Delhi District Court
Amadeus India Pvt. Ltd vs Mercury Travels Ltd on 29 October, 2024
IN THE COURT OF MR. SATYABRATA PANDA, DJ-04,
PATIALA HOUSE COURTS, NEW DELHI
CS No. 59487/16
Date of Institution: 26.06.2007
Date of Arguments: 08.08.2024
Date of Judgment: 29.10.2024
M/s Amadeus India Pvt. Limited,
A Company Incorporated Under
The Indian Companies Act, 1956,
Having its registered office at
E-9, Connaught House,
Connaught Place, New Delhi-110001.
Through its authorised attorney,
Sh. Rakesh Bansal
.....Plaintiff
Vs.
M/s Mercury Travels Limited (MTL),
Having its working Office,
At Jeevantara Building, Sansad Marg,
New Delhi-110001.
With registered office at:
4, Mangoe Lane, Kolkata-700001.
.....Defendant
JUDGMENT
1. The plaintiff has filed the present suit against the defendant for damages alleging breach and wrongful termination of contract by the defendant. Although, originally the plaintiff had also sought reliefs of permanent injunction and mandatory injunction apart from damages, however, during the pendency of the suit, the reliefs of injunction became infructuous and the issues remained regarding CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 1 of 26 wrongful termination of the contract by the defendant and damages.
2. Bereft of unnecessary details, the case of the plaintiff as pleaded in the plaint is summarised as follows:
2.1. The plaintiff has developed and maintains and operates a Central Reservation System (CRS) for booking of of airline tickets, booking of hotels, rental of cars and other facilities. The plaintiff's Central Reservation System (CRS) is used by various travel agents in India and neighbouring countries. The plaintiff is the only Global Distribution System (GDS) to offer its services in three cities for the travel agents who avail the Central Reservation System (CRS) of the plaintiff.
Such services are provided in Delhi, Mumbai and Bangalore.
2.2. The defendant, which is a travel agency, showed its interest in using the plaintiff's system as the primary GDS supplier with a minimum guarantee of 95% of the total segments for providing reservation functionality for its officials in India. An agreement dated 01.04.2005 was executed between the plaintiff and the defendant whereby the defendant undertook to use the system of the plaintiff for a period of 3 years commencing from 01.04.2005 till 31.03.2008.
2.3. As per the agreement, the defendant would use the CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 2 of 26 plaintiff's system as the only primary CRS system with a minimum guarantee of at least 95% of all its reservations made from its main offices, implant offices and associated offices. The defendant would have 85,000 number of segments per annum (a segment means a leg of a trip or a car or hotel booking within the itinerary of a PNR) which remains active and uncancelled twenty four (24) hours after the scheduled departure date or car pick- up or hotel check-in date and which is billable to an Amadeus participating vendor. It was further agreed between the parties that the plaintiff would pay the defendant a service fee per segment booked.
2.4. The booking fee paid by the plaintiff to the defendant on quarterly basis was the criteria to ascertain the commission for the plaintiff payable by the concerned airlines, hotels, etc. 2.5. The contract between the parties was for a period of 3 years commencing from 01.04.2005 till 31.03.2008. The parties further agreed that the contract would be automatically renewed for another period of 3 years on same terms unless either party gave a written notice of 3 months prior to the expiry of the original term of the agreement i.e. till 31.03.2008.
2.6. However, the defendant vide its letter dated 31.05.2007 intimated the plaintiff that the defendant CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 3 of 26 was not willing to have the contract implemented on the existing terms and conditions, knowing fully well that the agreement had a binding effect up to 31.03.2008. The defendant informed that it had taken a decision to terminate the contract on the close of business hours on 30.06.2007.
2.7. The plea taken by the defendant in its letter dated 31.03.2007 was wholly misconceived because the defendant was bound to comply with the existing terms of the contract and could not wriggle out of the contract which was having a binding effect till 31.03.2008. The plaintiff had invested a huge amount keeping in view the duration of 3 years with an automatic renewal clause of another period of 3 years. The defendant being bound by the terms of the agreement dated 01.04.2005 could not revoke the same prematurely.
