Delhi District Court
National Thermal Power Corporation Ltd vs Abhinav Sudhendra on 8 August, 2022
IN THE COURT OF SHRI NAVJEET BUDHIRAJA
ADDITIONAL DISTRICT JUDGE - 03, SOUTH EAST DISTRICT,
SAKET COURTS, NEW DELHI
CS DJ No. 8805/16
In the matter of :
National Thermal Power Corporation Ltd.
(A Government of India Enterprise),
Registered office: NTPC Bhawan, Scope Complex-7,
Institutional Area, Lodhi Road, New Delhi.
Site Office: North Karanpura Super Thermal
Power Project, Tandwa, Chatra-825321 (Jharkhand)
(Through its Authorized Representative)
..... Plaintiff
Vs.
1. Abhinav Sudhendra,
S/o- Shri Ghanshyam Prasad Singh,
Ranger, Foresh Department.
2. Ghanshyam Prasad Singh,
S/o- Shri Jwala Prasad Singh,
Both R/o- Tiril, near Basant Vihar,
Kokar, Ranchi- 834009 (Jharkhand)
..... Defendants
Date of Institution : 20.02.2016
Date on which Judgment
reserved : 27.07.2022
Date of Judgment : 08.08.2022
Result : Dismissed
SUIT FOR RECOVERY OF A SUM OF RS. 4,59,310/- WITH
INTEREST PENDENTE LITE AND FUTURE INTEREST @ 18%
PER ANNUM
This is a suit on behalf of plaintiff National Thermal Power
Corporation Limited (herein after referred to as 'NTPC') for recovery of
Rs. 4,59,310/- along with pendente-lite interest and future interest @ 18%
1 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
p.a from the date of filing of suit till its actual realization with costs of the
suit against the defendants i.e Sh. Abhinav Sudhendra and his father Sh.
Ghanshyam Prasad Singh.
2. Briefly stated, as per plaint, plaintiff is a government of India
Enterprise having its registered as well as corporate office at NTPC
Bhawan, Scope Complex 7, Institutional Area, Lodhi Road, New Delhi-
110003. It has got regional offices as well as offices at its various project
site including at North Karanpura Super Thermal Power, Project, Tandwa,
Chatra-825321 (Jharkhand). The present suit is filed by Sh. Satish Chandra
Lal, Law Officer of the plaintiff, who is authorized to represent the
plaintiff vide authorization letter dated 18.08.2018. It is averred that the
defendant no.1 was Executive Trainee (ET) with the plaintiff who joined
the corporate office at Delhi on 04.08.2008 and had furnished bond dated
04.08.2008 for the purpose of completing the training and serving the
plaintiff for the stipulated period of three years thereafter and his
appointment letter was issued on 26.06.2008. It is further averred that
defendant no.2 is the father of the defendant no.1 who had stood surety
towards performance of the bond dated 04.08.2018 for defendant no.1, in
the event there was any breach by defendant no.1 and was jointly and
severally liable.
3. It is further the case of plaintiff that as per the terms of appointment
of defendant no.1, he was sent to Korba for his initial training and as per
the requirement of appointment, he submitted bond dated 04.08.2008 to
the plaintiff with his undertaking to complete the training and thereafter to
serve the plaintiff for a period of three years failing which the defendant
no.1 and his surety i.e. defendant no.2 were made liable to pay
2 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
Rs.2,50,000/- (Rupees Two Lacs Fifty Thousand Only) to the plaintiff
jointly and severally.
4. Defendant no.1 while undergoing training at Kobra, Chhatishgarh
was deputed to North Karanpura Super Thermal Power Project, Tandwa,
Chatra-825321 wherein he had to report on 27.04.2009. However, he
applied for leave on ground of illness and reported to the above said
project on 18.05.2009. He once again applied for Earned Leave (EL) from
19.05.2009 to 08.06.2009 which was granted to him. Defendant no.1 was
suppose to report to Karanpura Project on 09.06.2009, however, he failed
to do so.
5. It is further asserted that plaintiff vide letter dated 03.07.2009
addressed to defendant no.1 called upon him to join the service
immediately and he was informed that if the absence exceeded the
prescribed 90 days period, the same shall make him liable to lose lien on
the post held by him. Defendant no.1 did not comply with the said
instructions and accordingly vide office order dated 23.10.2019, his name
was struck off from the rolls of the plaintiff with immediate effect. He was
directed to take his final payments after payment of bond money in respect
of service bond executed by him. Further, defendant no.1 joined the
plaintiff on 04.08.2018 and his date of separation is 23.10.2009.
6. It is further the case that the liability of defendant no. 1 towards
training cost and accommodation charges are as follows:-
• Period of Stay at PMI/Project - 52 Weeks = 365 days
• Training Cost : Rs. 1,39,700/-
3 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
• Accommodation charges : Rs. 2,00,750/-
• Total : Rs. 3,40,450/-
7. Further, defendant no.1 joined the plaintiff on 04.08.2018 and his
date of separation is 23.10.2009. Defendant no.1 did not respond back and
later on, it was found by Plaintiff company that defendant no.1 qualified in
the Indian Engineering Service Exam-2009 conducted by UPSC and
thereafter the project office at Karanpura accordingly recommended
recovery of Rs.3,05,697/- from defendant no.1 vide inter office memo
dated 09.12.2021, which recovery was towards the bond amount and the
negative pay.
