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Judgment
388 paragraphs · 7,725 wordsC.M. Appl. No. 10234/2018 (for exemption)
1.Exemption allowed, subject to all just exceptions.
C.M. stands disposed of.
C.M. Appl. No. 10235/2018 (for seeking permission to file dim and untyped annexures)
2.Allowed, subject to just exceptions.
C.M. Appl. No. 10236/2018 (for delay)
3.For the reasons stated in this application, the delay of 11 days in re-filing the appeal is condoned, subject to just exceptions.
C.M. stands disposed of.
4.This Regular First Appeal is filed under Section 96 of the Code of Civil Procedure, 1908 (CPC) by the defendant no. 1 in the suit impugning the
judgment of the trial court dated 31.10.2017 by which the trial court has decreed the suit filed by the respondent no. 1/plaintiff for a sum of
Rs.10,00,000/- along with interest at 9% till the filing of the suit and 6% thereafter till payment. Suit has been decreed on account of the
appellant/defendant no. 1/pilot breaching the terms of the Agreement/Bond of Indemnity and Service dated 23.2.2004, by not serving the respondent
no. 1/plaintiff for five years.
5.The facts of the case are that appellant/defendant no. 1 was appointed by the respondent no. 1/plaintiff as a pilot for its fleet of helicopters. The
respondent no. 1/plaintiff as per the plaint pleads that appellant/defendant no. 1 was given conversion training at its cost and the appellant/defendant
no. 1 at the time of appointment in terms of the letter of appointment dated 5.2.2004 agreed to serve the respondent no. 1/plaintiff for a period of five
years and for this purpose appellant/defendant no.1 executed an Agreement/Bond of Indemnity and Service dated 23.2.2004. The appellant/defendant
no.1 however gave his resignation within about three years in terms of the resignation letter dated 1.11.2006. The resignation letter did not specify any
reason. The subject suit was therefore filed for recovery of the sum of Rs.10,00,000/- for committing breach of the terms and conditions of the Bond
of Indemnity and Service dated 23.2.2004.
6.It may be noted that prior to filing of the suit the respondent no.1/plaintiff had sent letters dated 20.6.2007 and 27.7.2007 to the appellant/defendant
no. 1 to comply with the terms of service bond and appellant/defendant no. 1 sent his letter dated 24.8.2007 accepting the liability of payment and
expressed willingness to pay a pro-rata payment instead of Rs.10,00,000/-. Respondent no. 1/plaintiff replied that the bond amount cannot be reduced
proportionately in view of the terms of the bond and since the appellant/defendant no.1 failed to pay the amount, therefore after serving legal notice
dated 22.2.2008 the subject suit was filed.
7.Appellant/defendant no. 1 contested the suit and as per his written statement he pleaded that he was already an experienced pilot who had opted for
voluntary retirement from the Indian Air Force after having a flight experience of about four thousand hours and there was no requirement for any
training being given to him. It was also pleaded by the appellant/defendant no.1 that services rendered by the appellant/defendant no. 1 to the
respondent no.1/plaintiff company were not commensurate with the given experience of the appellant/defendant no. 1. It was pleaded that no
provident fund or medical facilities were provided to the family members of appellant/defendant no. 1 and appellant/defendant no. 1 was made to stay
away from his family throughout the week during assignment hours. Appellant/defendant no. 1 also claimed non-payment of certain leave encashment
and other allowances by the respondent no. 1/plaintiff. It was pleaded in the written statement that appellant/defendant no.1 had paid Rs.20,000/- for
conversion training. Execution of the Bond of Indemnity and Service dated 23.2.2004 was not denied but the said document was said to be devoid of
legal sanctity. The bond dated 23.2.2004 was also pleaded to be unconscionable, unfair, etc and therefore void as per the relevant provisions of the
Indian Contract Act, 1872, as also Article 23 of the Constitution of India. Appellant/defendant no. 1 therefore denied his liability to make payment of
the bond amount, and prayed for the suit to be dismissed.
After pleadings were complete issues were framed and parties led evidence and which aspects are recorded in paras 6 to 8 of the impugned
judgment, and these paras read as under:-
“6. On the basis of pleadings of the parties, following issues were framed on 19.03.2011: -
1.Whether the plaintiff is entitled to the mandatory injunction and permanent injunction as prayed for? OPP.
2.Whether the plaintiff is entitled to any damages if, so to what extent? OPP
Whether the present suit is not maintainable? OPD.
Relief.