2.8. As per the agreement, in case of breach of the contract, the party in breach was liable to pay to the other party amount equivalent to six months of the booking fee paid by the plaintiff to the defendant.
2.9. As per the payment terms contained in the agreement pertaining to the service fee per segment, the record of the plaintiff shows that the defendant had been paid a sum of Rs. 13,20,120 for the quarter
-October, 2006 to December, 2006 and Rs.
12,28,845/- for the quarter- January, 2007 to March, CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 4 of 26 2007, which means that the defendant had been receiving service fee at the rate of approximately Rs.4.50 lakh to Rs.4.55 lakh per month from the plaintiff. Therefore, the defendant was liable to pay a sum of Rs. 25,48,965/- equivalent to six months of the booking fee paid by the plaintiff to the defendant.
2.10. On this basis, the plaintiff has sought damages amounting to Rs. 25,49,225/-.
3. The defendant has filed written statement in its defence.
The case of the defendant as pleaded in the written statement is as follows:
3.1. The agreement being commercial in nature, as such, the defendant was entitled to terminate the agreement.
3.2. The defendant issued the letter dated 31.05.2007 as the parties could not agree upon a fresh and revised contract. This exercise of revision of the existing agreement was being done with a view to entering into a new agreement in light of certain events that took place subsequent to the entering to the agreement dated 01.04.2005. There was a change in the ownership of the defendant in July 2006 and thereafter, all contracts entered into by the defendant with various parties including the plaintiff were reviewed by the new management. Upon CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 5 of 26 review, it was found that the agreement between the parties was not based on sound commercial practice and the fee promised to be paid to the defendant was much lower than what it ought to be if determined having regard to market conditions and other relevant factors.
3.3. A request for review was made by the defendant to the plaintiff some time in August 2006 over the telephone. This request for review was initiated by the defendant in view of the imminent induction of additional travel professionals by the defendant which would have given further rise to the number of segments that were to be serviced in comparison to what was originally envisaged in the agreement dated 01.04.2005. Hence, there was a request by the defendant to the plaintiff for revision of the segment fee. The plaintiff submitted a revised proposal on 29.01.2007, however, this revised proposal did not find favour with the defendant for various commercial considerations. In February 2007, the defendant once again intimated the plaintiff that the travel professionals had been inducted and that the revised proposal of the plaintiff did not meet the defendant's expectations. In May 2007, the defendant requested the plaintiff to take back the hardware provided by the plaintiff as the defendant would be replacing the hardware provided with new and improved hardware purchased by the defendant.
CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 6 of 26 After receipt of the request, the plaintiff took back its hardware. The defendant was thereafter using its own hardware. Subsequently, there were some further negotiations between the parties. The plaintiff issued a fresh proposal dated 13.06.2007 which was to be a side letter to the agreement dated 01.04.2005. However, the negotiations failed and the parties could not arrive at any fresh agreement. In these circumstances, the defendant was compelled to start the process of negotiation with other service providers for more attractive and commercially viable contracts.
3.4. Another service provider and the plaintiff's chief competitor Inter Globe Technology Quotient Pvt. Ltd. offered a more commercially attractive proposal to the defendant with the ticketing system Galileo. The defendant agreed to accept the offer of Inter Globe Technology Quotient Pvt. Ltd. after negotiations and an agreement was signed by the defendant with Inter Globe Technology Quotient Pvt. Ltd. on 22.03.2007, and the defendant was now in the process of migrating to the Galileo system.
3.5. Since there was no illegality in terminating the agreement dated 01.04.2005, the defendant was not liable to pay any amount to the plaintiff as claimed in the suit.
3.6. On this basis, the defendant has sought dismissal of CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 7 of 26 the suit.
4. The plaintiff has filed replication in which it has reiterated the averments made in the plaint and has denied the averments made by the defendant in the written statement.