8. It is further stated that thereafter the Power Management Institute of
the plaintiff vide inter office memo dated 12.12.2011 directed that as the
resignation or striking off name has been done by the respective project
HR; settling of dues has to be done from their end. Plaintiff vide letter
dated 22.05.2012 and reminder dated 04.06.2012 once again requested the
defendant no.1 for settlement of final dues. Plaintiff later on learnt that the
defendant no.1 who joined Indian Railways and was posted at Ranchi
Division of South Eastern Railways and thereafter a request was made by
the plaintiff vide letter dated 29.06.2012 to the Divisional Personal Officer
of South Eastern Railway (SER) to advise the defendant no.1 for
settlement of outstanding dues against the plaintiff at the earliest.
9. Further, vide letter dated 06.08.2012, SER intimated the plaintiff
that the defendant no.1 after completion of training joined on 11.06.2012
and was posted as AMM (Prob) and has proceeded on sanctioned Extra
4 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
Ordinary Leave (EOL) for a period of 05 months from 1.06.2012 to
10.11.2012 for preparation of Civil Services (Main) Examination.
Defendant no.1 has not been posted to the working post.
10. Further, vide letter dated 19.09.2012, the plaintiff requested the SER
for recovery of Rs.3,05,697/- from the defendant no.1. The same request
was reiterated on 23.11.2012. SER accordingly intimated the APO
(Stores)/KGP to look into the matter vide letter dated 30.11.2012. The
plaintiff once again made the request to SER vide letter dated 12.12.2012
and a reminder was sent on 05.02.2013. In response to that, SER intimated
the plaintiff to make direct correspondence with APO under intimation to
its office vide letter dated 08.02.2013.
11. Further, vide letter dated 07.02.2013 addressed to the Dy. Manager
(Finance), NTPC, North Karanpura, the defendant no.1 replied to the letter
dated 23.11.2012 of the plaintiff by admitting that there has been some
procedural lapse on his part and requested the plaintiff to waive of the
bond amount and further stated to pay the rest of the amount to clear dues
reflected against him.
12. Vide letter dated 20.02.2013 addressed to the Director (HR) of the
plaintiff at corporate office, New Delhi, the defendant no. 1 intimated that
he had worked in NTPC from 04.08.2018 to 26.10.2009 and thereafter, is
working for Indian Railways from 17.12.2010 and as he served the
Government of India in different capacities and is willing to serve
thereafter as well, the bond amount should not be recovered from him
even though he had committed some procedural lapses.
5 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
13. It is further stated in the plaint that SER vide letter dated 13.03.2013
and 16.04.2013 directed its office at APO (Stores)/KGP to refer to the
matter and intimate its office regarding recovery to be made from
defendant no.1. Defendant no.1 while responding to the query of the SER
intimated vide letter dated 30.04.2013 that even though he has submitted a
bond to the plaintiff and he has not violated any condition and therefore is
not liable.
14. The defendants contested the suit by filing a written statement
containing some preliminary objections that the the present suit has been
filed beyond the period of limitation which had started from the letter
dated 23.10.2009 when the name of the defendant no. 1 was stated to be
struck off from the rolls of the plaintiff and the present suit having been
instituted on 20.02.2016 is barred by the limitation, that this court lacks
territorial jurisdiction to entertain the present suit, that the suit suffers from
non-joinder of parties as South Eastern Railways with whom the
communication was established by plaintiff vide letter dated 28.05.2013
has not been impleaded as a party to the suit. Apart from these objections,
it is also stated that the terms and conditions of the appointment order and
the bond are unconscionable, against public policy, fair play, exploitative
in nature and cannot be sustained. Further, after the termination of
defendant no. 1, plaintiff cannot enforce the conditions of the bond and
denied his liability to pay any amount.
15. Plaintiff filed the rejoinder wherein it stated that the cause of action
arose on 30.04.2013 when the defendant no.1 denied his liability to pay
6 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
the bond amount. It further arose on 28.05.2013 when the South Eastern
Railway communicated the letter dated 30.04.2013 of the defendant no. 1
to the plaintiff. The cause of action further arose on 21.04.2014 when the
plaintiff made a request to the defendant no. 1 to settle the account. The
cause of action further arose on 06.08.2014, 05.02.2015 and 24.12.2015
when similar request was made to the defendants. The cause of action is
continuous one and recurring in favour of the plaintiff and against the
defendants. Further, plaintiff demurred the averments made in the written
statement and replicated its submissions made in the plaint.
16. After hearing the parties and going through the pleadings, a
preliminary issue was framed " whether the present suit is barred by the
limitation", which issue was prima facie dwelt upon vide order dated
14.11.2017 by the then presiding officer by observing that in view of letter
of defendant no. 1 dated 20.02.2013, prima facie the suit is within the
limitation upon relying on Section 18 of the Limitation Act. Thereafter, the
matter came to be listed for framing of other issues, wherein along side the
issue of limitation, other issues were also framed which are as under:
Issue no. 1 :- Whether the suit of the plaintiff is barred by limitation?
