S.R. Chakrapani Chettiar vs S. Guruswami Reddiar

Ratnam, J.—The defendant in 0. S. No. 371 of 1974, Sub Court, Cuddalore, is the appellant in this appeal. That suit was laid by the-

respondent herein praying for the recovery of a sum of Its. 40,000, as damages and other incidental relief''s under the following circumstances. The

plaintiff and the defendant are stage carriage operators and they have been applying for grant of permits in respect of several routes. In relation to

two such routes, namely, Panruti-Vallam and Pantuti-Arasur, the plaintiff, the defendant and certain others had applied for the grant of stage

cairriage permits. Sometime in October 1971, before the applications were taken up for consideration, an agreement was arrived at between the

plaintiff and the defendant that the plaintiff should withdraw, his application for the route Panruti-Vallarn and that the defendant should likewise

withdraw his application with reference to the route Panruti-Arasur. In accordance with his agreement, when the R. T. A. took up for

consideration the grant of permit on the route Panruti-Vallam on 27-10-1971, the plaintiff withdrew his application and the defendant was granted

the permit on that route by the R. T. A. In relation to Panruti-Arasur, the R. T. A. had fixed 29-2-1972 as the date for the consideration of the,

applications and on 28-12-1972, a letter of withdrawal of the application of the defendant was filed before the R. T. A. However, on 29-2-1972,

when the - R. T. A. took for consideration the grant of stage carriage permit on the route Panruti-Arasur, the defendant engaged another counsel

and prayed for the withdrawal and in spite of opposition by The plaintiff, that was allowed and eventually the defendant was granted the permit

even on the route Panruti-Arasur by the R. T. A. Against this, the plaintiff and two others filed '' Appl. Nos. 53,3, 655 and 670 of 1972 to the

State Transport Appellate Tribunal, MadYas, and on 23-9-1972, the State Transport Appellate Tribunal found that the R.T.A. was not right in

permitting the defendant to withdraw his letter of withdrawal of the application and that the application of the defendant must be considered to have

been withdrawn rendering it unnecessary to be considered. ''Considering the merits also, the State Transport Appellate Tribunal found that the

plaintiff was entitled to be granted the permit and accordingly granted the permit to the plaintiff for the route Panruti-Arasur. The correctness of this

order was challenged in C. R. P. 2520 of 1972 and that was dismissed on 18-8-1973, with the result that the grant of the stage carriage permit in

favour of the plaintiff for the route Panruti-Arasur by the State Transport Appellate Tribunal stood confirmed. Claiming that as a result of the

breach . of the agreement entered into between the plaintiff and the defendant in relation to the route Panruti-Arasur committed by the defendant,

the plaintiff had sustained loss'' in collections on the route Panruti-Arasur. for a period of 15 months during which the defendant had run on that

route and further that other expenses had also to be incurred by the plaintiff which amounted. in all to Rs. 96,000. The plaintiff stated that he

restricted his claim to Rs. 40,000 and sought the recovery of this amount against the defendant with interest from the date of suit till the date of

realisation.

The defendant. resisted the suit contending that the agreement set up by the plaintiff was not true and that in any event it was opposed to public

policy as well as the provisions relating to the grant of stage carriage permits under the Motor Vehicles Act. The further plea of the defendant was

that the agreement was illegal and that was the reason why even in C. R: P. 2520 of 1972 there was no reference to ge agreement, and, therefore,

the plaintiff cannot base his claim for damages on such an agreement. The agreement was also stated to be devoid of consideration. It was also

contended by the defendant that there were other applicants for the grant of permit on the route PanrutiArasur and the authorities had to consider

the grant of a permit on a consideration of the merits and qualifications and, therefore, there was no certainty that the - plaintiff would have secured

the permit in the event of the withdrawal of the application by the defendant. The damages sustained by the plaintiff was, according to the

dofendant-not direct or proximate cause -of the breach of the agreement. The quantum of damages claimed by the Plaintiff was characterized as

excessive and fanciful. On those -grounds, the detendant prayed for the dismissal of the suit.

On the aforesaid pleadings, of the parties, the learned Subordinate Judge, Cuddalore, framed the following issues for trial:

Whether there was any agreement as stated by the plaintiff and if so what are the terms ?

Whether the agreement even if true is valid -and enforceable?