5. Vide order dated 29.01.2010, it was recorded by the Hon'ble High Court of Delhi (where the suit was earlier pending as CS (OS) No. 1160/2007 prior to its transfer to the District Court) that the prayers (a) and (b) for injunction no longer survived and had become infructuous. The issues were framed with respect to the wrongful termination of the contract and regarding the liability of the defendant to pay the amounts as claimed in the suit. The relevant paragraphs of the order dated 29.01.2010 are extracted as under:
"1. The learned counsel for the plaintiff states that so far as prayers 'a' and 'b' are concerned, that does not survive any longer on account of the fact that the period of agreement dated 1.4.2005 has come to an end by efflux of time on 31.3.2008. Accordingly, the prayers 'a' and 'b' are treated to have become infructuous.
2. On the pleadings of the parties, the following issues are framed:
a) Whether the agreement dated 1.4.2005 was wrongfully terminated by the defendant? OPP CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 8 of 26
b) If answer to issue no.1 is affirmative, whether the defendant is liable to pay an amount of Rs.
25,49,225/- or any other amount to the plaintiff? OPP
c) Relief.
3. No other issue arises or is pressed."
6. Both the parties have led their respective evidence, both oral and documentary.
7. In support of its case, the plaintiff has examined as PW-1, Sh. Rakesh Bansal who is the Chief Executing Officer of the plaintiff company. He has tendered his affidavit in evidence as Ex. PW1/A in which he has deposed along the lines of the plaint. He was cross-examined by the defendant. He has relied upon the following documents:
a. Copy of the certificate of Incorporation of the plaintiff company and its Memorandum and Articles of Association are collectively marked as Ex.PW1/1.
b. Agreement between the plaintiff and the defendant dated 01.04.2005 as Ex.PW1/2.
c. Letter dated 31.05.2007 as Ex.PW1/3.
8. In support of its case, the defendant has examined as DW-
1, Sh. Vikram Dhawan, Associate Vice-President of the CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 9 of 26 defendant company. He has tendered his affidavit in evidence as Ex. DW1/A, in which he has deposed along the lines of the written statement. He was cross-examined by the plaintiff. He has relied upon the following documents:
a. Email dated 29.01.2007 as Ex.DW1/1.
b. Deactivation report showing that the plaintiff had taken back its hardware as Ex.DW1/2.
9. Ld. Counsels for both the parties have made their respective submissions.
10. Ld. Counsel for the plaintiff has submitted that it is the admitted position that the parties had executed the agreement dated 01.04.2005 Ex.PW-1/2 which was for a period of 3 years w.e.f. 01.04.2005 till 31.03.2008. It is submitted that the agreement was binding on the parties for a period of 3 years and did not permit any party to unilaterally terminate the agreement. It is submitted that the defendant had clearly committed breach of the agreement by unilaterally terminating the agreement vide its letter dated 31.05.2007. It is submitted that the agreement provided for payment of compensation in case of breach of the contract by either of the parties. In this regard, the Ld. Counsel for the plaintiff has referred to the relevant clause under the heading of "Contractual Terms"
in the agreement and has submitted that the contract provided that in case of breach of the contract before the CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 10 of 26 expiry of the contract i.e. till 31.03.2008, then in such case the damages and compensation applicable on the party breaching the contract was equivalent to the last 6 months of booking fee paid to the defendant. It is submitted that the defendant had not disputed that the last 6 months of booking fee paid to the defendant amounted to Rs. 25,49,225/-. It is submitted that hence, due to breach of the contract by the defendant by unilateral termination of the contract, the plaintiff was entitled to receive the damages of Rs. 25,49,225/- i.e. the amount equivalent to the last 6 months of booking fee paid to the defendant. It is submitted that this amount was the liquidated damages which had been agreed to by the parties as a genuine pre- estimate of damages for unilateral termination of the contract. Ld. Counsel for the plaintiff has relied upon the following decisions, with regard to payment of liquidated damages: M/s. Kailash Nath Associates Vs. Delhi Development Authority JT 2015 (1) SC 164, ONGC v. Saw Pipes 2003 (2) RAJ 1 (SC): AIR 2003 SC 2629, and Sudhir Gensets Lt. v. Indian Oil Corp. Ltd. 2011 (3) RAJ 571 (Del).