7.In order to prove its case, plaintiff examined Mr. Sanjeev Agarwal as PW-1 who exhibited his evidence by way of affidavit vide Ex. PW1/A
wherein he reiterated the averments made in the plaint. During his deposition, he also relied upon and exhibited following documents: -
Ex. PW1/1 : Copy of Power of Attorney dated 30th November 2004 Ex. PW1/2 : Offer of Appointment Letter dated 05.02.2004
Ex. PW1/3 : Bond of Indemnity and Service dated 23.02.2004
Ex. PW1/4 : Letter dated 05.08.2004 seeking endorsement on license of defendant no. 1
Ex. PW1/5 : Notice regarding resignation dated 01.11.2006 written by defendant no. 1
Ex. PW1/6 : Reply dated 20.06.2007 on behalf of plaintiff to Notice of resignation of defendant no. 1
Ex. PW1/7: Letter dated 27.07.2007 written on behalf of plaintiff to defendant no. 1 seeking deposition of Bond Amount for acceptance of resignation
of defendant no. 1
Ex. PW1/8: Letter dated 24.08.2007 written by defendant no. 1 to plaintiff
Ex. PW1/9 : Reply dated 01.10.2007 sent by plaintiff to Letter of defendant no. 1 dated 24.08.2007
Ex. PW1/10(Colly): Envelope  containing  reply dated  01.10.2007 purportedly sent to defendant no.1 by plaintiff Ex. PW1/ 11 : Letter
dated 05.03.2007 written on behalf of plaintiff to
DG, Civil Aviation
Ex. PW1/ 12 : Letter dated 20.11.2007 written on behalf of plaintiff to DG, Civil Aviation
Ex. PW1/ 13 : Notice dated 22.02.2008 sent on behalf of plaintiff to defendant no. 1
Ex.PW1/14 to Ex. PW1/ 16 : Postal Receipts
Ex. PW1/ 17 : Reply dated 07.03.2008 to notice dated 22.02.2008 sent on behalf of defendant no. 1
Ex. PW1/ 18 : Notice dated 18.01.2009 sent on behalf of plaintiff to defendants
Ex. PW1/ 19 to Ex. PW1/ 22: Postal Receipts
Ex. PW1/23 (Colly) : Application dated 18.12.2003 written by defendant no. 1 to General Manager P&A (NR) of plaintiff company along with resume
of defendant no. 1.
Ex. PW1/ 24 : Application for employment of defendant no. 1 dated 23.01.2004
Ex. PW1/ 25: Letter dated 13.02.2004 written by defendant no. 1 to plaintiff company seeking time to join
Ex.PW1/ 26: Letter dated 08.04.2004 vide which Bond was submitted by defendant no. 1
Ex.PW1/ 27: Letter dated 08.04.2004 vide which defendant no. 1 joined services of plaintiff.
Mark 'A': Copy of Certificate of Incorporation of plaintiff company Mark 'B': Copy of Circular AIC 03/93 dated 25.02.1993
Mark 'C': Copy of letter dated 30.06.2004 with regard to grant of permission to defendant no. 1 to undergo conversion training on Dauphin SA 365 N
8.Defendant no. 1 on the other hand examined himself as DW-1 who exhibited his evidence by way of affidavit vide Ex. DW1/A. He relied and
exhibited following documents during his deposition: -
 Ex. DW1/1 : Copy of Pass Book of defendant no. 1 of Syndicate Bank Ex. DW1/2(Colly): Copy of passport of defendant no. 1
Ex. DW1/3 : Reply dated 07.03.2008 to Legal Notice dated 22.02.2008 Ex.DW1/4: Copy of reply dated 02.02.2009 to Notice dated
18.01.2008.â€
9.The relevant issue which is called upon for decision in this appeal is with respect to issue no. 2 framed by the trial court as to whether the
respondent no. 1/plaintiff was entitled to the damages as prayed for. In this regard trial court has held that bond was proved as Ex.PW1/3 and in terms
of the bond appellant/defendant no. 1 had agreed to serve the respondent no. 1/plaintiff for a period of five years, but admittedly the notice of
resignation was given on 1.11.2006 vide Ex.PW1/5 prior to expiry of five years of service which commenced on 8.4.2004 vide Ex.PW1/27. The
period of five years would have expired on 4.2.2009. Trial court also holds that issue of non-payment of provident fund and medical facilities to the
family cannot be a valid contention of the appellant/defendant no. 1 inasmuch as the terms of appointment have to be governed in terms of the
appointment letter Ex.PW1/2 and which did not provide grant of such amounts as claimed by the appellant/defendant no. 1. Trial court has also held
that the contention of the appellant/defendant no.1 that he was not paid salary on time is a misconceived stand because no such evidence was led
before the trial court besides the fact that this assertion was not made while issuing the notice of resignation. Trial court also holds that there was no
pressure upon the appellant/defendant no. 1 for joining the services of the respondent no. 1/plaintiff and it cannot be held that Clause 8 of the bond is a
result of undue influence, coercion, etc because the appellant/defendant no. 1 submitted the Bond Ex.PW1/3 on 8.4.2004 i.e after more than one and a
half months of his signing of offer of appointment Ex.PW1/2. Appellant/defendant no.1 was also a well educated person having various degrees
including of M.Sc. and therefore there does not arise any issue of alleged undue influence or fraud, etc for execution of the bond Ex.PW1/3. Trial
court has also held that the bond amount is an amount which is payable as liquidated damages under Section 74 of the Indian Contract Act in view of
Clause 7 of the bond and which Clause 7 talks of payment of the bond amount with respect to not only expenses incurred by the respondent no.
