Satya Narayan Dey And Anr vs Sushen Chandra Saha

This is an appeal under Section 100 of the CPC from the judgment dated 28.03.2014 delivered in Title Appeal No.06 of 2013 [hereinafter referred to as the first appeal] by the District Judge, South Tripura, Udaipur[as he then was].

This appeal arises from the judgment of reversal and has been admitted on the following substantial question of law:

"The reason assigned by the first appellate court for reversing the finding of payment of compensation whether is in conflict with law or alternatively whether the reasonings are perverse for purpose of reversing the finding returned by the trial courts."

The trial court by the judgment dated 08.03.2013 delivered in Title Suit No.10 of 2012 instituted by the appellants herein, decreed the suit partly. The said suit was instituted in the court of the Civil Judge, Senior Division, South Tripura, Udaipur.

By the said judgment, the trial court having appreciated the evidence has recorded its finding that in the Title Suit 02 of 2003 which was instituted by the respondent herein and the defendent in the suit, the Survey Commissioner was appointed by the trial court and the report of the Survey Commissioner shows that while constructing, the defendant had encroached seven inches of land of the plaintiff-appellants along the boundary of Badal Chandra Majumder. Even the defendant-respondent in the written statement [filed the T.S.20 of 2012] in Para-27 has admitted that the survey commissioner was appointed and that survey commissioner had submitted the report showing him to have encroached seven inches of land of the plaintiffs. In the agreement entered between the appellants [the plaintiffs] and the respondent, [the defendant] [registered being No.1-1588 dated 30.08.1995 Exbt.2] it has been clearly provided that either of the parties violated the terms or condition will be liable to pay compensation to the other party. In the agreement it was further provided that the plaintiff-appellants would provide five inches of land in favour of the defendant respondent for construction of the boundary wall. Simultaneously, it had been provided that the defendant-respondent will allow a strip of his land measuring 23 ft. in length and 2 ft. in breadth on the North-South along the eastern boundary of the land of the defendant-respondent. Further, it was provided that on such arrangement, the defendant will make the permanent building on his land in return the other parties who contributed the land in favour of the defendant- respondent will be entitled to use the base and infrastructure in the underground and they would be also be allowed to use the wall that would be constructed by the defendant-respondent without causing any damage.

The defendant-respondent did not dispute his encroachment of seven inches of land as stated. From the Survey Commissioner's report as submitted in Title Suit No.02 of 2003 (Exbt.7), it can clearly be gathered that the defendant-respondent has encroached 20 ft x 7" of the land belonging to the plaintiff- appellants [the Schedule-B land in the suit]. There is also no dispute that the plaintiff-appellants are the owners of the said strip of land as described in the Schedule-B. In the background of these facts, it has been inferred by the trial court that the appellants are rightly entitled to get some compensation from the defendants for causing loss/damage to the plaintiff appellants. Even though the plaintiff-appellants have claimed a sum of Rs.5,00,000/- as compensation from the defendant-respondent as the damage, but the trial court has observed as under :

". in may considered opinion that the said loss or damage could have been claimed by the present plaintiffs in Case No. Title Suit 02 of 2003 itself had they preferred a counter-claim against the defendant of the present suit. But as the plaintiffs of this suit did not prefer any counter claim in Case No. Title Suit 02 of 2003 and at this stage they are seeking compensation amounting to Rs.5,00,000/- from the defendants of this suit the plaintiffs could have easily sought compensation in the said Case No. Title Suit 02 of 2003 but they did not prefer any counter claim but not preferring the counter claim in that suit does not debar the plaintiffs from claiming compensation in the present suit. In my considered opinion, a compensation amounting to Rs.50,000/- is just to be given to the plaintiffs of this case by the defendant"s side for causing loss/damage to the plaintiffs."

[Emphasis added]

Based on the said finding, the suit which was filed for declaration of right, title and interest with recovery of possession along with compensation was decreed in terms as noted below :

"(a) The plaintiffs have proved their right, title and interest over the "D" Schedule land of the plaint (a part and parcel of "B" & Schedule land of the plaint).

(b) The plaintiffs have rightly proved that the defendants of this case illegally encroached upon the "D" Schedule land of the plaintiffs and the plaintiffs are entitled for recovery of possession of the same by removing all obstructions and nuisance at the cost of the defendants.

(c) The defendants are perpetually restrained from entering into the "D" Schedule of the plaint.