Whether the alleged agreement is opposed to public policy and hence invalid ? *

Whether there was any breach of the agreement ?

Whether the plaintiff suffixed- any damages and if so, to what amount is the plaintiff entitled ?

To what relief ?

Before the Court below, on behalf of the plaintiff, Exs. A-1 to A-14, were filed and the plaintiff was examined as P. W. 1, in addition to two

other witnessess 2 and 3. while. on behalf of the'' defendant. he- examained himself as D. W. I and marked Exhibits B-1 to B-13. On a

consideration of the oral as well as the documentary evidence, the learned Subordinate Judge found that there was an agreement between the

plaintiff and the defendant as claimed by the plaintiff and that such an agreement is enforceable and further that the defendant had committed a

breach of that agreement. It was also held that the agreement is not opposed to public policy. Adverting to the quantum of damages the learned

Subordinate Judge estimated, on the evidence that the daily net collection would be about Rs. 100 and that a provision at the rate of Rs. 50 per

day for payment of motor ''vehicles tax and other incidental expenses has to be made and, therefore, at the rate of Rs. 50 per day, the plaintiff will

be entitled to recover a sum of Rs. 22,500, ask damages with interest thereon at 6 per cent per annum from the date of plaint till payment. While

the defendant in his appeal challenges. the correctness of this decree, the plaintiff in his memorandum of cross-objections has questioned the

quantum of damages awarded to him under the decree of the Court below.

We may state at the outset that the finding of the Court below that there was an agreement between the plaintiff and the defendant in respect of

the route PanrutiVallarn and Panruti-Arasur and only in pursuance of that agreement the plaintiff had withdrawn his application when the meeting of

the route Panruti-Vallam took place on 27-10-1971, and the defendant committed breach of the agreement on 29-2-1972 when he filed the

withdrawal application of the withdrawal letter has not been challenged before us. The learned counsel for the appellant contended that the

consideration of applications f or the grant of route permits by the concerned authorities under the Motor Vehicles Act. involved the interest of the

public and any agreement of the kind set up by the plaintiff, even if true, will be opposed to. public policy as well as the provisions of the Motor

Vehicles Act, and cannot, therefore, be recognised by Court and enforced. Reliance in this connection was also placed by the learned counsel on

the decision in Swarninatha Aiyar v. Muthuswami Piflai, ILR (1907) Mad 530. Per contra, The learned counsel for the respondent submitted that

the withdrawal of an application already made by a person by the exercise of his volition is not prohibited by the provisions of the Motor Vehicles

Act and the Rules thereunder and. therefore, the object of the agreement was not to defeat what the law had prohibited. It was also further''

pointed out that at best the effect of the agreement was only to reduce the number of applicants by one, but that would not result in the grant of a

permit in favour of other or others, as. despite the withdrawal, the R. T. A. had to deal with the question of the grant of permit on the merits of the

rival Applicants. Out attention in this connection was drawn to the decisions in Mahommad Isack alias Papa Saheb Vs. Doddapaneni Sreeramalu,

, Pattipati Ramalingaiah and Another Vs. Nagulagunta Subbarami Reddi, , Gherulal Parakh Vs. Mahadeodas Maiya and Others, , and Firm of

Pratapchand Nopaji Vs. Firm of Kotrike Venkata Setty and Sons and Others, . The prior decision in C. R. P. 2520 of 1972, inter partes

upholding that of the State Transport ''Appellate Tribunal where''d it had been held that the defendant could not be permitted to withdraw his

earlier letter of withdrawal, was also relied upon as precluding the defendant from raising any plea in this regard. Our attention in this connection

was drawn to the decision in Satyadhyan Ghosal and Others Vs. Sm. Deorajin Debi and Another, and T. Govindaraja Mudaliar Vs. The State of

Tamil Nadu and Others, .

It has earlier been seen that the defendant has accepted The finding of the Court below that there was breach of an agreement'' between the

plaintiff and the defendant under the terms of which the defendant agreed to withdraw his application for the grant of a stage carriage permit in

respect of the route Panruti-Arasur. Thequestion is, whether such an agreement is unenforceable because it is opposed to public policy or the

provisions under the Motor Vehicles Act. We may immediately point out that our attention was not drawn to any provision in the Motor Vehicles

Act, or the Rules thereunder which prohibits ail applicant from withdrawn an application made by him earlier for the grant of a stage carriage

permit. In the absence of provisions to that effect, an agreement, which results merely in the withdrawal of an application made earlier for the grant

of a stage carriage permit by an applicant, would, not be opposed to or run counter to any provision of law or would defeat a prohibition by law.