OPD
Issue no. 2 :- Whether the plaintiff is entitled to a decree of suit
amount as claimed? OPP
Issue no. 3 :- Whether the plaintiff is entitled for interest as claimed?
OPP
17. Plaintiff was then called upon to lead its evidence. Sh. Kundan
Kishore was examined as PW-1 vide his affidavit Ex. PW-1/A and who
7 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
relied upon documents i.e Ex.PW-1/1 to Ex.PW-1/24 . This witness was
cross-examined on behalf of defendants. The evidence of the plaintiff side
was closed vide order dated 22.10.2021.
18. Defendants got examined defendant no. 1 as DW-1 vide his
affidavit Ex.DW-1/A, who was also cross-examined on behalf of plaintiff.
Thereafter, defendant's evidence stood closed, propelling the case to the
stage of final arguments.
19. Final arguments were addressed on behalf of plaintiff by ld. Counsel
Sh. Shree Prakash Sinha and Sh. Rakesh Mishra and on behalf of
defendants by Sh. Ranjit Sharma.
20. Ld. Counsel for the plaintiff broached the arguments by taking the
court through various exhibits i.e the appointment letter of the defendant
no. 1, terms and conditions of the employment and finally the bond which
was executed by defendant no. 1. Ld. Counsel further highlighted that vide
letter dated 23.10.2009, the name of defendant no. 1 was struck off from
the rolls of the plaintiff company for his failing to join back and he was
called upon to settle his dues and pay the bond amount. Ld. Counsel
further urged that the letter dated 20.02.2013 is in the nature of an
acknowledgement under Section 18 of Limitation Act on behalf of
defendant no. 1. Ld. Counsel for the plaintiff has referred to the judgment
of Supreme Court in Construction & Design Services Vs. DDA, (2015)
14 SCC 263.
21. In contrast, ld. Counsel for the defendant strenuously put forth his
8 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
stance that the present suit is barred by limitation as the cause of action
arose on 23.10.2009 when defendant no. 1 was stated to be terminated
from the services of plaintiff and service of subsequent letters could not
have revived the cause of action which had expired after three years from
23.10.2009. It is further argued that the acknowledgement is also not valid
being not made before the expiry of the said period of three years. Further,
he fulminated against the plaintiff that the terms and conditions of the
employment of defendant no. 1 and the bond were unconscionable and
against public policy. Ld. Counsel for defendant has relied upon
Superintendence Company Of India Vs. Shri Krishan Murgai,
21.03.1980, Supreme Court and Ashwani Satish Bhatt Vs. Shri Jeevan
Diwakar, 05.02.1999, Bombay High Court.
22. Having heard both the ld. Counsels and gone through the records of
the case, my issue wise finding is as under:
23. Issue no. 1 :- Whether the suit of the plaintiff is barred by
limitation? OPD
23.1 The burden to prove this issue was upon defendants. But on perusal
of the order sheets of the present case file, it is noted that vide order dated
15.12.2016, the then ld. Presiding officer had framed the issue of
limitation as a preliminary issue and posted the matter for arguments on
the said issue. Then, perusal of order sheet dated 14.11.2017 reveals that
the then ld. Presiding officer had prima facie decided the issue with the
following observations:
• "Part arguments on the issue of limitation heard on the side of
plaintiff. In view of letter of defendant no. 1dated 20.02.2013, prima facie,
9 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
the suit is within limitation upon relying on Section 18 of the Limitation
Act."
23.2 The matter was then posted for framing of other issues. It appears
that on 14.11.2017, when the finding was given on the preliminary issue, it
was a prima facie view of the then ld. Presiding officer that in view of the
letter of defendant no. 1 dated 20.02.2013, the suit was found to be within
the limitation period, but since the issue of limitation is the mixed question
of law and fact, therefore, evidence was warranted. Thus, now this issue
has to be finally decided on the basis of pleadings of the parties and
evidence led thereon.
23.3 When the issue of limitation was flagged on behalf of the defendants
in the written statement on the premise that the cause of action arose by
way of letter dated 23.10.2009 when the plaintiff struck off the name of
defendant no. 1 from its rolls and defendant no. 1 was called upon to pay
the bond amount, in the replication on behalf of plaintiff it was claimed
that cause of action arose on 20.02.2013 when defendant no. 1 in his letter
admitted of the procedural lapses. Further, it arose on 30.04.2013 when the
defendant no. 1 denied his liability to pay the bond amount. It further arose
on 28.05.2013 when the South Eastern Railway communicated the letter
dated 30.04.2013 of the defendant no. 1 to the plaintiff. The cause of
action further arose on 21.04.2014 when the plaintiff made a request to the
defendant no. 1 to settle the account. The cause of action further arose on
06.08.2014, 05.02.2015 and 24.12.2015 when similar request was made to
the defendants. The cause of action is continuous one and recurring in
favour of the plaintiff and against the defendants.