(d) The plaintiffs are entitled to get a compensation amounting to Rs.50,000/- (Rupees Fifty Thousand) from the defendants for causing loss/damage to the plaintiffs" side."

For averting any confusion, it may be noted that the land [beyond the agreement] as encroached by the defendant- respondent has been, in particular, shown in the Schedule-D. For purpose of reference, the Schedule-D is, as a whole, extracted from the plaint which is as under :

"SCHEDULE "D" LAND

(Part and parcel of Schedule "B" land of the plaintiffs)

Schedule of the Suit land

Within District South Tripura, Sub-Division- Udaipur, Sub-Registry Office-Udaipur, Mouja- Udaipur Town, Tahashil-Radhakishorepur, Revenue Circle-Udaipur, Khatian No.4917 (Hal), Sabek Plot No.1452, 1453(Part), Hal Plot No.3580 Land measuring 21" (twenty one feet) North-South wise and in length and (East-West wise in breadth i.e. 21" Sq.ft. bounded by-)

North :- New Town Road South :- Narayan Shil & Others

East :- Legal heirs of Badal Majumder and Sushen Saha

West :- Mahamaya Roy Karmakar.

Within this boundary land measuring 12.25 Sq.ft."

The said judgment dated 08.03.2013 was challenged by the defendant-respondent in the appeal filed under Section 96 of the CPC being Title Appeal No.06 of 2013.

In the appeal, the basic ground of objection that was taken is that for mutual interest, the said agreement was entered into. According to the defendant-respondent it was clearly provided in the agreement that the wall of the building will be constructed and be erected on the land of the plaintiffs at the expenses of the defendants and in lieu thereof the plaintiffs will use the wall perpetually. If the defendant used the excess land for construction of the wall, then the plaintiff might seek compensation. According to the defendant-respondent, the trial court has failed to take into consideration those aspects and as consequence, the finding that has been returned is grossly perverse. In short, the defendant- respondent has questioned the decree of recovery of the land described in the Schedule-D of the plaint. However, in the memorandum of appeal, it has been clearly stated as follows :

"Learned trial Court ought to have dismissed the suit by giving relief that the defendant has the right of perpetual user of the land and the wall, and excess land then the stipulated area, the plaintiffs are only entitled to compensation and nothing more."

[Para-10 of the memorandum of appeal in the first appellate court].

This plea has been repeatedly stated in the said memorandum of appeal. That apart, in the memorandum of appeal it has been stated as follows :

"15. For that the defendant-appellant by registered sale deed no. 1-2625 dated 16.11.90 purchased 7 x 14 cubits (10.5 x 21" feet) commercial land from Badal Ch. Majumder and got the possession of his purchased land on the even date and accordingly the defendant constructed temporary shop house and started his business therein. The plaintiffs and defendant enter into a registered agreement on 30.08.95 and as per agreement the defendant raised/construction his shop building in his land will full consent and active cooperation of the plaintiffs upto roof top and in the year 2000 the defendant started constriction of roof then the plaintiffs for no reason raised objection and obstruction for which roofing work could not be completed. Thereafter the defendant filed civil suit no.T.S.02/2003 in the Court of Ld. Civil Judge (Junior Division), Udaipur, South Tripura seeking declaration of right, title and interest on the land over which the building wall was constructed by the defendant. During trial survey commissioner was appointed and report shows that the defendant encroached 7" (seven inches) land of the plaintiffs and as per agreement between the plaintiffs and defendant the plaintiffs are entitled compensation only for such user of land of plaintiffs land by the defendant."

[Emphasis added]

Be it noted that in the written statement, such statement was not made. What has been stated by the defendant- respondent is that the plaintiffs did not raise such plea in the written statement filed by them in Title Suit 02 of 2003. Moreover even they did not raise any counter-claim in respect of the said suit. The said first appeal was partly allowed by the judgment dated 28.03.2014 by returning the finding as follows:

"In view of my above findings over the two points, the appeal is allowed partly. Judgment and decree passed by the learned court below is confirmed to the extent of declaration of title and recovery of possession of the „D" schedule land measuring 7 inches x 21 feet, but the direction in respect of payment of compensation of Rs.50,000/- to the appellant, is set aside. Appellant is directed to demolish the boundary wall in 7 inches x 21 feet area and hand over vacant possession to the plaintiff-respondents."

