Orlando Dias vs Union of India

U.V. Bakre, J.—Heard learned Counsel for the respective parties.

This appeal is directed against the judgment and decree dated 29/10/2005 passed by the learned Additional District Judge- II, North Goa, Panaji ("Trial Court", for short) in Civil Suit No. 42/1984.

The appellant is the plaintiff and the respondents are the defendants. The parties shall hereinafter be referred to as per their status in the said suit.

The plaintiff had filed the said suit for recovery of a sum of Rs. 18,00,000/- from the defendants, with interest at the rate of 12% from the date of notice.

There was an agreement dated 06/01/1981 between the original plaintiff and the President of India for the purpose of giving to the plaintiff the fishing rights in the vicinity of sluice gates on the bund called as "Chorao Complex" situated at Chorao, Madel, village Chorao, Taluka Tiswadi, Goa. The lease was for a period from 3 FA 73 of 2006 01/09/1980 to 31/08/1981 on payment of annual rental of Rs. 50,001/-. As per clause (i) of the said agreement the plaintiff had to close all the infiltrations and take every precaution to prevent saline water from entering the adjoining fields and not to anything prejudicial to the said paddy fields. As per clause (xi), for the purpose of counting the period of one year, it was to be counted from the date on which all the twelve breaches which were existing to the said bund were closed/repaired and wooden structure of all the eight sluice gates were replaced and the lessee intimated to take possession of the same. The plaintiff had deposited Rs. 10,000.20 paise as security deposit, in terms of the said agreement. According to the plaintiff, the work as per clause (i) of the agreement was done by the plaintiff after spending thousands of rupees. The plaintiff alleged that though the said agreement was executed, the possession was not given to him and, hence, the payment of annual rental as per clause 9 of the agreement had not started. The plaintiff alleged that clause 11 of the said lease agreement was not complied with by the defendants and by letter dated 11/03/1982, the plaintiff informed the defendant about the existence of breaches and absence of wooden structures. In view of the above, the plaintiff could not take possession of the sluice gates and the defendant also could not give possession. However, the plaintiff received notice dated 27/01/1983 from the defendants 4 FA 73 of 2006 thereby terminating the said agreement. The plaintiff claimed that this notice of termination was bad-in-law, inoperative and ineffective. According to the plaintiff, he had spent an amount of about Rs. 13,00,000/- for putting the bund in order and maintaining the same. He also stated that he would have made net profit of Rs. 5,00,000/-. Hence the suit was filed for recovery of the said amount of Rs. 18,00,000/- with interest.

The defendants denied the case of the plaintiff. According to the defendants the subject matter of the said contract dated 06/01/1997 was frustrated and in spite of repeated demands the plaintiff had failed to pay the amount of installment and had also not carried out repairs to the bund. It was alleged that the plaintiff, by letters dated 19/01/1982, 25/02/1982 and 07/04/1982, was informed that the clause no. (xi) of the agreement was complied with and even all the twelve breaches were closed and hence the plaintiff should take possession of the sluice gate. The defendants alleged that the termination was valid and legal.

The Trial Court framed following issues:

Whether the plaintiff proves that the notice of termination of lease is bad?

Whether the plaintiff proves that there was no 5 FA 73 of 2006 liability on him to pay the first installment of Rs.12,500.25 paise at the time the defendants demanded such payment?

Whether the plaintiff proves that he is entitled to get possession of the suit sluice gate from the defendants?

Whether the plaintiffs are entitled to the sum of Rs. 18,00,000/- with interest at 17% p.a. from the date of Notice?

Whether the defendants prove that Civil Court jurisdiction is barred in view of the property being declared as reserved forest area by virtue of notification dated 28/4/88?

The original plaintiff examined himself as PW1, one Shri Devidas Narvekar, the Civil Contractor of the plaintiff, as PW2 and the Supervisor of the plaintiff, namely Anthony Fernandes, as PW3. The defendants examined the Junior Engineer working in the soil Conservation Division of the Agricultural Department namely Shri Somnath Sardessai as DW1.

After considering the entire evidence on record, the learned Trial Court held that the plaintiff proved that there was breach of 6 FA 73 of 2006 the agreement committed by the defendants and notice of termination given by the defendants was bad. The Trial Court also held that there was no liability on the plaintiff to pay the first installment of Rs. 12,500.25 paise at the time when the defendants had demanded the same. However, the Trial Court held that the plaintiff could not succeed in proving his claim towards damages by producing cogent and convincing evidence. The issues no. 1 and 2 were answered in the affirmative. The issue no. 3 was answered as having become redundant and the issues no. 4 and 5 were answered in the negative. The suit consequently came to be dismissed.

