Karnataka High Court
K.P Poulose vs K U John on 26 November, 2010
Author: Anand Byrareddy
Bench: Anand Byrareddy
IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 26"' DAY OF NOVEMBER_;,: 15;" . BEFORE, THE HON'BLE MR. JUSTXCE ANAND EYRAREDDRYE REGULAR SECOND ARREAL l\TO,__ 2334,DE2a08si BETWEEN: A A K.P. Poulose, -. V A S/0 Kl. Pavu, _ - . ., Aged about :-16 'years, 2: Residing Badagabylu miage,' , N.R.~P1'11aA 577-134». A . ..Appel1ant (By M/s M. Rambhat & Sreepada As s0ciate_s,ll Advoc afie} V g " Sig Ufiianan about 66 years, Residing at Echikere Village, a Pura Talk -- 577 134. 2. H. Laxminarayana Rao S/0 Hanumanthappa, Aged about 56 years, Residing at N0.629, E K.M. Road, Kadur, Chikmagalur District -- 577 134. ...Respondents
(By Shri. DR. Basava-rajappa, Advocate r-for Caveator/Respondent No.1, Respondent No.2 Served): _ This Regular Second Appeal is filed under-r4SectioTnfl--r ' of Code of Civil Procedure, 1908, against the ._and" ., decree dated 21.08.2008 passed in."Rl.A;l\lo'...3112007, or1r~.thelg file of the Civil Judge (Sr.Dn) & Principaa:l--i' JMFC,"'Ta'ri_l<ere,=_gA dismissing the appeal and conf1rrn.ing*__the judgment --and decree dated 31.07.2007 passed-._in O'.'S.No.3:3!_2'00zi3.-..on_.3the file of the Civil Judge (Jr.Dn) and.VJl'v'lFC, N..R;Pu[ra. This Regular Second 1. onffolri Hearing this day, the Court delivered'the_VfolZowiri_g;V}= _ iiéa'raiirhe ¢E;§1ins§riar?;>r thehfappellant.
2..__The appellant'*""the defendant before the trial cot;1rt'in a suit for recovery of money. It was the case of the . plaintiffs . they had entered into an agreement to standing timber in land bearing survey #Pl, measuring about 3 acres and land in survey . :no';_«l59/P2 measuring about 2 acres. The defendant claimed as the owner of the land and that the first plaintiff was authorised and empowered by the second plaintiff to prefer E the suit. The agreement was entered into on 8.8.2002 and it was agreed that 42 jungle wood trees and 1?. beete wood (rosewood) trees and 35 fire wood trees would be total consideration of Rs.70,000/--. An advance ' Rs.l5,000/-- was received in cash,"on"the_ exec:.1tion of-thexfig agreement. The balance amount be 'afteir'=.4thev"* felling of standing timber and atlterfilobtaining from the competent {raIV1Vé1:@.tatiOn of the same. "V H 9 i It tfhatithedddplaintiffs undertook the and sanction from the competenpt' 'incurred much expenditure in processing the a prelude to granting such permits by » Dthe competent authorities namely, the revenue and forest " .autho1'ities, the land was required to be surveyed to ensure thatthe; trees that were proposed to be cut and removed were r the boundary of the land mentioned. It was the case of the plaintiffs that such survey having been conducted, it was found by the authorities that the major portion of the 5 trees listed to be cut and removed were outside the boundary of the land mentioned in the sale agreement. When this was brought to the attention of the plaintiffs and when the'yL:"w.ereV informed that the permits could not be granted 2 V' gross infirmity, the plaintiffs opined that the failed and therefore, had issued a 'notice to lidefendantii' calling upon the defendant amount received as there Wagbflélilureip .vitl1e_'feo1atract claimed damages in asarn of Thi€s«'xva.sV the and it was urged on plaintiffs had not taken any stepyslto permits from the competent au}€§hoi'ities and was only on an imaginary ground that the » :v'trees_,:i11.pfac't, were not available within the land specified " .un~deri A itheiA'iI=.Vagreement and that the defendant had surreptitiously cut and removed trees that the plaintiff was . _seeking to lay claim. and therefore, there was no basis for the suit in the absence of material evidence to demonstrate that the plaintiffs had discovered that the trees agreed to be sold % were never existent in the land identified in the agreement. in the absence of such material, the plaintiffs' claim. could not be considered at all. On the basis of those pleadings, the court held that the payment of the advance V' and further that the plaintiff was justified' in the money and as there was material evidence tpo..'dernonstratei i that the standing timber agreed eitistent in the identified land elaim for damages was 'opined that the plaintiffs forth to the extent of in appeal by the appellVantV_p4'andl court having in turn affgrrned the and decree of the trial court, the a pjgpreseatviappéaiis filed.