11. On the other hand, Ld. counsel for the defendant has submitted, with respect to the Issue No.1, that the termination of the agreement by the defendant cannot be termed as wrongful. It is submitted that firstly, after the defendant had issued the notice of termination dated 31.05.2007, the plaintiff instead of raising any issue with the termination, made a fresh proposal to the defendant CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 11 of 26 vide email sent on 13.06.2007. It is submitted that by virtue of its conduct in participating in negotiations for a fresh agreement, the plaintiff had waived any right to challenge the termination of the agreement by the defendant. It is submitted that since the plaintiff had waived its right to challenge the termination, the termination would not constitute breach of the agreement. It is submitted that since the plaintiff offered fresh proposals before and after receipt of the notice of termination, the same amounted to waiver on part of the plaintiff of the conditions stipulated under the agreement and thus, the termination could not constitute a breach of the agreement. Ld. Counsel for the defendant has further referred to the cross-examination of PW-1 on 13.08.2013 and has submitted that the PW-1 has admitted that the plaintiff had made an offer to the defendant. It is further submitted that the termination of the agreement dated 01.04.2005 cannot be also considered as wrongful since the defendant was compelled to terminate the agreement since the terms were not commercially viable for the defendant, which position was admitted by the plaintiff.
12. With respect to the issue no.2, Ld. Counsel for the defendant has submitted that since the termination cannot be constituted as wrongful and thus, there was no breach of the agreement by the defendant, the question of payment of any damages to the plaintiff does not arise. It is submitted that even assuming that there was a breach on CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 12 of 26 the part of the defendant, that would not make the plaintiff ipso facto entitled to damages. It is submitted that a party claiming damages must prove the damages by leading the evidence. It is submitted that in the present case, the plaintiff has failed to prove any loss whatsoever suffered on account of the termination of the agreement by the defendant. It is submitted that the plaintiff has not filed any documentary evidence to show any losses having been suffered by the plaintiff. It is further submitted that even the plaintiff's witness has not proved on what basis, the plaintiff was claiming damages of Rs. 25,49,225/-. It is submitted that merely apart from denying the suggestion that the plaintiff had not suffered any losses due to the termination, the plaintiff's witness had given no evidence as to the particulars or nature or quantum of losses suffered. It is further submitted that even if the plaintiff was seeking the damages in the suit as liquidated damages in the form of the last 6 months of booking fee under the agreement, even in such case, the plaintiff had to prove the actual losses which were suffered by the plaintiff. It is submitted that without proving the actual losses, the plaintiff cannot claim any liquidated damages. It is further submitted that although the plaintiff is seeking to claim as liquidated damages an amount equivalent to the last 6 months of booking fee paid to the defendant, however, the plaintiff has failed to produce any evidence to show as to what was the amount which was paid in the last 6 months of booking fee to the defendant. Ld. Counsel has referred to the cross-examination of PW-1 on 22.03.2014 and has CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 13 of 26 submitted that the witness has admitted that he did not have the figures as to how much revenue was earned in the period of 2 years of the agreement. It is further submitted that the witness has also admitted that the plaintiff had not filed the books of account and the financial reports for the relevant period. Ld. Counsel for the defendant has relied upon the decisions in Fateh Chand vs. Balkishan Dass AIR 1963 SC 1405 and Kailash Nath Associates vs Delhi Development Authority (2015) 4 SCC 136, on the aspect of proof of loss in case of liquidated damages. On a closing note, the Ld. Counsel for the defendant has submitted that although the defendant is making a claim of liquidated damages, however, the plaintiff has neither proved the breach nor proved the losses caused to the plaintiff. It is submitted that as such, the suit deserves to be dismissed.
13. I have considered the submissions of the ld. Counsels for the parties and I have perused the record.
14. My Issue-wise findings are as follows.
Issue No.1: Whether the agreement dated 1.4.2005 was wrongfully terminated by the defendant? OPP
15. Undisputedly, the parties had executed the agreement dated 01.04.2005 Ex.PW-1/2. As per the agreement, the defendant had committed that it would use the plaintiff as the primary GDS with a minimum guarantee of 95% of the total segments done by the defendant for all reservations CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 14 of 26 from its offices and locations in India. The agreement further provided that the only other GDS that the defendant could use for 5% booking would be SABRE. The agreement also provided for the payment terms in respect of the service fee which would be paid by the plaintiff to the defendant per segment booked. The plaintiff would have charged the booking fee to the providers. The agreement clearly provides that it shall be valid for 3 years from 01.04.2005. The agreement did not have any provision for unilateral termination of the contract by either of the parties. Hence, the unilateral termination of the contract by the defendant vide its letter dated 31.02.2007 was clearly in breach of the contract.