The question of public policy with reference to the enforceability of the agreement has to be considered in their , twin aspects, namely, the nature of

the consideration as well -is the nature of the acts to be performed. In this case, it is not the case of the appellant that the consideration is such as

to be treated as opposed to public policy. But even with reference to the nature of the acts to be performed under the agreement, it is only the

withdrawal of the application earlier made by the appellant for the grant of the stage carriage permit for the route Panruti-Arasur, which Is not in

*any manner frowned upon by the statute. In addition, it has also to be borne in mind that effect of such an agreement is not to dispense with an

enquiry by the R. T. A. in relation to the grant of permits for the route PanrutiArasur and to grant a permit for the route in favour of the plaintiff. In

other words, in spite of the withdrawal of the application by the defendant, the question as to who among the applicants is entitled to the grant of a

stage carriage permit on the concerned route has nevertheless to be considered and dealt with by the R. T. A. on the merits. For all practical

purposes, the effect of the agreement was to leave one applicant out of consideration for the grant of the permit for the route in question and that is

not the same thing as saying that one of the. applicants should be granted a permit irrespective of his other qualifications. We. do not, therefore, see

involvement of any public interest or the violation of public policy or even the provisions of the Motor Vehicles Act.

The decision relied - on by the learned counsel for the appellant in Saminatha Aiyar Muthusami Pillai, ILR (1907) Mad 530 has no application

to the present case, for, therein, money was undertaken to be paid to a public servant to induce him to retire with a view to make way for the

appointment of the promissory and that was held to be trafficking with reference to an office, and, therefore, void u/s 23 of the Contract Act. Such

considerations are totally lacking in this case. On the other hand, in Mahommad Isack alias Papa Saheb Vs. Doddapaneni Sreeramalu, the

question arose whether an agreement between the owner of motor buses to withdraw the tender of one so that the other can secure a ''licence for

carrying mails between Ellore and Chintalapddi as a valid one. Under the agreement, the person who withdrew his tender. had to be paid by the

successful tendered a sum of Rs. 15 per month /for a certain period and Rs. 20 per month in other contingencies and it was this amount that was

sought to be recovered -by the institution of a suit, in which the defense was that the contract was unenforceable as being opposed to public

policy. In holding that such an agreement would be valid, Rajamannar J.as be then was applied the principle laid down by Sargent C. J. in

Haribalakrishna and Co. v. Naro Moreshwar and Co., ILR (1894) Bom 342 and observed that if an agreement to* refrain from bidding at an

auction is not opposed to public policy. thus an agreement for the withdrawal of a tender which is only in the nature of an offer or a bid, cannot be

declared unlawful. In Pattipati Ramalingaiah and Another Vs. Nagulagunta Subbarami Reddi, , Panchapagesa Sastri J. had to consider the validity

of a knock out agreement by which certain villagers had agreed not to bid against each other, but to put up one person as the sole bidder. It was

contended that such an agreement not to bid against each other is not illegal under the common law nor an auction would get invalidated because

of such an agreement and in upholding the validity of such an agreement, the absence of a statute here as in England to remedy the evil of a knock

out combination was noticed and it was held that such an agreement cannot be invalidated on the ground of public policy. Considered.in tile light of

the principles laid down in the decisions referred to above, we are of the view that at best the agreement in this case would amount to a mere

withdrawal of the application made by the defendant for the grant of a stale carriage permit on the route Panruti-Arasur and that such an agreement

is not opposed to public policy. We may also note that the object of the agreement was not to carry out something prohibited by the provisions of

the Motor Vehicles Act or law widely applicable so as to be hit by Section 23 of the Contract Act. as pointed out by the Supreme Court in Firm

of Pratapchand Nopaji Vs. Firm of Kotrike Venkata Setty and Sons and Others, .