1/plaintiff for providing services to the appellant/defendant no. 1 but also for loss of business/revenue opportunities and expenses to be incurred to
make another person obtain the necessary experience to fly independently, salary of the new pilot during that period and other scheduled aspects on
account of leaving of the services by the appellant/defendant no. 1 before the bond period. The relevant observations of the trial court with respect to
provisions of Sections 73 and 74 of the Indian Contract Act and the relevant Clause 7 of the bond and the fact that losses cannot be proved
numerically by the respondent no. 1/plaintiff company and therefore liquidated damages have to be granted are contained in the following
observations:-
Now, the question arises as to what is the quantum of damage which should be granted in circumstances of present case.
Section 73 and 74 of Indian Contract Act deals with the consequence of breach of contract. Section 73 lays down when a contract has been broken,
the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused
to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be
likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the
breach.
Section 74 lays down as when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the
contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is
proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so
named or, as the case may be, the penalty stipulated for.
In “ONGC v. Saw   Pipes   2003(5) SCC 705â€, after noticing Maula Bax v. Union of India AIR 1970 SC 1955, Hon'ble Supreme
Court held that in certain eventualities parties may contemplate payment of damages or compensation to cater to specific situations because the
quantification of such damages by evidence is impossible or impracticable. The Court observed as follows:-
Under Section 73, when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss caused to
him which the parties knew when they made the contract to be likely to result from the breach of it. This section is to be read with Section 74, which
deals with penalty stipulated in the contract, inter alia (relevant for the present case) provides that when a contract has been broken, if a sum is named
in the contract as the amount to be paid in case of such breach, the party complaining of breach is entitled, whether or not actual loss is proved to have
been caused, thereby to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named. Section 74
emphasizes that in case of breach of contract, the party complaining of the breach is entitled to receive reasonable compensation whether or not
actual loss is proved to have been caused by such breach. Therefore, the emphasis is on reasonable compensation. If the compensation named in the
contract is by way of penalty, consideration would be different and the party is only entitled to reasonable compensation for the loss suffered.â€
 Defendant no. 1 filed certain judgments.
In judgment titled as “Vishal Engineers & Builders Vs. Indian Oil Corporation Limited (FAO {OS} No. 204 of 2010)â€, Hon'ble High Court of
Delhi discussed various judgments concerning Section 73 and 74 of Indian Contract Act and held as below:-
“In our view these observations have to be read in the context of the pronouncement of the Constitution Bench pronouncement in Fateh Chand
Case (Supra). If it is so, all that it implies is that where it is impossible to assess the compensation arising from breach and that factor is coupled with
the parties having agreed to a pre-determined compensation amount not by way of penalty or unreasonable compensation then that amount can be
awarded as a genuine pre -estimate of the loss suffered by a party. It cannot be read to mean that even if no loss whatsoever is caused to party it can
still recover amounts merely by reason of the opposite party being in breach.
We are, thus, of the considered view that the recovery of liquidated damages by the respondent in the absence of any loss whatsoever cannot be held
to be permissible.â€
Judgment in case tiled as “M/s Sicpa India Limited Vs. Shri Manas Pratim Deb (in RFA No. 596/2002)†has also been filed by defendant no. 1 in
which Hon'ble High Court of Delhi held as below :¬
 “As per the ratio of these cases, clauses of liquidated damaged which are awarded once actual damages are proved. This legal position applies
when losses from the breach of contract can otherwise be proved. When losses cannot be proved, then, of course the liquidated damages specified
can always be recovered.†In both the above-mentioned judgments, judgment in case titled as
ONGC v. Saw Pipes (Supra) has been referred to.
In the present case, amount having upper limit of Rs. 10,00,000/- is liquidated damages and not by way of penalty. It becomes clear by reading Clause
No. 10 of Ex. PW-1/3 in which it has been clearly mentioned that the said amount is by way of liquidated damages and not by way of penalty.
In Clause No. 7 of the bond Ex. PW-1/3, it has been mentioned as below:-
“That if the pilot fails to complete his bond period successfully, the pilot undertake alongwith the sureties that they shall jointly/serverally
compensate the Company for all the expenses incurred by it on account of and in connection with his service. The said expenditure shall not only
include the loss of business revenue/opportunities but also expenses /liquidated damages to be suffered, expenses to be incurred to make another
person to obtain experience to fly independently, salary of the pilot during the period cost of supervision, cost of training skill test, proficiency test,
checks and other other losses/expenses suffered due to leaving of said pilot. The decision of the Chairman-cum-Manager Director/General Manager
or an officer nominated by the Chairman-cum-Managing Director shall be binding as to the total amount of the expenditure incurred and loss suffered
by the Company on account of and in connection with the training/other expenses of the pilot. Although the above mentioned cost would be fairly high
amount, however, in case of breach of any condition of this bond by the pilot, he/she alongwith the sureties shall be liable to pay and reimburse to the
Company by way of damages, the amount to the Company but the said recoverable amount of damages shall not exceed Rs. 10,00,000/- (Rupees Ten
Lakhs only).
 From language of Clause No. 7, having signatures of defendant no. 1 (signatures on Ex.PW-1/3 have been admitted by defendant no.1 in his cross-
examination and at the same time it has been admitted by defendant no. 1 that bond was submitted by him to plaintiff company), it is clear that
defendant no.1 knew that for the things mentioned in Clause No. 7, although the cost would be fairly high but reimbursement on account of heads as
mentioned in clause no. 7 was limited not to exceed Rs. 10,00,000/-.