16. The defendant has raised two-fold grounds to contend that the termination of the contract was not illegal. It is submitted, firstly, that the plaintiff had made a revised proposal after the defendant had requested for a review of the agreement and that as such the plaintiff had waived the performance of the agreement. The second contention of the defendant is that the termination was not illegal since the agreement had ceased to be commercially viable for the defendant. Both these contentions are without merit.
17. The contention that the plaintiff had waived the performance of the agreement since it had participated in negotiations for execution of a fresh agreement and had also given made an offer in this respect to the defendant is without merit. It was the defendant itself which was not CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 15 of 26 satisfied with the agreement and had made a request for review of the agreement. Both the parties were business entities. The plaintiff would have participated in the negotiations for fresh agreement in view of the business relationship between the parties. Unless the plaintiff had expressly stated that it had waived the performance of the agreement, it would be deemed that the plaintiff's participation in the negotiations for a fresh agreement was without prejudice to the already executed agreement in case no revised agreement was executed. The defendant has been unable to show that the plaintiff had expressly waived performance of the agreement merely since it was participating in the negotiations for a fresh agreement.
18. The contention that the contract had ceased to be commercially viable for the defendant is wholly without merit. It is not the case of the defendant that it had executed the contract under any misconception, misrepresentation or mistake. The defendant had voluntarily executed the contract and as such was well aware of the terms of the agreement. Merely because a new management came into being in the defendant company which was not satisfied with the agreement was no ground to legitimize the termination, when otherwise the contract provided that it was binding for a period of 3 years and there was no provision for unilateral termination. In case such an argument is accepted then there would remain no sanctity in respect to contracts.
CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 16 of 26
19. Accordingly, it is held that the agreement dated 1.4.2005 was wrongfully terminated by the defendant. The Issue No.1 is answered accordingly in favour of the plaintiff and against the defendant.
Issue No.2: If answer to issue no.1 is affirmative, whether the defendant is liable to pay an amount of Rs. 25,49,225/- or any other amount to the plaintiff? OPP
20. In the present suit, the plaintiff has claimed amount of Rs.
25,49,225/- as damages on the basis that this is the amount equivalent to the last 6 months of booking fee paid to the defendant and that the plaintiff was entitled to this amount under the agreement in the event of breach of the contract by the defendant.
21. The relevant clause of the agreement relied upon by the plaintiff in this regard is extracted hereunder:
"Contractual Terms This agreement shall be valid for 3 years, starting from April 1, 2005.
In lieu of the hardware, software and the other services that Amadeus has agreed to provide to MTL, MTL has wilfully agreed not to ask for any revision in the contract both in terms of commercial terms, increased hardware & increased connectivity.
Both Amadeus and MTL agree to strictly CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 17 of 26 abide by all the clauses of contract and should either MTL or Amadeus breach this contract before the natural expiry of this contract which is till 31 March 2008, in such case the penalty applicable on the party breaching this agreement, would be equivalent to the last 6 months of booking fee paid to MTL."
(Emphasis supplied by me)
22. A perusal of the aforesaid clause clearly shows that the parties have termed the amount to be paid in case of breach as a "penalty". Hence, when the parties are themselves referring to the amount equivalent to the last 6 months of booking fee paid to the defendant as a "penalty" to be paid on breach of the contract then such amount would be regarded as a penalty.
