Mst. Jaswant Kaur vs Harnam Singh

D.K. Mahajan, J.—This appeal must succeed on the basis of the decision of the Supreme Court in Sir Chunilal V. Mehta and Sons, Ltd. Vs. The Century Spinning and Manufacturing Co., Ltd.,

A sum of Rs. 500/- was stipulated in the contract as liquidated damages for breach of the contract. In this case, the contract was for the sale of land measuring 13 1/2 Kanals for a sum of Rs. 1,700/-. The sale price was to be paid in two equal installments, the last installment to be paid at the time of registration. The sale deed could not be executed with the result that the vendor filed a suit for recovery of Rs. 500/-, which was stipulated as damages in the case of breach of contract. If the breach was on the part of the vendor, she had to pay the same amount to the vendee. Both the Courts below have come to a concurrent decision that the breach of contract in this case is on the part of the vendee. The trial Court awarded the entire sum of Rs. 500/- to the vendor, but the lower appellate Court has reduced that amount to Rs 200/-. The vendor has come up in second appeal to this Court claiming the remaining amount of Rs. 300/-.

Mr. Mehra sought to contend that the decision of the Courts below that the breach is on the part of the vendee is erroneous. But that decision being on a question of fact is final in second appeal.

The second contention of Mr. Mehra is that the decision of the lower appellate Court reducing the amount from Rs. 500/- to Rs. 200/- is justified in terms of the language of section 74 of the Indian Contract Act. As already, stated this matter stands concluded by the decision of the Supreme Court in Sir Chunilal''s case. It was ruled by their Lordships of the Supreme Court that-

Where parties name in a contract reduced to writing a sum of money to be paid as liquidated damages they must be deemed to exclude the right to claim an unascertained sum of meney as damages. The right to claim liquidated damages is enforceable u/s 74 of the Contract Act and where such a right is found to exist no question of ascertaining damages really arises. Where the parties have deliberately specified the amount of liquidated damages there can be no presumption that they at the same time, intended to allow the party who has suffered by the breach to give a go-by to the sum specified and claim instead a sum of money which was not ascertained or ascertainable at the date of the breach.

It is only in cases where the damages are by way of penalty that the Court has the power u/s 74 of the Indian Contract Act to fix reasonable damages. See in this connection the decision of the Supreme Court in Fateh Chand Vs. Balkishan Das,

In this view of the matter, this appeal must succeed. I accordingly allow this appeal, set aside the decision of the lower appellate Court and restore that of the trial Court. There will be no order as to costs.