10 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
23.4 I do not concur with the submissions on behalf of plaintiff that the
cause of action is a recurring one in favour of the plaintiff and against the
defendants. It is manifest from Article 30, Schedule of the Limitation Act,
1963 that the limitation period would start when the condition of the bond
is broken. The letter dated 23.10.2009 Ex.PW-1/5 lucidly demonstrates
that in accordance with the NTPC Service Rules, the name of defendant
no. 1 was struck off with immediate effect as he had unauthorizedly
absented himself since 08.06.2009 and he was called upon to collect his
final payment after payment of bond money. PW-1 also affirmed these
facts in his cross-examination. In my opinion, the cause of action arose
when the name of defendant no. 1 was struck off from the rolls of plaintiff
company and the suit ought to have been filed within the period of three
years from that date, but it came to be filed on 20.02.2016. The issuance
of successive letters to defendant no. 1 would not extend the cause of
action. Further, though in the replication, plaintiff has not pleaded that by
way of acknowledgement under Section 18 of the Limitation Act, the
limitation period got extended, but during arguments, ld. counsel for the
plaintiff sought to allude to the said provision, but again, in the light of the
position emerged herein, when the cause of action arose on 23.10.2009,
the acknowledgement, if any, ought to have been within the expiry of
three years period, which is not the case herein. Thus, this issue is decided
against the plaintiff and in favour of the defendants, the suit being time
barred.
24. Issue no. 2 :- Whether the plaintiff is entitled to a decree of suit
amount as claimed? OPP
11 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
24.1 The burden to prove this issue was casted upon the plaintiff. PW-1
Sh. Kundan Kishore has spoken on the lines of the plaint. Before we
embark upon further discussion, let us jot down the facts in regard to
which there has been no expostulation on behalf of defendants :
(a) That defendant no.1 joined as executive trainee at the corporate
office of the plaintiff on 04.08.2008 against the employment letter issued
on 26.06.2008 Ex.PW-1/2.
(b) That defendant no.1 furnished a bond dated 04.08.2008 for the
purpose of completing the training and serving the plaintiff for a period of
three years thereafter Ex.PW-1/3.
(c) That defendant no. 2, who is the father of defendant no. 1 had stood
surety towards performance of the bond.
(d) That defendant no. 1 absented himself and his name was taken off
the record from the rolls of plaintiff vide letter dated 23.10.2009 Ex.PW-
1/5.
24.2 The controversy has narrowed down to the fact that whether for the
period i.e 04.08.2008 till 23.10.2009 that is the period of employment of
defendant no. 1 with the plaintiff company, is he liable to compensate the
plaintiff for the expenses incurred in his training etc. To better appreciate
this controversy, let us have a glance at the relevant terms and conditions
which would have a bearing on this issue. The employment letter of
defendant no.1 Ex.PW-1/2 contains the clauses with regard to his training
and final placement. Those clauses are reproduced as under:
"1.0 You will be required to undergo training for a period
of one year. The training programme is scheduled to
commence immediately after your joining NTPC. During
the training period, you may be deputed for training to
12 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
any of the NTPC projects/establishments or other
institutes as may be decided by the management.
2.0 On successful completion of one year training, your
final placement will be based on your performance
during the training as assessed periodically and you may
be posted at any of NTPC'S projects/Stations/
Offices/Establishments including Subsidiaries and JVCs
of NTPC, based on requirement."
24.3 Annexure I contains the terms and conditions of the appointment,
the relevant extract of various heads are also mentioned as under:
"1. You will undergo training for a period of one year
which may be extended at the discretion of the
management and will thereafter serve the company for a
period of three years. The decision of the management
regarding extension of training period or termination of
service in the event of unsatisfactory performance shall
be final and binding.
4. For this appointment you and your surety, who should
be a person of substantial means, will have to execute a
Service Agreement Bond on a Rs. 100/- Stamp Paper
(non-judicial) to complete the training and to remain in
the service of NTPC or at the discretion of NTPC
Management to serve any other department or
organization or Institution or enterprise of the Goverment
of India for at least three years after successful
completion of your training. In case you fail to complete
your training successfully and/or to serve the company
for the stipulated period of three years thereafter, you and
your surety shall jointly and severally compensate the
company for stipend/salary, joining expenses, TA/DA,
medical expenses etc. paid during the training period and
training expenses incurred by it on account of and in
connection with your training and this amount will be
recovered from you if you leave the organization within
the training/bond period. However, the total amount
recoverable under this clause shall not exceed rupees two
lakhs and fifty thousand for SC/ST/PWD candidates.
Further, you will be required to serve one month notice
on regularization after successful completion of
probation, or pay salary (notice pay) in lieu thereof in
addition to fulfilling the obligations stipulated in the
Service Agreement Bond/Rule of the company.
