the continuing deterioration of the global situation, driven by economic integration, rising inequality, and intra-State conflicts, will inevitably lead the political establishment to define a new global institutional structure. This future debate will become highly political.
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- “The law is well settled that a constitutional court can award monetary compen sation against the State and its officials for its failure to safeguard fundamental rights of citizens but there is no system or method to measure the damages caused in such situations. Quite often the courts have a difficult task in determining dam ages in various fact situations. The yardsticks normally adopted for determining the compensation payable in private tort claims are not as such applicable when a constitutional court determines the compensation in cases where there is a viola tion of fundamental rights guaranteed to its citizens.
... In D.K. Basu v. State of W.B. [(1997) SCC 1 416], a Constitution Bench of this Court held that there is no straitjacket formula for computation of damages and we find that there is no uniformity or yardstick followed in awarding damages for violation of fundamental rights. In Rudul Sah case [Rudul Sah v. State of Bihar, (1983) 4 SCC 141] this Court used the terminology ’palliative’ for measuring the damages and the formula of ’adhoc’ was applied. In Sebastian Hongray case [Se bastian M. Hongray v. Union of India, (1984) 3 SCC 82] the expression used by this Court for determining the monetary compensation was ’exemplary’ costs and the formula adopted was ’punitive’. In Bhim Singh case [Bhim Singh v. State of J & K, (1985) 4 SCC 677], the expression used by the Court was ’compensation’ and the method adopted was ’tortious formula’. In D.K. Basu v. State of W.B. [(1997) SCC 1 416] the expression used by this Court for determining the compensation was ’monetary compensation’. The formula adopted was ’cost to cost’ method. Courts have not, therefore, adopted a uniform criterion since no statutory formula has been laid down.”
tracted from: Municipal Corporation of Delhi, Delhi v Uphaar Tragedy Victims Association (2011) 14 SCC 481- CLAT PG - 2026
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- It is well recognized that actionable negligence in context of medical profession involves three constituents (i) duty to exercise due care; (ii) breach of duty and (iii) consequential damage. However, a simple lack of care, an error of judgment or an accident is not sufficient proof of negligence on part of the medical professional so long as the doctor follows the acceptable practice of the medical profession in discharge of his duties. He cannot be held liable for negligence merely because a better alternative treatment or course of treatment was available or that more skilled doctors were there who could have administered better treatment.
A medical professional may be held liable for negligence only when he is not pos sessed with the requisite qualification or skill or when he fails to exercise reasonable skill which he possesses in giving the treatment. None of the above two essential conditions for establishing negligence stand satisfied in the case at hand as no ev idence was brought on record to prove that Dr. Neeraj Sud had not exercised due diligence, care or skill which he possessed in operating the patient and giving treatment to him. When reasonable care, expected of the medical professional, is extended or rendered to the patient unless contrary is proved, it would not be a case for actionable negligence.
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Today, in the year 2025, we have been experiencing the drastic consequences of large scale destruction of environment on human lives in the capital city of our country and in many other cities. At least for a span of two months every year, the residents of Delhi suffocate due to air pollution. The AQI level is either dangerous or very dangerous. They suffer in their health. The other leading cities are not far behind. The air and water pollution in the cities is ever increasing. Therefore, coming out with measures such as the 2021 Official Memorandum is violative of fundamental rights of all persons guaranteed under Article 21 to live in a pollution free environment. It also infringes the right to health guaranteed under Article 21 of the Constitution.
The 2021 OM talks about the concept of development. Can there be development at the cost of environment? Conservation of environment and its improvement is an essential part of the concept of development. Therefore, going out of the way by issuing such OMs to protect those who have caused harm to the environment has to be deprecated by the Courts which are under a constitutional and statutory mandate to uphold the fundamental right under Article 21 and to protect the environment. In fact, the Courts should comedown heavily on such attempts. As stated earlier, the 2021 OM deals with project proponents who were fully aware of the EIA notification and who have taken conscious risk to flout the EIA notification and go ahead with the construction/continuation/expansion of projects. They have shown scant respect to the law and their duty to protect the environment. Apart from violation of Article 21, such action is completely arbitrary which is violative article 14 of the Constitution of India, besides being violative of the 1986 Act and the EIA notification.
(Extracted with edits from Vanashakti v. Union of India, 2025 INSC 718)- CLAT PG - 2026
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With the Paris Agreement, countries established an enhanced transparency frame work (ETF). Under ETF, starting in 2024, countries will report transparently on actions taken and progress in climate change mitigation, adaptation measures and support provided or received. It also provides for international procedures for the review of the submitted reports.
The information gathered through the ETF will feed into the Global stocktake which will assess the collective progress towards the long-term climate goals. This will lead to recommendations for countries to set more ambitious plans in the next round.
Although climate change action needs to be massively increased to achieve the goals of the Paris Agreement, the years since its entry into force have already sparked low-carbon solutions and new markets. More and more countries, regions, cities and companies are establishing carbon neutrality targets. Zero-carbon solutions are becoming competitive across economic sectors representing 25% of emissions. This trend is most noticeable in the power and transport sectors and has created many new business opportunities for early movers. By 2030, zero-carbon solutions could be competitive in sectors representing over 70% of global emissions.
(Extracted with edits from the website UNFCCC.INT)- CLAT PG - 2026
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