23. Furthermore, a perusal of the aforesaid clause shows that this clause is wide and is not restricted to any particular form of breach of the contract. The clause provides that the parties agree to strictly abide by "all the clauses of the contract" and should either party "breach this contract"
before the expiry of the contract till 31.03.2008, then in such case "the penalty applicable on the party breaching this agreement" would be equivalent to the last 6 months of booking fee paid to the defendant. Thus, the breach which is spoken of in the aforesaid clause could be a breach of any clause of the contract. Thus, as per the aforesaid clause, the party breaching was supposed to pay the amount stipulated irrespective of the nature of the CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 18 of 26 breach, whether it was minor or major. This also goes to show that the stipulation for payment of the last 6 months of booking fee paid to the defendant was in the nature of a penalty only and not as liquidated damages, since there was no correlation with the nature of the breach in respect of which the amount stipulated was to be paid. Hence, the amount stipulated in the contract to be paid in case of breach of the contract being equivalent to the last 6 months of booking fee paid to the defendant was nothing but a stipulation of penalty.
24. Section 74 of the Contract Act deals with cases in which stipulation of penalty is there, and the same is extracted hereunder:
"74. Compensation for breach of contract where penalty stipulated for.--
When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
... ... ..."
CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL)
Page 19 of 26
25. In terms of section 74 of the Contract Act, where a contract has been broken, and if the contract contains a stipulation by way of penalty, then the party complaining of the breach was entitled, whether or not actual damage or loss was proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the penalty stipulated for.
26. Thus, under section 74 of the Contract Act, in case of breach, merely because a stipulation by way of penalty is contained in the contract, the party complaining of the breach would not become entitled to the amount of the penalty, but such party would be entitled only to the reasonable compensation not exceeding the penalty stipulated for. This means that in case of a stipulation for penalty, in case of breach, the plaintiff would not become entitled to receive the amount stipulated as penalty, but the plaintiff would only be entitled to reasonable compensation for the breach and the amount stipulated as penalty would be the upper limit of such compensation to be awarded.
27. The stipulation of payment of the amount equivalent to the last 6 months of booking fee paid to the defendant cannot be taken as a clause for liquidated damages containing a genuine pre-estimate of damages in case of unilateral termination of the contract by one of the parties, since the clause does not specify that such amount was to be paid in case of termination of the contract by one party before the CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 20 of 26 expiry of the term of the contract. Rather, the penalty clause provides for payment of the stipulated amount in case of any form of breach of the contract, which could have been a minor breach or a major breach. Since the penalty clause does not specifically relate to a case of unilateral termination of the contract prior to its expiry, the clause could not have been for providing a genuine pre- estimate of damages in case of unilateral termination by one party prior to expiry of the contract.
28. Hence, what the plaintiff was entitled to was only the reasonable compensation not exceeding the stipulated amount of penalty. The onus was on the plaintiff to show the loss suffered by it in monetary terms on account of the breach of the contract by the defendant by way of unilateral termination of the contract so as to enable the court to arrive at the reasonable compensation payable to the plaintiff. In this respect, it would be appropriate to refer to the decision of the Hon'ble Supreme Court in Maula Bux vs Union Of India AIR 1970 SC 1955, (1969) 2 SCC 554, [1970] 1 SCR 928, in the context of Section 74 of the Contract Act, in which it was held as under:
"7. Counsel for the Union, however, urged that in the present case Rs. 10,000/- in respect of the potato contract and Rs. 8,500 in respect of the poultry contract were genuine pre-estimates of damages which the Union was likely to suffer as a result of breach of contract, and the plaintiff was not entitled CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 21 of 26 to any relief against forfeiture. Reliance in support of this contention was placed upon the expression (used in Section 74 of the Contract Act), "the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation". It is true that 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, and 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 the breach of contract. But the expression "whether or not actual damage or loss is proved to have been caused thereby" is intended to cover different classes of contracts which come before the Courts. In case of breach of some contracts it may be impossible for the Court to assess compensation arising from breach, while in other cases compensation can be calculated in accordance with established rules. Where the Court is unable to assess the compensation, the sum named by the parties if it be regarded as a genuine pre- estimate may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty. Where loss in terms of money can be determined, the party claiming compensation must prove the loss suffered CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 22 of 26 by him.
8. In the present case, it was possible for the Government of India to lead evidence to prove the rates at which potatoes, poultry, eggs and fish were purchased by them when the plaintiff failed to deliver "regularly and fully" the quantities stipulated under the terms of the contracts and after the contracts were terminated. They could have proved the rates at which they had to be purchased and also the other incidental charges incurred by them in procuring the goods contracted for. But no such attempt was made."