You shall not be released during your training period or
during the period of operation of Service Agreement
Bond for any employment elsewhere of for any study on
full-time basis requiring grant of study leave. You shall
not apply for employment elsewhere during your training
period or service period of three years thereafter, without
13 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
the prior permission of the NTPC management. In case
you have already applied and/or appeared in any such
test, interview etc. before joining the service of NTPC, in
the event of your selection you shall not join the new
organization, unless you have fully complied with the
terms and conditions of the Service Agreement Bond. It
may however, be mentioned that in case of employment
in Govt/PSU, the bond is transferable."
24.4 The bond executed by defendant no. 1 and defendant no. 2 as surety
Ex.PW-1/3 contains the relevant condition at point 7 which is as under :
"7. That if the trainee-employee fails to complete/his/her
training successfully/and or serve the company for the
stipulated period of three years thereafter, the trainee-
employee and the surety undertake that they shall jointly
and severally compensate the company for all the
expenses incurred by it on account of and in connection
with his/her training. The expenditure incurred by the
company on account of and in connection with of the
trainee-employee shall include the salary, TA etc. paid to
the trainee-employee during the training period, the cost
of supervision, overhead and other direct and indirect
expenses incurred by the company on the training. The
decision of the Chairman & Managing Director/General
Manager or an officer nominated by the Chairman &
Managing Director shall be final and binding as to the
total amount of expenditure incurred by the company on
account of and in connection with the training of the
trainee-employee. However, the total amount recoverable
under this clause shall not exceed Rs. 2,50,000/- (Rupees
Two Lakhs And Fifty Thousand Only). Further the
trainee-employee shall on the termination of his her
training/service by the company or on his/her leaving the
said training/service whenever it may happen shall
account for, pay and peacefully deliver to the company
all the stocks in trade, books of accounts, documents,
papers and effects then in his/her possession and custody
and belonging or relating to the company."
24.5 Before rendering any finding on the interpretation of various
clauses mentioned above, let us also lay down the law governing the
implication of execution of the bond which is in the nature of a contract.
Ld. Counsel for the defendant made a vehement argument that such
contracts are unconscionable and against public policy. But, the dictum of
the law is otherwise and it is not the case that all such contracts are
14 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
unconscionable and unenforceable. The Supreme Court of India in
Association of Medical Super Speciality Aspirants Vs. Union of India
& Ors, 2019 SCC Online 1055, held that service bonds cannot be
categorised as "forced labour" and a contract to serve Government for a
few years on reasonable terms cannot be described as one in restraint of
trade and is not violative of Section 27 of the Contract Act, 1872.
24.6 It is, thus, observed that as such service bonds are not illegal but
other facets of such bonds are also to be considered. The following
Judgment is worth noting. In M/s Sicpa India Ltd. v. Shri. Manas
Pratim Deb, date of decision 17.11.2011, the High Court of Delhi, it was
held as under :
"6. ...So far as the question regarding enforcibility of
these penalty clauses of the bonds are concerned, it is
appropriate to look into the legal position. There is no
doubt that these clauses are in the nature of the penalty
and Section 74 of the Contract Act in applicable. The
Hon'ble Supreme Court in case Maula Bux v. Union of
India 1969 (2) SCC 554 held that "if the forfeiture is of
the nature of penalty Section 74 applies. Where-under the
terms of contract the party in breach has undertaken to
pay a sum of money or to forfeit a sum of money which
he has already paid to the party complaining of a breach
of contract, the undertaking is of a nature of a penalty.
Ld. counsel for the defendant also referred to AIR 1963
AP 312 and AIR 1987 SC 1260. The gist of the
authorities cited by the Ld. Counsel for the defendant is
that while invoking the penalty clause as per Section 74
of the Indian Contract Act, it is not necessary to award
the compensation stipulated in the agreement rather a
reasonable compensation is to be awarded irrespective
fact whether the party invoking the clause has actually
suffered the damages or not...
7. In addition to the aforesaid reasoning, I may refer to
the three main judgments of the Supreme Court in this
regard being the cases of Fateh Chand v. Balkishan Dass,
AIR 1963 SC 1405, Maula Bux v. UOI, 1969 (2) SCC
554 and Union of India v. Raman Iron Foundry (1974) 2
SCC 231. As per the ratio these cases, clauses of
liquidated damages which are in the nature of penalty are
void and the liquidated damages are only the upper limit
15 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra &
Anr
of damages which are awarded once actual damages are
proved. This legal position applies when losses from the
breach of contract can otherwise be proved. Well losses
cannot be proved, then, of course the liquidated damages
specified can always be recovered vide Sir Chuni Lal v.
Mehta & Sons Ltd. v. Century Spinning and
Manufacturing Company Ltd. AIR 1962 SC 1314 (1) and
O.N.G.C. v. Saw Pipes Ltd., 2003 (5) SCC 705."
24.7 It is clear that in the aforementioned judgment, hon'ble Justice in
para 7 of the judgment referred to three main judgments of the Supreme
Court and concluded that the clauses of liquidated damages are in the
nature of penalty and are void and the liquidated damages are only the
upper limit which are awarded once actual damages are proved. This legal
position applies when losses from the breach of contract can otherwise be
proved.