Though, no evidence has been led by plaintiff company as to the loss suffered actually on account of pre-mature resignation of defendant no. 1 but
loss was caused to plaintiff company is evident from contents of Clause No. 7 of bond Ex. PW1/3 as mentioned above. Further, defendant no. 1 in his
cross-examination has admitted that he was given conversion routine training. Defendant no. 1 in his cross-examination stated that he does not
remember that he had been given instrument rating test at Port Blair after receiving on his CHPL (License). He further stated that there may be other
tests but he does not remember then at this stage. Expenses must have been incurred by plaintiff company on conversion training and other tests
undertaken by defendant no. 1 which defendant no. 1 in his cross-examination has stated to be not remembering but has not denied the same. Further,
in case of pre-mature leaving of service of plaintiff company, loss must have been caused to plaintiff company in the form of expenses for getting
trained other Pilot, getting passed various tests as required for the job and cost of selection of other candidate in place of defendant no. 1 including
expenses on account of giving of advertisement in newspapers and giving of honorarium to selection board members etc.
Present case is a case in which though losses could not be proved numerically by plaintiff company but as liquidated damages have already been
provided in bond Ex. PW-1/3 and it has been mentioned in Clause 7 of the bond that expenses on account of things mentioned in Clause 7 of the bond
would be fairly high, liability of defendants was limited to jointly and severally to the extent of Rs. 10,00,000/-, I am of the view that amount of Rs.
10,00,000/- is reasonable compensation in view of judgment in case of ONGC v. Saw Pipes(Supra). â€
I  completely agree with the  aforesaid reasoning, discussion and conclusion of the trial court because admittedly the bond had been
executed and the bond was breached by the appellant/defendant no. 1 by leaving services prior to five years service period of the bond. When a pilot
like the appellant/defendant no. 1 leaves suddenly then lots of schedules are thrown haywires with consequential loss of business opportunities,
expenses of training of new pilot, other expenses and losses suffered on account of disruption of the business of the respondent no. 1/plaintiff which
was in the business of providing transportation services, etc through its helicopters. Loss on account of such services therefore cannot be accurately
calculated and the bond was thus in the nature of contract which falls under Section 74 of the Indian Contract Act entitling the respondent no.
1/plaintiff for liquidated damages specified in the bond amount.
11(i).Counsel for the appellant/defendant no.1 argued before this Court that appellant/defendant no.1 was to be posted at Delhi but he was instead
posted at Mumbai, and there was an assurance that appellant/defendant no.1 would be posted at Delhi. Attention of this Court is invited to the letter
dated 5.2.2004 issued by the respondent no. 1/plaintiff of appointment showing the posting of the appellant/defendant no. 1 at Mumbai.
(ii) I cannot agree with this argument urged on behalf of the appellant/defendant no. 1 inasmuch as the letter of the respondent no. 1/plaintiff dated
5.2.2004 Ex.PW1/2 does not in any way provide that appellant/defendant no. 1 would be posted at Delhi. In fact the letter dated 5.2.2004 states that
the present place of posting at the time of issuance of the appointment letter was at Mumbai and in accordance with the terms of service being parag
12(e) appellant/defendant no. 1 could be transferred anywhere in India or abroad at the discretion of respondent no. 1/plaintiff. Obviously, there was
no assurance of the appellant/defendant no. 1 being posted at Delhi and in fact para 12(e) of the appointment letter specified otherwise. This argument
of the appellant/defendant no. 1 is therefore rejected.
Learned counsel for the appellant/defendant no.1 then argued with respect to proportionate bond amount being only decreed in favour of the
respondent no. 1/plaintiff, however, in view of the fact that the bond amount is the amount of liquidated damages which can be granted under Section
74 of the Indian Contract Act as it is not possible to calculate the losses suffered by the respondent no. 1/plaintiff on account of appellant/defendant
no. 1 suddenly resigning from his services with the respondent no. 1/plaintiff, therefore, appellant/defendant no. 1 was liable to pay the entire bond
amount and which aspect has been discussed in detail by the trial court by reference to the law under Sections 73 and 74 of the Indian Contract Act,
and which relevant discussion has already been reproduced above.
Learned counsel for the appellant/defendant no.1 then argued that the appellant/defendant no.1 after leaving services of the respondent no.
1/plaintiff did not work anywhere else, however, when asked to show any pleading in this regard or any evidence which was led by the
appellant/defendant no. 1, the counsel for the appellant/defendant no. 1 could not show any pleading or evidence led, much less documentary evidence
such as income tax returns, etc to the fact that appellant/defendant no. 1 did not work elsewhere after resigning from the services of the respondent
no. 1/plaintiff. Even for the sake of arguments if what is argued on behalf of the appellant/defendant no.1 is correct, yet that will not exempt the
appellant/defendant no. 1 from making payment of the bond amount on account of the appellant/defendant no. 1 breaching the terms and conditions of
the bond of serving the respondent no. 1/plaintiff for a period of five years.
14.There is no merit in the appeal. Dismissed.