The said finding has its root in appreciation of the evidence carried out by the first appellate court. The first appellate court has observed that there is no evidence to support that for improper construction of the wall by encroaching the land of the plaintiff-appellants, they suffered loss of Rs.5,00,000/-. In the plaint, as mentioned in the judgment dated 28.03.2014, it has mentioned that the financial loss occurred as the plaintiff could not complete his eight dokan viti in the ground floor and they could not earn revenue as they could not let those on shops. Such loss is wholly imaginary, inasmuch as it was only the projection that the plaintiff would have earned revenue for construction of eight dokan vitis. Therefore, no compensation is entitled to the plaintiff- appellants.

Mr. N. Majumder, learned counsel appearing for the plaintiff-appellants has stated that illegal encroachment by itself causes financial damage. That apart, the plan of construction of the building has been admitted by the defendant in the said agreement (Exbt.7). In the agreement, it has been clearly laid down that the said common wall as agreed was to be constructed by the defendant-respondent on including the land that has been left by the plaintiff-appellants. The plaintiff-appellants were entitled to carry out the construction by using the common wall without constructing any wall on that side. Therefore, the loss is not imaginary. For illegal act of the defendant-respondent the said loss has been caused and as such, there was no bar in filing the separate suit notwithstanding the fact that the plaintiff-appellant being the defendant in the suit being Title Suit 02 of 2003 did not file any counter-affidavit. Order 8 Rule 6A of the CPC provides that the defendant in a suit "may" in addition to his right of pleading may file the counter affidavit. If such counter affidavit is filed that shall be treated as a plaint in the suit.

On the question of assessing the damage that the plaintiff-appellants has suffered for breach of contract/agreement, the compensation for damage caused by the breach of contract/agreement can be assessed under Section 73 of the Indian Contract Act. Section 73 of the Indian Contract Act reads as under:

"73. Compensation for loss or damage caused by breach of contract.-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. -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. Compensation for failure to discharge obligation resembling those created by contract.-When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. -When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract."

Explanation.-In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account."

Regarding the method of assessing the damage Mr. Majumder, learned counsel has relied on few decisions of the apex court. In S.M. Hasan, S.T.O. Jhansi and another versus M/s New Gramophone House, Jhansi reported in (1976) 4 SCC 854, the apex court validated "reasonable guess". The best judgment assessment in the tax-domain is one of the well known principles. It has been observed in S.M. Hasan(supra) that in case, the condition for a best judgment assessment is present that can be adopted inasmuch as the best judgment assessment is not based on speculative or fanciful grounds but on reasonable guess.

In another judgment in MSK Projects India (JV) Limited versus State of Rajasthan and another reported in (2011) 10 SCC 573 the apex court had the occasion to observe as follows :

In common parlance, "reimbursement" means and implies restoration of an equivalent for something paid or expanded. Similarly, "Compensation" means anything given to make the equivalent. (See: State of Gujarat v. Shantilal Mangaldas and Ors. AIR 1969 SC 634; Tata Iron and Steel Co. Ltd. v. Union of India and Ors. AIR 2000 SC 3706; Ghaziabad Development Authority (Supra); and H.U.D.A v. Raj Singh Rana, (Supra). However, in Dwaraka Das v. State of Madhya Pradesh and Anr. AIR 1999 SC 1031, it was held that a claim by a contractor for recovery of amount as damages as expected profit out of contract cannot be disallowed on ground that there was no proof that he suffered actual loss to the extent of amount claimed on account of breach of contract.

In A.T. Brij Paul Singh and Ors. v. State of Gujarat (1984) 4 SCC 59 : AIR 1984 SC 1703, while interpreting the provisions of Section 73 of the Indian Contract Act, 1972, this Court held that damages can be claimed by a contractor where the government is proved to have committed breach by improperly rescinding the contract and for estimating the amount of damages, court should make a broad evaluation instead of going into minute details. It was specifically held that where in the works contract, the party entrusting the work committed breach of contract, the contractor is entitled to claim the damages for loss of profit which he expected to earn by undertaking the works contract. Claim of expected profits is legally admissible on proof of the breach of contract by the erring party. It was further observed that : (SCC pp.64-65, para 10)

"10 what would be the measure of profit would depend upon facts and circumstances of each case. But that there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid.

(Emphasis added)"

Mr. N. Majumder, learned counsel appearing for the appellants has further contended that damages, as expected profit, out of contract cannot be disallowed on the pretext that there was no sufficient proof that the person suffered actual loss to the extent of the amount as claimed on account of breach of contract.