24.8 Let us also have a glance at some of the other judgments containing
the discussion on the aspect of enforceability of employment bond. In the
judgment of High Court of Judicature at Bombay, Mr. Milind P. Mane v.
Godrej Infotech Ltd. & Ors, 16.01.2015, it was held as under:
"43. Insofar as the submission of Mr. Gupte, the learned
counsel for respondent no.1 that the claim made by
respondent no.1 under the said bond agreement was in the nature of liquidated damages and thus respondent no.1 though had referred to some expenditure incurred in providing training to the petitioner, respondent no.1 was not required to prove any such loss / damages alleged to have been suffered by respondent no.1 is concerned, in my view, there is no merit in the submission of the learned counsel. In my view, if the loss is capable of calculation and being proved, it cannot be construed as liquidated damages.
44. A perusal of the affidavit in lieu of examination in chief, filed by the witness examined by respondent no.1, clearly indicates that it was the deposition of the witness 16 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr that respondent no.1 had actually incurred expenditure of about Rs.2.00 lakhs in imparting the training to the petitioner. Though in the affidavit of evidence, the witness has categorically deposed that he was producing copies to show the expenses incurred by respondent no.1 in respect of the training, it is common ground that no such details were produced by the witness. In paragraphs 9 and 10 of the affidavit of evidence, the witness has referred to various heads under which respondent no.1 had alleged to have incurred the expenditure on the training of the petitioner. Since no documents were produced in support of such expenditure alleged to have been incurred, the learned arbitrator could not have awarded any amount of compensation, the same having not been proved. A perusal of such deposition itself indicates that the alleged loss was capable of calculation and proof. Since respondent no.1 itself has proceeded on the premise and has agreed to produce the details of such expenditure and the proof and having failed to produce the same, it cannot be allowed to urge that the said claim was in the nature of the liquidated damages and thus no loss actually suffered was required to be proved."
24.9 The golden thread of the afore-mentioned judgment is that if the loss is capable of calculation and being proved, it cannot be construed as liquidated damages. Further, it was also observed that when the company had agreed to produce the details of the expenditure and the proof and after having failed to produce the same, it cannot be allowed to urge that the said claim was in the nature of the liquidated damages and thus no loss actually suffered was required to be proved.
24.10 In the judgment of Madras High Court, Toshniwal Brothers (P) Ltd. v. Eswarprasad, E. And Others, date of decision 18.01.1996, it was held as under:
"20. I have carefully considered the submissions of the 17 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr learned counsel appearing on either side. The decision of the Division Bench of Calcutta High Court as also the decision ofthe Single Judge of the Punjab and Haryana High Court relied upon by the appellants, do not accord, in my view, with the ratio of the decisions of the Supreme Court referred to above. So far as the decision of the Division Bench of this Court in , is concerned, it merely turned on the exception to S. 74 and the decision in 1973 2 M.L.J. 361 (vide supra), which had the approval in this decision did not advert to the aspect of legal injury, the existence of which has been considered to be an essential prerequisite before saddling with liability even under S. 74 of the Indian Contract Act emphasised by the Supreme Court in and (vide supra), apparently on account of the fact that the fact situation presented in 1973 2 M.L.J. 361 and (vide supra), case proceeded on that hypothesis the existence of legal injury rendering it unnecessary to advert to the said aspect unlike in these cases before me which requires a definite consideration of the matter in the perspective and background of legal injury too. In my view, the decisions of the Apex Court referred to above would go to show in most unmistakable terms and force that what has been dispensed with under the provisions of S. 74 even in a case to which it applies is the proof of actual loss or damage, and it does not justify the award of compensation whether a legal injury has resulted in consequence of the breach or not since compensation is only awarded to make good the loss or damage which naturally arose in the usual course of things, or which the parties knew when they made the contract, to be likely to result from the breach. That being the position well settled and firmly fixed and declared by more than one decision of the Apex Court, it becomes necessary in each case for the Court concerned to consider as to whether a legal injury could be said to have resulted as a consequence of breach complained of in a case before the Court to justify the award of reasonable compensation or damages as estimated by the parties. Legal injury, in my view, could be safely presumed to have resulted in a case where the employer or the management concerned was shown to have either incurred any expenditure or involved itself into financial commitments to either give any special training either within the country or abroad or 18 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr in having conferred any special benefit or favour to the detriment of the claimant in favour of the violater involving monetary commitments, though an actual damage after the alleged violation or breach of the contract was shown to have separately resulted or not. To illustrate this aspect the claim which is the subject-matter of Second Appeal No. 1291 of 1987 itself may be taken up for consideration. The first defendant has been after selection sent abroad by the plaintiff-management and the management incurred an expenditure of Rs. 25,625.80 for the said purpose on various aspects, and though after obtaining such training at the expense of the management, the first defendant undertook to serve the plaintiff for atleast a minimum period of three years undertaking default to pay a stipulated sum of Rs. 25,000 the first defendant has committed a breach of the undertaking when he left the services of the plaintiff after serving for 14 months only as against the contracted period of three years. In such a case, it becomes unnecessary for the plaintiff to prove separately any post- breach damages. On the other hand, it would suffice to substantiate the fact that the first defendant was the beneficiary of any special favour or concession or training at the cost and expense wholly or in part of the employer and there had been a breach of the undertaking by the beneficiary of the same. In such cases, the breach would per se constitute the required legal injury resulting for the plaintiff-management, out of the breach or violation.