C.M. Appl. No. 10234/2018 (for exemption)
1.Exemption allowed, subject to all just exceptions.
C.M. stands disposed of.
C.M. Appl. No. 10235/2018 (for seeking permission to file dim and untyped annexures)
2.Allowed, subject to just exceptions.
C.M. Appl. No. 10236/2018 (for delay)
3.For the reasons stated in this application, the delay of 11 days in re-filing the appeal is condoned, subject to just exceptions.
C.M. stands disposed of.
4.This Regular First Appeal is filed under Section 96 of the Code of Civil Procedure, 1908 (CPC) by the defendant no. 1 in the suit impugning the
judgment of the trial court dated 31.10.2017 by which the trial court has decreed the suit filed by the respondent no. 1/plaintiff for a sum of
Rs.10,00,000/- along with interest at 9% till the filing of the suit and 6% thereafter till payment. Suit has been decreed on account of the
appellant/defendant no. 1/pilot breaching the terms of the Agreement/Bond of Indemnity and Service dated 23.2.2004, by not serving the respondent
no. 1/plaintiff for five years.
5.The facts of the case are that appellant/defendant no. 1 was appointed by the respondent no. 1/plaintiff as a pilot for its fleet of helicopters. The
respondent no. 1/plaintiff as per the plaint pleads that appellant/defendant no. 1 was given conversion training at its cost and the appellant/defendant
no. 1 at the time of appointment in terms of the letter of appointment dated 5.2.2004 agreed to serve the respondent no. 1/plaintiff for a period of five
years and for this purpose appellant/defendant no.1 executed an Agreement/Bond of Indemnity and Service dated 23.2.2004. The appellant/defendant
no.1 however gave his resignation within about three years in terms of the resignation letter dated 1.11.2006. The resignation letter did not specify any
reason. The subject suit was therefore filed for recovery of the sum of Rs.10,00,000/- for committing breach of the terms and conditions of the Bond
of Indemnity and Service dated 23.2.2004.
6.It may be noted that prior to filing of the suit the respondent no.1/plaintiff had sent letters dated 20.6.2007 and 27.7.2007 to the appellant/defendant
no. 1 to comply with the terms of service bond and appellant/defendant no. 1 sent his letter dated 24.8.2007 accepting the liability of payment and
expressed willingness to pay a pro-rata payment instead of Rs.10,00,000/-. Respondent no. 1/plaintiff replied that the bond amount cannot be reduced
proportionately in view of the terms of the bond and since the appellant/defendant no.1 failed to pay the amount, therefore after serving legal notice
dated 22.2.2008 the subject suit was filed.
7.Appellant/defendant no. 1 contested the suit and as per his written statement he pleaded that he was already an experienced pilot who had opted for
voluntary retirement from the Indian Air Force after having a flight experience of about four thousand hours and there was no requirement for any
training being given to him. It was also pleaded by the appellant/defendant no.1 that services rendered by the appellant/defendant no. 1 to the
respondent no.1/plaintiff company were not commensurate with the given experience of the appellant/defendant no. 1. It was pleaded that no
provident fund or medical facilities were provided to the family members of appellant/defendant no. 1 and appellant/defendant no. 1 was made to stay
away from his family throughout the week during assignment hours. Appellant/defendant no. 1 also claimed non-payment of certain leave encashment
and other allowances by the respondent no. 1/plaintiff. It was pleaded in the written statement that appellant/defendant no.1 had paid Rs.20,000/- for
conversion training. Execution of the Bond of Indemnity and Service dated 23.2.2004 was not denied but the said document was said to be devoid of
legal sanctity. The bond dated 23.2.2004 was also pleaded to be unconscionable, unfair, etc and therefore void as per the relevant provisions of the
Indian Contract Act, 1872, as also Article 23 of the Constitution of India. Appellant/defendant no. 1 therefore denied his liability to make payment of
the bond amount, and prayed for the suit to be dismissed.
After pleadings were complete issues were framed and parties led evidence and which aspects are recorded in paras 6 to 8 of the impugned
judgment, and these paras read as under:-
“6. On the basis of pleadings of the parties, following issues were framed on 19.03.2011: -
1.Whether the plaintiff is entitled to the mandatory injunction and permanent injunction as prayed for? OPP.
2.Whether the plaintiff is entitled to any damages if, so to what extent? OPP
Whether the present suit is not maintainable? OPD.
Relief.