Earlier, it has been noticed how the plaintiff and others appealed to the State Transport Appellate Tribunal in App. Nos. 533, 655 and 670 of

1972 against the grant of a permit in favour Of the defendant in respect of the route Panruti-Arasur, contra icy to the agreement between the

plaintiff and the defendant under which the defendant had agreed to withdraw his application. Ex. A-7 is the copy of the judgment of the State

Transport Appellate Tribunal. - After elaborately considering the circumstances under which the agreement between the plaintiff and the defendant

was entered into, the State Transport Appellate Tribunal, in para 26 of its judgment, found that the Regional Transport Authority was not right in

having permitted the defendant to withdraw bis letter of withdrawal of the application and in having proceeded to consider the application of the

defendant and had also further stated that the application of the defendant must be considered . to have been withdrawn. In other words, the State

Transport Appellate Tribunal had proceeded to uphold the validity, of, the agreement as well as its legal effect and, this judgment of - the State

Transport : Appellate Tribunal bad bow upheld by this Court in C. R. P. 2520 of 4972 on 1841-1913, as seen from Ex. A-8. Though it may

appear from Ex. A-11, that the validity of the agreement had not be specifically advised to, yet, the binding effect of the adjudication therein would

not be dependent upon whether this argument put forth or not. But if the point with reference to which the argument was raised before the State

Transport Appellate Tribunal was decided. it does not matter whether it was, expressly considered or a decision was given thereon or not as That

will not take away the binding effect of the decision of this Court confirming that ''of the State Transport Appellate Tribunal (vide T. Govindaraja

Mudaliar Vs. The State of Tamil Nadu and Others, . We are. therefore, of the view that even by the principles of res judicator, the defendant is

precluded from contesting either the validity or the legal effect of the agreement entered into between the plaintiff and the defendant. with reference

to the withdrawal of the application of the defendant for the grant of a stage carriage permit on the route Panruti-Arasur.

Regarding the quantum of damages, the learned counel for the appellant submitted that the quantification and the fixation of the damages at Its.

22,500, is excessive. It was submitted that the basis for the quantification of the damages at Rs. 50 per day is on the high side, and, therefore, the

amount of damages should be reduced. It was also further pointed out that during the tendency of C. R. P. 252 '' 0 of 1972, the defendant

operated on the Ute in question on the strength of an order of stay of this Court which endured to his benefit between 19-10-1972 to 18-8-1973,

and, therefore, at least during this period when he was protected by an order of stay, damages cannot be awarded to the plaintiff. The Jtarned

counsel pressed into service the well known tbaxim actus curiae neminem gravabit. On the other hind, the learned counsel for the respondent

submitted that even on the basis of the evidence of D. W. 1, the net income from the route in question was Rs. 100 per day and, therefore, the

quantification of damages at the rate of Rs. 50 per day after making provision for payment of taxes and other incidental expenses by the Court

below is erroneous. In this connection. he drew our attention to the admission of D. W. 1 in his evidence to the effect that the net income per day

was Rs. 100 on this route. In addition, the learned counsel also submitted that no plea was raised by the defendant in his written statement that he

was not liable to pay damages for the period between 19-10-1972 and 18-8-1973 and that no point in this regard had also been raised in the

grounds of appeal, and, therefore, the defendant cannot be heard to complain that the Court below had gone wrong in quantifying the damages for

this period also. The learned counsel for the respondent further submitted that the defendant who had operated on the route during the period was

in possession of evidence which would throw considerable light on the collections made during the period, but had burn4:d the evidence except for

the production of Exhibit B-10, relating to the month of May, 1972, only and had suppressed the rest of the materials and, therefore, the Court

below had fixed the quantum on the basis of the admission. of the defendant himself, though erroneously after deducting some amount towards

expenses, motor vehicles tax, etc., from out of the net income. The learned chimed also drew out attention to Gopal Kishnaji v. Mohd. Haji Latif,

AIR 18 SC 14, in this connection.