substantial questions of law framed at the ~ stageiof admission of this appeal are follows :
"l. Whether the judgments of the courts below decreeing the suit filed by the respondent / é plaintiff for damages is perverse as being without any basis and on account of misreading of the evidence on record'?
2. Whether the finding of the courts below respondent / plaintiff had performed his it the obligations under the agree.r_nentjil3§t.P;..lv» not supported by evidence?
3. Whether the courts belowiiiiare' ju_stified.iin the decree respcyifidefit / plaintiff without the actual daInag*eiiii_i_ 273 74 of the mayaaaailaal» 1 'The'leariied for the appellant would submit that' 'there was nomaterial produced before the trial court or the.__1ower appellate court to demonstrate that the i e justified in terminating the contract and seekirig refund of the advance money paid in the absence of " _ material to show that the standing timber which was agreed to be sold was non existent. It is the mere assertion of the plaintiffs that they were informed by the competent % authorities at the time of alleged survey conducted that there was no standing timber as agreed in the agreement within the land identified under the agreement and in the ab_sen"c.e_iof which permits could not be granted if such treesyverey ~ the land identified by survey numberu11de:f the:iag1fee1ri.entf,A it In the absence of such material to h'old"that theV_~co11tracit*:.vvas"~ lawfully terminated cannot be accepted. iSecondly,.llvtheiVclaim for damages was not 's.u_ibVstantiat§«::i(1i" _ia'n.y documents. The plaintiffs therefore wereuleiititledg in terms of Sections _7.3l'--. ii:""Co11tract Act, 1872 (herei11after"5referi*ed .t'o~..i_'as _ '-- the Act' for brevity) is a substantial question Aofy_i'a«x.vi."
can beseen from the reasoning of the trial court V i'[fllltii.:*'lOWf3I' appellate court, the damages has been a\var£ied~.off--hand while the courts below have held that the V " damages claimed at Rs.40,000/~ is on the higher side and the ipliaintiff would be en_titled to Rs.20,000/-- atleast which is a reasonable amount. This according to the learned counsel for S the appellant is not the manner in which damages could be awarded in the absence of actual proof of damages» or likelihood of such injury being caused which compensated in terms of money. The1'efore,V_ii_'the' -cavalier"
manner in which damages has b_eeng..,ajwaided.i'c-annot .i sustained and the substantial'ii_qu.estion'of law *fran1ed.Vin..3this regard would have to be __a.ns'wered in "favour? of the defendants.