Mr. Usgaonkar, learned Counsel appearing on behalf of the plaintiffs submitted that non payment of the first installment of Rs. 12,500.25 paise was the ground for termination. He pointed out that the Trial Court held that the plaintiff was not liable to pay the said first installment. The breach of agreement by the respondents, according to the learned Counsel, was duly proved and it was also proved by the plaintiff that the notice of termination given by the defendants was bad in law. He urged that if the termination of contract was bad, the plaintiff was legitimately entitled for damages. He submitted that a perusal of the judgment will show that issue no. 4 was answered in the negative on the ground that 7 FA 73 of 2006 the plaintiffs could not prove the quantum of damages. He submitted that in terms of Sections 73 and 74 of the Contract Act, the person aggrieved by the breach of contract is not required to prove actual loss or damage suffered by him and that the Court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of a breach of the contract. In this regard, he relied upon the judgment of the Hon''ble Supreme Court in the case of Oil and Natural Gas Corporation Ltd. Vs. SAW Pipes Ltd., He therefore submitted that the impugned judgment and decree is bad in law and liable to be set aside. He further prayed that reasonable compensation be awarded to the plaintiff with reasonable interest.

On the contrary, Mr. Afonso, learned Government Advocate appearing on behalf of the defendants, submitted that as per the agreement the plaintiff was required to pay annual rent of Rs. 12500.25 paise and the plaintiff was duly informed about the closure of the breaches and to make payment of the first installment. He submitted that the plaintiff did not comply with the said direction and, therefore, the agreement was rightly terminated. He further submitted that in any case the plaintiff miserably failed to prove the quantum of compensation claimed by him and, 8 FA 73 of 2006 therefore, the suit has been rightly dismissed.

I have perused the original records and proceedings. I have considered the arguments advanced by the learned Counsel for the parties and also the judgment relied upon by the learned Counsel for the plaintiffs.

Admittedly, the issue no.1 as to whether the notice of termination dated 27/01/1983 given by the defendants was bad has been answered in the affirmative i.e. in favour of the plaintiff and even the issue no.2 as to whether there was no liability on the part of the plaintiff to pay the first installment of Rs. 12,500.25 paise at the time when the defendants had demanded such payment was answered in the affirmative i.e. in favour of the plaintiff. The defendants have not filed any cross-objections. Even otherwise, a perusal of the evidence on record which has been minutely discussed by the trial Court, shows that the findings of the trial Court on the said issues no. 1 and 2 are unshakable and are in accordance with the settled principles of law, based on the evidence on record. Since breach of agreement by the defendants was duly proved, it goes without saying that the plaintiff was legitimately entitled for damages. 9 FA 73 of 2006

The Only question therefore which arises for determination is as to what should be the reasonable compensation that should be awarded to the plaintiffs and what should be the reasonable interest.

The trial Court, in detail discussed the oral evidence of PW1, PW2 and PW3, in paragraphs 16, 17 and 18 of the impugned Judgment and held that the plaintiff could not prove the quantum of damages. In this regard, the learned Counsel appearing on behalf of the plaintiff could not show as to how the evidence on record was sufficient to prove the actual damages. However, there is great force in the contention of the learned Counsel for the plaintiff that even if no actual damage was proved to have been suffered in consequence of the breach of the contract, the Trial Court was competent to award reasonable compensation on account of breach of contract.

In the case of "Oil and Natural Gas Corporation Limited" (supra) the Hon''ble Supreme Court has held thus:

"68. From the aforesaid discussions, it can be held that:-

(1) Terms of the contract are required to be taken into consideration before arriving at the conclusion whether the 10 FA 73 of 2006 party claiming damages is entitled to the same.

(2) If the terms are clear and unambiguous stipulating the liquidated damages in case of the breach of the contract unless it is held that such estimate of damages/compensation is unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation and that is what is provided in Section 73 of the Contract Act.

(3) Section 74 is to be read along with Section 73 and, therefore, in every case of breach of contract, the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree. The Court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequences of the breach of a contract.

(4) In some contracts, it would be impossible for the Court to assess the compensation arising from breach and if the compensation contemplated is not by way of penalty or unreasonable, Court can award the same if it is genuine pre- estimate by the parties as the measure of reasonable compensation."

In fact the parties had approached the Lok Adalat for settlement. Considering the judgment of the Hon''ble Apex Court in the case supra and the evidence of the parties on record, I am of the considered view that an amount of Rs. 4,00,000/- should be a reasonable amount of compensation to be paid to the plaintiffs by 11 FA 73 of 2006 the defendants and the reasonable rate of interest would be 6% per annum from the date of the suit till the date of payment.

In the result, the appeal is partly allowed.

(a) The impugned judgment and decree dated 29/10/2005 passed by the trial Court in Civil Suit No. 42 of 1984 is quashed and set aside.

(b) The said Civil Suit no. 42 of 1984 is partly decreed.

(c) The defendants shall pay to the plaintiff a sum of Rs. 4,00,000/- ( Rs. Four Lakhs only) along with interest at the rate of 6% per annum from the date of filing of the suit i.e. from 19/11/1984 till the date of payment.

(d) Decree be drawn accordingly.

Appeal stands disposed of in terms as above.