21. So far as the other appeals are concerned, though the claim has been made on behalf of the plaintiff that the defendants/respondents have been placed on probation and have been given a training, nothing has been specified to demonstrate before the Court about the details of any such special or privileged training or favour of concession having been shown to the defendants to presume any legal injury automatically resulting from the breach of the commitment to serve for a minimum period by such defendants. Apparently, the probationary training may be or might have been the training given to the incumbents to acciamatize themselves to the nature of work, they will have to 19 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr perform under the employer and nothing more. The Courts below cannot be considered to have committed any error, in such cases in the absence of any special pleading or proof of any such commitments and expenditure having been made or incurred by the plaintiffs to their detriment to infer any legal injury from the mere default or breach committed by the employees concerned. In view of the above, and in the absence of any factual plea or proof for substantiating such legal injury to justify the claim for the damages claimed in the suits no exception could be taken to the judgments and decrees of the Court in the above appeals except the appeal in Second Appeal No. 1291 of 1987 which will be separately considered. Consequently Second Appeals Nos. 1803, 2116, 178 of 1983 and 1717 of 1986 do not call for any interference with Judgments and decrees under challenge in those appeals and they shall stand dismissed. No costs."
24.11 The crux of the ratio laid down in the above noted judgment is that in the absence of any factual plea or proof for substantiating such legal injury to justify the claim for the damages claimed in the suits, the suit cannot be decreed.
24.12 In other judgment of High Court of Delhi namely, Vijaya Kumar Anugandula v. Dedicated Freight Corridor Corporation of India Ltd, 2018 SCC Online Del 12370, it was observed:
"41. The petitioners had, thus, agreed to compensate DFCCIL for loss that may be suffered by it on account of their failing to serve DFCCIL for a period of five years. Clause 10 of the appointment letter, and the Service Bond, must be construed as embodying the agreement to pay liquidated damages. As stated above, given the remuneration on which the petitioners were engaged and the limited training imparted to them, it appears that the stipulation to pay minimum liquidated damages of Rs. 6 lakhs is in the nature of penalty. As held by the Supreme Court in Fateh Chand v. Balkishan Dass, AIR 1963 SC 1405; Maula Bux v. Union of India, (1969) 2 SCC 554:
AIR 1970 SC 1955; and Union of India v. Raman Iron 20 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr Foundry, 91974) 2 SCC 231: AIR 1974 SC 1265, clauses of liquidated damages which are in nature of penalty are void. Thus, there is good ground for the petitioners to contend that the stipulations contained in the Service Bond fall foul of Section 74 of the Contract Act 1872 amd are not enforceable. (Also see: Sicpa India Limited v. Shri. Manas Pratim Deb: RFA No. 596/2002, decided on 17.11.2011).
42. Having stated above, DFCCIL would be entitled to reasonable damages.
43. In the present case, the petitioners have already paid a part of the amount demanded by the DFCCIL. As noticed above, the cost incurred in imparting training to the petitioners has been computed by the petitioners on the basis of the applications furnished under the Right to Information Act, 2005 and there is no serious doubt as to such costs. In all cases, the cost so worked out is around Rs. 2 lakhs or below."
24.13 The ratio of the above noted judgment also is that clauses of liquidated damages which are in the nature of penalty are void and not enforceable. But it was also held that in that case the employer would be entitled to original damages which are to be proved.
24.14 In yet another judgment of High Court of Delhi namely, Shubh Gautam v. Nabanita Mukherjee, date of decision 02.12.2013, it was held as under:
"9. I may at the outset refer to the judgment dated 24th April, 2012 of this Court in RFA No.195/2004 titled V.S. Saini Vs. D.C.M. Ltd. holding that on mere breach of service bond, the amount thereof would not become payable and that no claim on the basis of service bond can be accepted without showing any damage. It was held that Section 74 of the Contract Act provides for imposition of reasonable damages and the liquidated damages provided in the agreement are only the upper limit beyond which damages cannot be granted. The same learned Judge in an earlier judgment in M/s. Sicpa India Ltd. Vs. Shri Manas Pratim Deb MANU/DE/6654/2011 had also held that such clauses in 21 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr service bond are in the nature of penalty and are void and the liquidated damages mentioned in such bond are only the upper limit of the damage which are awarded once actual damages are proved; accordingly, the judgment of the Trial Court of dismissal of the suit for recovery of the service bond amount was upheld.
10. I have perused the affidavit by way of examination- in-chief of the appellant/plaintiff and do not find even a whisper therein of any consideration for the respondent/defendant to have bound herself to serve the appellant/plaintiff for a period of five years or of any training having been imparted by the appellant/plaintiff to the respondent/defendant or of the appellant/plaintiff having suffered any loss whatsoever on account of the respondent/defendant leaving the employment. Though in the absence of any such case in the examination-in-chief, there was no need for the respondent/defendant to cross- examine the appellant/plaintiff on the said aspects but still cross-examination was done and nothing is found to have emerged therein. I have also perused the cross- examination by the appellant/plaintiff of the respondent/defendant and do not find the appellant/plaintiff to have therein also established any such case.