From the other side, Mr. S. Lodh, learned counsel appearing for the respondent has raised two-pronged objections :

(i) that the plaintiff-appellants did not take any reasonable step to mitigate the loss consequent upon the breach. Thus, the plaintiff appellants are debarred to claim any part of the said damage, which was due but for negligence as no step was taken to mitigate, that part of the damage cannot be recovered. In this respect a decision of the apex court in Murlidhar Chiranjilal versus Harishchandra Dwarkadas and Others reported in AIR 1962 SC 366 where it has been held as under :

"9. The two principles on which damages in such cases are calculated are well-settled. The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed; but this principles is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps : (British Westinghouse Electric and Manufacturing Company Limited v. Underground Electric Railways Company of London [1912] A.C. 673."

[Emphasis added]

Mr. Lodh, learned counsel has emphatically submitted that there was no step for mitigating the damage. The other objection (ii) as raised by the respondent-appellant is that the suit is barred by Article 55 of the Schedule to the Limitation Act, 1963. Besides the element of perpetuity incurring loss, Section 55 itself provides the response that where the breach is continuing the cause of action would only start from the point where the breach ceases. Article 55 of the Limitation Act is reproduced for purpose of reference hereunder :

For compensation for the breach of any contract, express or implied not herein specially provided for.

Three years.

When the contract is broken or (where there are successive breaches) when the breach in respect of which the suit is instituted occurs or (where the breach is continuing) when it ceases.

Therefore, it is clear that cause of action accrues for compensation for the breach of any conduct, express or implied, from the day when the contract is broken or there are successive breaches when the breach in respect of which the suit is instituted, occurs or where the breach is continuing, when it ceases.

The plaintiff appellants have pleaded that the damage was in perpetuity. When in the suit [T.S. 02 of 2003] filed by the defendent-respondent it had been clearly observed that the damage was caused by not taking action in conformity to the contract and by deferment of the construction which was to be carried out by the plaintiff-appellants depending on the construction of the said wall.

Having appreciated the rival contentions as projected by the counsel for the parties, the questions those emerged to be answered in this appeal are :

(a) Whether any contract has been breached by the defendant- respondent by causing damage by non performance or by effect?

(b) Whether the damage is quantifiable in terms of Section 73 of the Indian Contract Act, 1872?

The breach of contract by encroaching the land of the plaintiff appellants is well established in the evidence and admitted by the defendant-respondent. But except the non- performance by the defendant-respondent in conformity to the said agreement (Exbt.7), there is no physical evidence for assessing the damage that the plaintiff-appellants have suffered. But the action of the defendant-respondent of encroaching the excess amount, as detailed in the Schedule-D [reproduced] it can reasonable inferred that the defendant-respondent has suffered loss on failing to generate revenue from the proposed shops and also for escalation of the materials. But the former one has not been pleaded. Thus, except the damage from the loss of revenue there is no other pleading. When this court had categorically asked Mr. Majumder, learned counsel what would be the rental value of the entire shop premises he had candidly submitted that no such pleadings or evidence is available. Even he has admitted that there was no mitigating action. Thus, this court think it to be prudent to give three years damage taking the best judgment method and adopting the rental value minimally at Rs.3000/- per month. Thus, the total compensation payable would be Rs.1,08,000/-[3000 x 12] x 3 . The said amount was payable to the plaintiff on 20.03.2012.

It is to be noted that since the plaintiff-appellants did not file any appeal against the determination of the quantum of compensation by the trial court, the amount of compensation shall be restricted to Rs.50,000.00/- (fifty thousand). The plaintiff- appellants are estopped to challenge the quantum. As the quantum has to be fixed on the day of filing of the suit i.e. 20.03.2012 as natural corollary to preserve the value, amount shall carry interest at 6% per annum from 20.03.2012 till payment.

Since the defendant-respondent has not challenged the finding of the first appellate court, there is nothing in dispute besides the question of quantum of compensation. In this appeal, in respect of the content of the agreement (Exbt.7) vis-a-vis the construction of the common wall, the space encroached by the defendant-respondent by breach of the contract and the right, title and interest of the plaintiff-respondent over the Schedule-D land have not been questioned by either of the parties. For that reason, no discussion, barring some scanty reference, has been made.

In the result, the appeal stands allowed. The impugned judgment dated 28.03.2014 is set aside in terms of the above.

Prepare the decree accordingly. Send down the LCRs.