7.In order to prove its case, plaintiff examined Mr. Sanjeev Agarwal as PW-1 who exhibited his evidence by way of affidavit vide Ex. PW1/A
wherein he reiterated the averments made in the plaint. During his deposition, he also relied upon and exhibited following documents: -
Ex. PW1/1 : Copy of Power of Attorney dated 30th November 2004 Ex. PW1/2 : Offer of Appointment Letter dated 05.02.2004
Ex. PW1/3 : Bond of Indemnity and Service dated 23.02.2004
Ex. PW1/4 : Letter dated 05.08.2004 seeking endorsement on license of defendant no. 1
Ex. PW1/5 : Notice regarding resignation dated 01.11.2006 written by defendant no. 1
Ex. PW1/6 : Reply dated 20.06.2007 on behalf of plaintiff to Notice of resignation of defendant no. 1
Ex. PW1/7: Letter dated 27.07.2007 written on behalf of plaintiff to defendant no. 1 seeking deposition of Bond Amount for acceptance of resignation
of defendant no. 1
Ex. PW1/8: Letter dated 24.08.2007 written by defendant no. 1 to plaintiff
Ex. PW1/9 : Reply dated 01.10.2007 sent by plaintiff to Letter of defendant no. 1 dated 24.08.2007
Ex. PW1/10(Colly): Envelope  containing  reply dated  01.10.2007 purportedly sent to defendant no.1 by plaintiff Ex. PW1/ 11 : Letter
dated 05.03.2007 written on behalf of plaintiff to
DG, Civil Aviation
Ex. PW1/ 12 : Letter dated 20.11.2007 written on behalf of plaintiff to DG, Civil Aviation
Ex. PW1/ 13 : Notice dated 22.02.2008 sent on behalf of plaintiff to defendant no. 1
Ex.PW1/14 to Ex. PW1/ 16 : Postal Receipts
Ex. PW1/ 17 : Reply dated 07.03.2008 to notice dated 22.02.2008 sent on behalf of defendant no. 1
Ex. PW1/ 18 : Notice dated 18.01.2009 sent on behalf of plaintiff to defendants
Ex. PW1/ 19 to Ex. PW1/ 22: Postal Receipts
Ex. PW1/23 (Colly) : Application dated 18.12.2003 written by defendant no. 1 to General Manager P&A (NR) of plaintiff company along with resume
of defendant no. 1.
Ex. PW1/ 24 : Application for employment of defendant no. 1 dated 23.01.2004
Ex. PW1/ 25: Letter dated 13.02.2004 written by defendant no. 1 to plaintiff company seeking time to join
Ex.PW1/ 26: Letter dated 08.04.2004 vide which Bond was submitted by defendant no. 1
Ex.PW1/ 27: Letter dated 08.04.2004 vide which defendant no. 1 joined services of plaintiff.
Mark 'A': Copy of Certificate of Incorporation of plaintiff company Mark 'B': Copy of Circular AIC 03/93 dated 25.02.1993
Mark 'C': Copy of letter dated 30.06.2004 with regard to grant of permission to defendant no. 1 to undergo conversion training on Dauphin SA 365 N
8.Defendant no. 1 on the other hand examined himself as DW-1 who exhibited his evidence by way of affidavit vide Ex. DW1/A. He relied and
exhibited following documents during his deposition: -
 Ex. DW1/1 : Copy of Pass Book of defendant no. 1 of Syndicate Bank Ex. DW1/2(Colly): Copy of passport of defendant no. 1
Ex. DW1/3 : Reply dated 07.03.2008 to Legal Notice dated 22.02.2008 Ex.DW1/4: Copy of reply dated 02.02.2009 to Notice dated
18.01.2008.â€
9.The relevant issue which is called upon for decision in this appeal is with respect to issue no. 2 framed by the trial court as to whether the
respondent no. 1/plaintiff was entitled to the damages as prayed for. In this regard trial court has held that bond was proved as Ex.PW1/3 and in terms
of the bond appellant/defendant no. 1 had agreed to serve the respondent no. 1/plaintiff for a period of five years, but admittedly the notice of
resignation was given on 1.11.2006 vide Ex.PW1/5 prior to expiry of five years of service which commenced on 8.4.2004 vide Ex.PW1/27. The
period of five years would have expired on 4.2.2009. Trial court also holds that issue of non-payment of provident fund and medical facilities to the
family cannot be a valid contention of the appellant/defendant no. 1 inasmuch as the terms of appointment have to be governed in terms of the
appointment letter Ex.PW1/2 and which did not provide grant of such amounts as claimed by the appellant/defendant no. 1. Trial court has also held
that the contention of the appellant/defendant no.1 that he was not paid salary on time is a misconceived stand because no such evidence was led
before the trial court besides the fact that this assertion was not made while issuing the notice of resignation. Trial court also holds that there was no
pressure upon the appellant/defendant no. 1 for joining the services of the respondent no. 1/plaintiff and it cannot be held that Clause 8 of the bond is a
result of undue influence, coercion, etc because the appellant/defendant no. 1 submitted the Bond Ex.PW1/3 on 8.4.2004 i.e after more than one and a
half months of his signing of offer of appointment Ex.PW1/2. Appellant/defendant no.1 was also a well educated person having various degrees
including of M.Sc. and therefore there does not arise any issue of alleged undue influence or fraud, etc for execution of the bond Ex.PW1/3. Trial
court has also held that the bond amount is an amount which is payable as liquidated damages under Section 74 of the Indian Contract Act in view of
Clause 7 of the bond and which Clause 7 talks of payment of the bond amount with respect to not only expenses incurred by the respondent no.