We now proceed to consider in the light of the submissions wade, the correctness of the quantum of damages fixed by the Court below. In

relation to this, the plaintiff had placed before the Court only oral evidence. P. W. I had stated that he estimated the'' loss of earnings at Rs. 200

per day. P. W. 3, the, conductor, would say that, on the route in question the total earnings would be about Rs. 550 per day and that Rs.150 will

be spent for expenses and the net income would be Rs. 200 per day. On the other . hand, the evidence of D. W. I which has been noticed by the

Court below is to the effect that the net income on the route will be about Rs. 100 per day. The Court below has, in para 13, adverted to this

admission of D. W. 1, but has proceeded to deduct Rs. 50 per day for payment of motor vehicles tax and other incidental charges, overlooking

that the net collections amount to Rs. 100 a day after making provision for these outgoings. In other words, the Court below had made double

deduction in this regard. It had deducted again from out of the net income, items of expenditure like the motor vehicles tax and other incidental.

expenses. This is plainly erroneous. The defendant, apart from relying upon Ex. B-10, biks not made available any other material to show the

income from the route in question. Undoubtedly, during the period in question, the defendant had operated on the route and the defendant should

have materials in his possession which would throw light with reference to the income. But he has not made available to Court the best evidence in

his possession, and in the absence of such evidence, the defendant cannot be permitted to rely upon the abstract doctrine of onus of proof (vide

Gopal Krishnaji Ketkar Vs. Mahomed Haji Latif and Others, . We are inclined to accept the admission of D. W. 1. as reflecting a correct estimate

of the net income, from the rough in question which, even according to him, would be about Rs. 100 per day. On this basis, the plaintiff will be

entitled to recover from the defendant a sum of Rs. 100 every day for the total period of 15 months. In other words, the plaintiff will be entitled to

recover from the defendant a sum of Rs. 45,000 but he had restricted the claim to Rs. 40,000 only. We, therefore, hold that the plaintiff is enticed

to recover the amount of Rupees 40,000 from the defendant as damages.

The argument that the plaintiff is not entitled to damages for the period covered by the stay order does not appear to us to be one of

substance. That this period has to be excluded has not been raised by the defendant in the written statement. There is nothing whispered about this

even in the grounds of. appeal. Apart from this, if the plaintiff had been prevented from operating by an order of stay on the route on which he was.

entitled to operate, as a result of the grant of a stage carriage permit in his favour by the State Transport Appellate Tribunal, we do not see h:)w the

defendant can claim that he should not bc prejudiced by an act of Court. It has also to be remembered that ultimately C. R. P. 2520 of 1972 was

dismissed and that would mean that even the stay order granted in favour of the defendant ought not to have been granted as ultimately the plaintiff

was held entitled to The stage carriage permit in respect of the route Panruti-Arasur. In other words, the plaintiff was prevented by the order of

stay obtained by the defendant from operating on the route in respect of which he secures a permit and he ought not to be penalised because the

defendant obtained an order of stay in C. R. P. 2520 of 1972, which was eventually dismissed. Under these circumstances, the defendant c4nnot

be heard to take umbrage or shelter under the principle of actus curiae neminem gravabit.

That takes us on to the question of interest awarded under the decree of the Court below. The Court below has granted interest at the rate of

6 per cent per annum on Rs. 22500 from 17-8-1914, the date when the suit was instituted till the date of re4lisation. The learned counsel for the

appellant contended that till the actual determination of the quantum of damages, the amount of damages would really remain unascertained and

under such circumstances, interest ought to have been allowed on the damages awarded only from the date of the decree of the Court below. On

the other band, the learned counsel for the respondent submitted that the Court below had thought it reasonable to direct payment of interest on

the amount decreed from the date of institution of the suit in accordance with Section 34, C. P. C. and therefore no exception can be taken to the

interest as awarded under the decree of the Court below. It is seen from the plaint that the respondent had set out a claim for a sum of Rs. 96000

and had eventually confined his relief to Rs. 40000 and this would show that even the respondent was not very sure about the quantum of damages

he is likely to secure from the appellant. As against the claim as made by the respondent the Court had to go into and decide the question of the

exact amount -of damages payable to the respondent and this was done only under the decree of the Court below dated 7-1-1977. Taking into

account all the circumstances of the case, we arc of the view that the ends of justice would be Met, if the appellant is directed to pay interest at the

rate of 6 per cent per annum on the sum of Rs. 40000 from 7-1-1977.

Consequently, the decree of -the Court below will stand modified in that the appellant should pay the respondent though sum of Rs. 40000

with interest thereon at six per cent per . annum from 7-1-1977 till the date of payment. The result is Appl. No. 81 of 1977 will stand dismissed

and there will be no order as to costs therein. The memorandum of cross-objections will stand allowed with costs and the suit will stand decreed

as prayed for with costs.

Order accordingly.