(Emphasis supplied by me)
29. In the facts of the present case, it was very much possible for the plaintiff to show the loss caused to it in monetary terms through the unilateral termination of the contract. As per the terms of the contract, the defendant was supposed to exclusively use the system of the plaintiff to make the bookings (to the extent of 95%). In consideration, the plaintiff was to pay the service fee to the defendant. The plaintiff's revenue was to be generated through the commissions paid by the providers of the airline, hotel and rental cabs in respect of whom the bookings were made by the defendant on the plaintiff's system. Upon termination of the contract by the defendant, the loss caused to the plaintiff would have been essentially on account of the loss of revenue and profits which otherwise the plaintiff would CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 23 of 26 have been generating. The revenue and profits being generated by the plaintiff through the contract during the period prior to the termination would have been seen and a reasonable estimate could have been made about the loss which would have been caused due to the termination for the subsisting period of the contract. On the basis of the monetary loss so ascertained, the reasonable compensation would have been arrived at.
30. Thus, the plaintiff ought to have placed on record the evidence of the revenue and profits being earned by the plaintiff through the contract so as to enable the court to arrive at the monetary loss caused due to the unilateral termination and consequentially the reasonable amount of compensation due for the wrongful termination by the defendant. However, the plaintiff has not produced on record any details of the revenue and profits earned by the plaintiff through the contract. Even the ld. Counsel for the plaintiff did not draw my attention to any evidence, documentary or oral, which would show what were the revenue or profits earned by the plaintiff through the contract. The plaintiff has really not led any evidence to enable the court to arrive at the reasonable compensation. The entire focus of the submissions of the ld. Counsel for the plaintiff was that the plaintiff was entitled to receive the sum of Rs. 25,49,225/- which was the last booking fee amount of 6 months since the contract provided that in case of breach the party committing the breach was liable to pay penalty equivalent to amount of last 6 months CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 24 of 26 booking fee. As already mentioned, the stipulation of penalty would only be the upper-limit of compensation which the plaintiff could receive in view of Section 74 of the Contract Act, and the plaintiff could only receive reasonable compensation for breach not exceeding the stipulated amount. Hence, the plaintiff completely misdirected itself in the suit in just focusing to claim the penalty amount and in not leading any evidence which would enable the court to arrive at the value of reasonable compensation.
31. A perusal of the record of oral evidence shows that even upon being specifically questioned by the defendant as to the revenue earned by the plaintiff, the plaintiff's witness PW-1 has stated during his cross-examination that he did not have the figures as to how much revenue was earned during the contract period and also that this was the confidential information of the plaintiff. This was an opportunity for the plaintiff to bring on record the evidence on the revenues and profits generated by it through the contract. However, rather than placing on record the material to assist the court in arriving at the reasonable compensation, the plaintiff has completely evaded producing any material to enable the court to arrive at the reasonable compensation.
32. Hence, there is absolutely no material produced on the record in evidence by the plaintiff to enable the court to arrive at the amount of reasonable compensation and in CS No. 59487/16 M/s Amadeus India Pvt. Limited Vs. M/s Mercury Travels Limited (MTL) Page 25 of 26 this regard, the plaintiff has failed to discharge the onus. The plaintiff has completely misdirected itself in only focusing on claiming the penalty amount stipulated in the contract and in not leading any evidence which would have enable the court to ascertain the loss caused to the plaintiff and the resultant reasonable compensation which would have been payable to the plaintiff. The suit would thus be dismissed. The Issue No.2 is decided accordingly.
33. In the result, the suit is dismissed.
34. In the facts and circumstances of the case, the parties to bear own costs.
35. Let the decree-sheet be drawn up accordingly.
36. File be consigned to record room after due compliance.
Digitally signed by Satyabrata Panda Satyabrata Date: Panda 2024.10.29 17:05:48 +0530 (SATYABRATA PANDA) District Judge-04 Judge Code- DL01057 PHC/New Delhi/29.10.2024
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