11. Reference in this regard may be made to a recent judgment of the Division Bench of this Court in Vishal Engineers and Builders Vs. Indian Oil Corporation Ltd. MANU/DE/6829/2011 reiterating that in the absence of any loss whatsoever, an aggrieved party cannot claim that it is still entitled to liquidated damages, without, at least proving a semblance of loss."
24.15 In view of the conspectus of the judgments mentioned above, in the facts of the present case, it is limpid that the bond amount of Rs. 2,50,000/- was in the nature of penalty and cannot be enforced per se, unless, the plaintiff establishes the actual expenses incurred on the training and the losses suffered, if any.
22 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr 24.16 From perusal of the plaint and the affidavit of PW-1, it is observed that by way of the present suit, the plaintiff has sought to recover the amount from the defendant as listed in Para 10 of affidavit Ex.PW-1/A, which is the liability towards training cost and accommodation charges as under :
• Period of stay at PMI/project- 52 weeks = 365 days.
• Training cost Rs.1,39,700/-. • Accommodation charges Rs. 2,00,750/-. • Total Rs. 3,40,450/-.
24.17 Then in paragraph 23 of the affidavit, the final principal amount sought to be claimed from the defendants is mentioned as Rs. 3,05,697/-
along with interest, which is calculated in paragraph 24 of the affidavit and the total amount claimed is stated to be Rs. 4,59,310/-. The amount as mentioned in paragraph 23 of the affidavit was demanded from defendant no. 1 vide various letters Ex.PW-1/22, Ex.PW-1/23 and Ex.PW-1/24. It is manifest that there is divergence between the amounts mentioned at paragraph 10 of the affidavit and paragraph 23 of the affidavit. This dissonance between the two amounts has remained inexplicable on behalf of plaintiff.
24.18 Further, in paragraph 10 of the affidavit, the heads under which the amount has been claimed are cited as training cost Rs.1,39,700/- and accommodation charges Rs. 2,00,750/-. But neither in the plaint nor in the affidavit, the details of how these amounts have been arrived at specified. The plaintiff was duty bound to explain as to what sort of training was imparted, the duration of the training, the total number of trainee officers, 23 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr the expenses incurred in hiring the trainers etc. Similarly, it is not specified as to how the accommodation charges came to Rs. 2,00,750/-, what sort of accommodation was provided, what was the monthly charge etc. The amount mentioned under these heads cannot be per se taken to be the amount due without furnishing the rules/regulations governing the levy of the said amount.
24.19 Further, it is manifest from clause 4 of the terms and conditions of appointment document Ex.PW-1/2 that in case of failure to complete the training, the defendants were to jointly and severally compensate the plaintiff for stipend/salary, joining expenses, TA/DA, medical expenses and other training expenses for an amount not exceeding Rs.2,50,000/-, which is also the amount of the bond furnished by defendant no. 1 Ex.PW- 1/3. It can be discerned that the heads mentioned in this clause again differ from the heads mentioned in paragraph 10 of the affidavit except the head of training expenses. It is also inexplicable how the amount claimed by way of present suit exceeded the amount as mentioned in the service agreement bond i.e Rs. 2,50,000/-.
24.20 It can be deduced from the various judgments discussed above that the employer has to prove the details of the expenses incurred in providing training to the trainee and the details of all the heads under which the amount is sought to be recovered. Merely mentioning the figure of Rs. 1,39,700/- towards the training cost and Rs. 2,00,750/- as accommodation charges will not advance the cause of the plaintiff.
24.21 The upshot of the above discussion is that the clause of recovery of 24 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr bond amount is not enforceable being in the realm of penalty and plaintiff has also failed to prove the actual expenses incurred in according training to defendant no. 1 and thus has failed to establish the claim of recovery of the amount mentioned in the plaint. This issue is accordingly decided against the plaintiff and in favour of the defendants.
25. Issue no. 3 :- Whether the plaintiff is entitled for interest as claimed? OPP 25.1 In the light of the finding of issue no. 2, the plaintiff is not found to be entitled to claim any interest. This issue is also decided against the plaintiff and in favour of the defendant.
26. In the result, the present suit for recovery of a sum of Rs. 4,59,310/- stands dismissed. Decree sheet be prepared. Parties are left to bear their own costs.
Announced & dictated in the open court on 08.08.2022 (Navjeet Budhiraja) Additional District Judge-03 South East District, Saket Courts, New Delhi 08.08.2022 Certified that this judgment contains 25 pages and each page bears my signatures.
(Navjeet Budhiraja) Additional District Judge-03 South East District, Saket Courts, New Delhi 08.08.2022 25 CS DJ No. 8805/16 National Thermal Power Corporation Ltd. Vs. Abhinav Sudhendra & Anr