6. Whilethe 1eamed:"counse_li for lirst respondent would suhrrfit ..that..';'-_in'so:£ar thelcontr'act is concerned, the respoinsibifllity permits and other sanctions was placed-on" the'v.pliaintifi;s in terms of the agreement itself. 'i V' A The deferidant seek'i'ng to contend that there was no material itproofiTto..vesta.blish that the trees were non-existent in the identified-, :'ro ert is an incorrect statement. It is onl after A p p y y i * ascertaining that the trees were non--existent when the land was surveyed that a notice was issued. In fact, the legal notice issued to the defendant had categorically stated this 3 circumstance in seeking to terminate the agreement in laying claim to damages. The plaintiffs have incurred expenses over and above the amount claimed and as much of "c.a'nno-tv be accounted for, the plaintiff had restricted 1 V' Rs.40,000/-- and it is therefore the plaintiffs who approached this court by way of a'---second appeial seeking V' enhanced damages. HoweveiifingvView not being in a position i entire claim for damages has nQt'd_Qne below having held that of Rs.20,000/--
was of the facts and circurnstancesi a.nd:'itiie4"reasonableness of the claim, which cyannotsi be saidatoibe unnatural or without any basis. It was a » :V'coinmercia.\1'«-..{transaction whereby there is a direct and " .ii1:mediate':_losis to the plaintiffs, which the courts below have taken note of in awarding the reasonable amount of damages. if =§fIefi;1ce, the substantial question of law that whether the damages were in accordance with Sections 73 and 74 of the Act would have to be answered in favour of the respondent. § 10 Insofar as the first substantial question of law is concerned, the plaintiffs have merely claimed that theyhad suffered loss of Rs.40,0{)0/~ by virtue of breach by the defendant. From a reading of fiection :'th%C'V'V;i:A:sC'tA, it is does provide for compensation for lossfordamage_lc9.uSé§*'_b'3rc_' breach of contract. It lays d,own that when' «a "c;o'ntra;it is * is broken, the party who"suffers*by--such-breach'"is entitled to receive, from the party Avvhoihasgibroken the contract, cornpensatioii anyitloss caused to him thereby, which naturally;"aros'e,inthe usual course of things from such breach, 'or wh1t%h.,,,t1;.e' knew, when they made the contractltollbe likely..Vtio'«result from the breach of it. Such ' V' eornpensation is 'n'ot*'t'o be given for any remote and indirect 3 .,lolss ., sustained by reason of the breach. Section 74 lays the compensation for breach of contract where is .penalty is stipulated for. In the instant case under the agreement, the penalty stipulated was that the party in breach would have to meet the expenses incurred for obtaining S necessary permits and sanctions. The plaintiff having claimed damages to the extent of Rs.40,000/-- was therefore required to establish before the court that this was A consequence of the loss that he has suffered of V' incurred in obtaining sanctions and i'permits..;« .V:Froin"*the material on record, it is not disclosed thal1.l:any such expenditure has in fact been below have proceeded on a the while holding that vi4t_:"iS__' might have incurred catering that Rs.20,0o0/..
was expenditure. This can hardlybesaid 'requirement of establishing the damages that'th_eyhave incurred. On the other hand, it is »i that the plaintiffs having been placed on " notice A breach of agreement by issuance of a legal notice' has not denied or refuted the same. It is only by way in V. ofpleadings in the suit that the defendant has sought to deny that there was any breach of agreement, in any event, the defendant has not denied that he has had the benefit of the 3 12 advance price of Rs.l5,0()0/~ from the date of agreement which he is bound to refund. Since this is a commercial transaction, interest would be attracted on such which has been withheld by the defendant "
pendency of the suit and the present.'appea«l is; on record that the appellant has been idirectedijtoijde'pos;it"a sum of Rs.l5,000/-- before court. not preclude the respondent._..ii'Orri.iilaying' to interest on the said amount from the therefore be reasonable which the courts below H @5514 V annum. The respondent amount to offset the denial of the; award of 'da_rnagesi; which this court has deem it fit in the . 'light ofatlreireasoning aforesaid. ' while holding that the courts below were not justified in awarding damages without any basis on account of the alleged breach of the agreement, it would be just and reasonable to direct refund of the price paid by the 8 l3 respondent with interest at 10% per annum from the date of payment till the date of deposit before this court. Accordingly, the appeal stands disposed' V' answering the substantial question law framed to the award of damages in favour' of'--theV--appellantA. and Wlllilfiili directing that the amount of pay'able 'shall be paid within three months froinAti3Cla;y,tifa~i_livng~which the interest payable would_'oe__at 18"'/:5" till date of payment from the 'respondent shall take steps to seek withdrawal of the.i,5a_moiLiint i_n'depositiiyy'hich is said to be deposited in a nation21lised_lwithsiich interest as may have accrued o4nthe,same.'* ., _ V' V' ' Sdfm Iudge