1/plaintiff for providing services to the appellant/defendant no. 1 but also for loss of business/revenue opportunities and expenses to be incurred to
make another person obtain the necessary experience to fly independently, salary of the new pilot during that period and other scheduled aspects on
account of leaving of the services by the appellant/defendant no. 1 before the bond period. The relevant observations of the trial court with respect to
provisions of Sections 73 and 74 of the Indian Contract Act and the relevant Clause 7 of the bond and the fact that losses cannot be proved
numerically by the respondent no. 1/plaintiff company and therefore liquidated damages have to be granted are contained in the following
observations:-
Now, the question arises as to what is the quantum of damage which should be granted in circumstances of present case.
Section 73 and 74 of Indian Contract Act deals with the consequence of breach of contract. Section 73 lays down when a contract has been broken,
the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused
to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be
likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the
breach.
Section 74 lays down as when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the
contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is
proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so
named or, as the case may be, the penalty stipulated for.
In “ONGC v. Saw   Pipes   2003(5) SCC 705â€, after noticing Maula Bax v. Union of India AIR 1970 SC 1955, Hon'ble Supreme
Court held that in certain eventualities parties may contemplate payment of damages or compensation to cater to specific situations because the
quantification of such damages by evidence is impossible or impracticable. The Court observed as follows:-
Under Section 73, when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss caused to
him which the parties knew when they made the contract to be likely to result from the breach of it. This section is to be read with Section 74, which
deals with penalty stipulated in the contract, inter alia (relevant for the present case) provides that when a contract has been broken, if a sum is named
in the contract as the amount to be paid in case of such breach, the party complaining of breach is entitled, whether or not actual loss is proved to have
been caused, thereby to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named. Section 74
emphasizes that in case of breach of contract, the party complaining of the breach is entitled to receive reasonable compensation whether or not
actual loss is proved to have been caused by such breach. Therefore, the emphasis is on reasonable compensation. If the compensation named in the
contract is by way of penalty, consideration would be different and the party is only entitled to reasonable compensation for the loss suffered.â€
 Defendant no. 1 filed certain judgments.
In judgment titled as “Vishal Engineers & Builders Vs. Indian Oil Corporation Limited (FAO {OS} No. 204 of 2010)â€, Hon'ble High Court of
Delhi discussed various judgments concerning Section 73 and 74 of Indian Contract Act and held as below:-
“In our view these observations have to be read in the context of the pronouncement of the Constitution Bench pronouncement in Fateh Chand
Case (Supra). If it is so, all that it implies is that where it is impossible to assess the compensation arising from breach and that factor is coupled with
the parties having agreed to a pre-determined compensation amount not by way of penalty or unreasonable compensation then that amount can be
awarded as a genuine pre -estimate of the loss suffered by a party. It cannot be read to mean that even if no loss whatsoever is caused to party it can
still recover amounts merely by reason of the opposite party being in breach.
We are, thus, of the considered view that the recovery of liquidated damages by the respondent in the absence of any loss whatsoever cannot be held
to be permissible.â€
Judgment in case tiled as “M/s Sicpa India Limited Vs. Shri Manas Pratim Deb (in RFA No. 596/2002)†has also been filed by defendant no. 1 in
which Hon'ble High Court of Delhi held as below :¬
 “As per the ratio of these cases, clauses of liquidated damaged which are awarded once actual damages are proved. This legal position applies
when losses from the breach of contract can otherwise be proved. When losses cannot be proved, then, of course the liquidated damages specified
can always be recovered.†In both the above-mentioned judgments, judgment in case titled as
ONGC v. Saw Pipes (Supra) has been referred to.
In the present case, amount having upper limit of Rs. 10,00,000/- is liquidated damages and not by way of penalty. It becomes clear by reading Clause
No. 10 of Ex. PW-1/3 in which it has been clearly mentioned that the said amount is by way of liquidated damages and not by way of penalty.
In Clause No. 7 of the bond Ex. PW-1/3, it has been mentioned as below:-
“That if the pilot fails to complete his bond period successfully, the pilot undertake alongwith the sureties that they shall jointly/serverally
compensate the Company for all the expenses incurred by it on account of and in connection with his service. The said expenditure shall not only
include the loss of business revenue/opportunities but also expenses /liquidated damages to be suffered, expenses to be incurred to make another
person to obtain experience to fly independently, salary of the pilot during the period cost of supervision, cost of training skill test, proficiency test,
checks and other other losses/expenses suffered due to leaving of said pilot. The decision of the Chairman-cum-Manager Director/General Manager
or an officer nominated by the Chairman-cum-Managing Director shall be binding as to the total amount of the expenditure incurred and loss suffered
by the Company on account of and in connection with the training/other expenses of the pilot. Although the above mentioned cost would be fairly high
amount, however, in case of breach of any condition of this bond by the pilot, he/she alongwith the sureties shall be liable to pay and reimburse to the
Company by way of damages, the amount to the Company but the said recoverable amount of damages shall not exceed Rs. 10,00,000/- (Rupees Ten
Lakhs only).
 From language of Clause No. 7, having signatures of defendant no. 1 (signatures on Ex.PW-1/3 have been admitted by defendant no.1 in his cross-
examination and at the same time it has been admitted by defendant no. 1 that bond was submitted by him to plaintiff company), it is clear that
defendant no.1 knew that for the things mentioned in Clause No. 7, although the cost would be fairly high but reimbursement on account of heads as
mentioned in clause no. 7 was limited not to exceed Rs. 10,00,000/-.
