Matilal Nath vs Bengal Chemical and Pharmaceutical Works Ltd.

P.N. Mookerjee, J.—This appeal is by the Defendant and it arises out of a suit for recovery of a sum of Rs. 10,000 on account of damage or compensation for breach of contract.

The relevant facts lie within a short compass and may be stated as follows: -The Appellant was employed as an assistant bacteriologist in the Biological Department of the Respondent company. He had special training at Kasauli in biological production through the help of the Respondent company. In connection with the above special training there was an agreement between the parties which was dated March 11, 1954. Under that agreement the Respondent company undertook to bear all the expenses of the Appellant at Kasauli, as stated therein, and in return the Appellant agreed to serve the Respondent company at least for five years after completion of his training at Kasauli, failing which he was to refund the amount spent on him at Kasauli, as stated hereinbefore, by the Respondent company together with a further amount of Rs. 2,000 as damages or compensation. The Appellant''s special training at Kasauli commenced on and from March 15, 1954, and ended on March 14, 1955. Thereafter the Appellant came back and joined the Respondent company in terms of the above agreement. Before, however, the completion of the stipulated five years of service, he left the Respondent company on January 2, 1958, after intimating his intention to that effect by letter dated December 18, 1957. The Respondent thereupon instituted the present suit on September 3, 1958, claiming compensation in terms of the above agreement and put its claim at Rs. 10,000 after giving up a small part, namely Rs. 25-1-0.

The suit was contested by the Appellant and his principal defence were that the agreement in question was not binding upon him as it was vitiated in particulars by coercion and undue influence, that he was not guilty of any breach of the above agreement as, in addition to the terms, there were contemporaneous verbal assurances given to him on behalf of the Respondent company, which not having been kept, the breach was really on the part of the Respondent company. His further defence was that, in any event, the Respondent company, not having suffered any damages as a result the alleged breach, was not entitled to recover any compensation in the instant case.

All the above defences practically failed before the learned trial Judge, who decreed the Respondent''s suit substantially for the amount of Rs. 8,125 with costs according to success.

Aggrieved by this decision, both parties have come up to this Court. The Appellant has filed this appeal against the above decree claiming that, in the circumstances of this case, the Plaintiff''s suit should have been dismissed. '' The Respondent, on the other hand, filed a cross-objection claiming that the disallowed part of its claim should also have been decreed by the learned trial Judge.

It is necessary to mention at this stage that the learned trial Judge accepted the Respondent Plaintiff''s claim of refund of Rs. 8,025 and disallowed only its claim of stipulated damages or estimated damages by reducing it from Rs. 2,000 to Rs. 100, the decrial amount of Rs. 8,125 being made up of the first item of Rs. 8,025 and Rs. 100 out of the estimated damages of Rs. 2,000 as aforesaid.

For our present purpose it is not necessary to go into any of the above questions except the point of reasonable compensation to which the Respondent Plaintiff would be entitled under the circumstances. The extreme defence that the agreement in question was not binding on the Defendant appears to have been rightly rejected by the learned trial Judge on the materials before him, and in fairness to the Learned Counsel Mr. Basak, who appeared for the Defendant Appellant before us, we may at once state that he did not press this part of the defence having regard to the evidence before the Court. It is not also necessary for us to go into any of the other questions as both parties have argued the matter before us on the footing that the instant case would come u/s 74 of the Indian Contract Act. This, indeed, is obvious having regard to the facts stated hereinbefore. The agreement in question did itself provide a named amount of damages in case of breach. The matter was thus brought within the express terms of the above statutory provision, and the only question, which the Court has to consider, would be the assessment of reasonable compensation for the breach in question.

A point was raised by Mr. Basak that, in order to succeed u/s 74, the Plaintiff has to prove actual damage or the extent of his damage. Later on, however, this submission had to be modified, in view of the ruling decisions on the point, vide Sir Chunilal V. Mehta and Sons, Ltd. Vs. The Century Spinning and Manufacturing Co., Ltd., and Fateh Chand Vs. Balkishan Das, and the submission that was eventually made by him on this part of the case was to this effect that, in any event, the Plaintiff had to prove general damage, although proof of actual damage or the quantum of damage was not necessary. That submission would be supported by the above leading authorities and by the earlier decision of this Court, reported in Mahadeoprasad Vs. Siemens (India) Ltd., citing and explaining the decision of the Judicial Committee in Bhai Panna Singh v. Bhai Arjun Singh AIR 1929 P.C. 179 : 33 C.W.N. 949. In the light of the above decisions, the section may be interpreted as requiring proof of general damage as opposed to or distinguished from proof of actual damage or quantum of damage for reconciling the terms of the section by a reasonable interpretation of the words ''whether or not actual damage or loss is proved to have been caused thereby'', the stress there being obviously on the words ''actual damage or loss'' which point to quantum of damages. On the evidence, as it stands, it may well be held that the Respondent company has suffered damage or general damage by reason of the breach of contract in question. That indeed is quite different. The short point for our enquiry, therefore, will be what will be the reasonable amount of compensation recoverable by the Respondent company in the facts of the instant case for the aforesaid breach. It is abundantly clear and this was actually admitted before the learned trial Judge that the Respondent company spent on the Defendant for his training at Kasauli an amount of Rs. 8,025-1-0 as detailed in para. 3 of the plaint. For this, however, leaving aside for the present the estimated damages of Rs. 2,000 as mentioned in the aforesaid agreement for breach of contract, the Appellant undertook to serve the Respondent company for a period of five years. Admittedly, also, he served the Respondent company after completion of his training at Kasauli roughly for a period of two years and nine months. To that extent, the Respondent company must be held to have been benefited by getting some return for its investment for the Defendant at Kasauli. Taking a broad view on this part of the case, we may reasonably put the amount of compensation recoverable out of the above amount of Rs. 8,025-1-0 by the Plaintiff Respondent to the round figure of Rs. 4,000.

As to the other claim of Rs. 2,000 it seems to us that, having regard to the evidence on record, the Plaintiff company must be held to have suffered prejudice by reason of the Appellant''s leaving their service after two years and nine months in place of the stipulated five years. This has also been responsible on the evidence, as it stands, for loss or diminution of earnings or profits of the Respondent company which were expected to be made from the Appellant''s service to the stipulated period of five years after his specialized training at Kasauli. Taking all circumstances into consideration we are inclined to think that, in the context of the above facts, it will not be reasonable to interfere with the parties'' estimate of damages under this head, namely Rs. 2,000 which, in our opinion, is a fair and reasonable estimate of this part of the compensation.

We would, accordingly, hold that the Respondent company would be entitled to a total compensation of Rs. 6,000, Rs. 4,000 under the first head and Rs. 2,000 under the second.

This appeal will be allowed to the above extent and the learned trial Judge''s decree will be modified accordingly. The Plaintiff will also get costs in proportion to its success in the trial Court.

In view of the above order, no further order is necessary on the cross-objection, which must be deemed to be disposed of by and in terms of the above modification of the learned trial Judge''s decree.

There will be no order for costs in this Court, either in the appeal or in the cross-objection.

Amiya K. Mookerji, J.

I agree.