Though, no evidence has been led by plaintiff company as to the loss suffered actually on account of pre-mature resignation of defendant no. 1 but
loss was caused to plaintiff company is evident from contents of Clause No. 7 of bond Ex. PW1/3 as mentioned above. Further, defendant no. 1 in his
cross-examination has admitted that he was given conversion routine training. Defendant no. 1 in his cross-examination stated that he does not
remember that he had been given instrument rating test at Port Blair after receiving on his CHPL (License). He further stated that there may be other
tests but he does not remember then at this stage. Expenses must have been incurred by plaintiff company on conversion training and other tests
undertaken by defendant no. 1 which defendant no. 1 in his cross-examination has stated to be not remembering but has not denied the same. Further,
in case of pre-mature leaving of service of plaintiff company, loss must have been caused to plaintiff company in the form of expenses for getting
trained other Pilot, getting passed various tests as required for the job and cost of selection of other candidate in place of defendant no. 1 including
expenses on account of giving of advertisement in newspapers and giving of honorarium to selection board members etc.
Present case is a case in which though losses could not be proved numerically by plaintiff company but as liquidated damages have already been
provided in bond Ex. PW-1/3 and it has been mentioned in Clause 7 of the bond that expenses on account of things mentioned in Clause 7 of the bond
would be fairly high, liability of defendants was limited to jointly and severally to the extent of Rs. 10,00,000/-, I am of the view that amount of Rs.
10,00,000/- is reasonable compensation in view of judgment in case of ONGC v. Saw Pipes(Supra). â€
10.I  completely agree with the  aforesaid reasoning, discussion and conclusion of the trial court because admittedly the bond had been
executed and the bond was breached by the appellant/defendant no. 1 by leaving services prior to five years service period of the bond. When a pilot
like the appellant/defendant no. 1 leaves suddenly then lots of schedules are thrown haywires with consequential loss of business opportunities,
expenses of training of new pilot, other expenses and losses suffered on account of disruption of the business of the respondent no. 1/plaintiff which
was in the business of providing transportation services, etc through its helicopters. Loss on account of such services therefore cannot be accurately
calculated and the bond was thus in the nature of contract which falls under Section 74 of the Indian Contract Act entitling the respondent no.
1/plaintiff for liquidated damages specified in the bond amount.
11(i).Counsel for the appellant/defendant no.1 argued before this Court that appellant/defendant no.1 was to be posted at Delhi but he was instead
posted at Mumbai, and there was an assurance that appellant/defendant no.1 would be posted at Delhi. Attention of this Court is invited to the letter
dated 5.2.2004 issued by the respondent no. 1/plaintiff of appointment showing the posting of the appellant/defendant no. 1 at Mumbai.
(ii) I cannot agree with this argument urged on behalf of the appellant/defendant no. 1 inasmuch as the letter of the respondent no. 1/plaintiff dated
5.2.2004 Ex.PW1/2 does not in any way provide that appellant/defendant no. 1 would be posted at Delhi. In fact the letter dated 5.2.2004 states that
the present place of posting at the time of issuance of the appointment letter was at Mumbai and in accordance with the terms of service being parag
12(e) appellant/defendant no. 1 could be transferred anywhere in India or abroad at the discretion of respondent no. 1/plaintiff. Obviously, there was
no assurance of the appellant/defendant no. 1 being posted at Delhi and in fact para 12(e) of the appointment letter specified otherwise. This argument
of the appellant/defendant no. 1 is therefore rejected.
12.Learned counsel for the appellant/defendant no.1 then argued with respect to proportionate bond amount being only decreed in favour of the
respondent no. 1/plaintiff, however, in view of the fact that the bond amount is the amount of liquidated damages which can be granted under Section
74 of the Indian Contract Act as it is not possible to calculate the losses suffered by the respondent no. 1/plaintiff on account of appellant/defendant
no. 1 suddenly resigning from his services with the respondent no. 1/plaintiff, therefore, appellant/defendant no. 1 was liable to pay the entire bond
amount and which aspect has been discussed in detail by the trial court by reference to the law under Sections 73 and 74 of the Indian Contract Act,
and which relevant discussion has already been reproduced above.
13.Learned counsel for the appellant/defendant no.1 then argued that the appellant/defendant no.1 after leaving services of the respondent no.
1/plaintiff did not work anywhere else, however, when asked to show any pleading in this regard or any evidence which was led by the
appellant/defendant no. 1, the counsel for the appellant/defendant no. 1 could not show any pleading or evidence led, much less documentary evidence
such as income tax returns, etc to the fact that appellant/defendant no. 1 did not work elsewhere after resigning from the services of the respondent
no. 1/plaintiff. Even for the sake of arguments if what is argued on behalf of the appellant/defendant no.1 is correct, yet that will not exempt the
appellant/defendant no. 1 from making payment of the bond amount on account of the appellant/defendant no. 1 breaching the terms and conditions of
the bond of serving the respondent no. 1/plaintiff for a period of five years.
14.There is no merit in the appeal. Dismissed.