Delhi District Court
Pawan Hans Helicopter Ltd. Cs No. 239/12 vs Capt. Naushad Ghori on 19 November, 2013
IN THE COURT OF SH. SANDEEP YADAV, ADDITIONAL DISTRICT
JUDGE2, SOUTHEAST DISTRICT, SAKET COURTS, NEW DELHI
Pawan Hans Helicopter Ltd. CS No. 239/12
Registered Office/Corporate Office
Safdarjung Airport
New Delhi 110 003 ..... plaintiff
Vs.
1. Capt. Naushad Ghori
S/o. Late Sh. Abdul Wahid Ghori
Pilot Licence No. 642
96/47, Sneh Nagar, Ghori Mansion
Near Sapna Sangeeta Talkies,
Indore 452001 ..... defendant no. 1
2. M/s. Heligo Charters Pvt. Ltd.
301, Landmark, Juhu Tara Road
Mumbai 400049 ..... defendant no. 2
3. Dr. M.M. Ansari
S/o. Shri M.B. Ansari
Senior Scientist (Plant Pathology)
National Research Centre for Soyabeen
Khandawa Road, Indore 452017 ..... defendant no. 3
4. Dr. Suresh Silawat,
s/o. Late Sh. T.D. Silawat
Assistant Professor Commerce
Govt. Postgraduate College
Mhow, Indore ..... defendant no. 4
Suit for Declaration, Mandatory/Permanent Injunctions and for
Recovery of Damages of Rs. 14,32,750/
(a) Date of institution : 23.12.08
2
(b) Date when judgment reserved : 23.10.13
(c) Date of Judgment : 19.11.13
JUDGMENT
This suit for declaration, mandatory/permanent injunction and for recovery of damages has been filed by Pawan Hans Helicopter Ltd. against defendant no. 1 Capt. Naushad Ghori, defendant no. 2 M/s. Heligo Charters Pvt. Ltd., defendant no. 3 Dr. M.M. Ansari and defendant no. 4 Dr. Suresh Silawat. The case of plaintiff succinctly stated is as under :
1. Plaintiff, a government company incorporated under the provisions of Companies Act, is engaged in the business of promoting, developing, organizing and providing air support services to the oil and non oil sector. Plaintiff is maintaining and operating a fleet of helicopters for the purposes of transportation and carrying the passengers, mail, freight, etc. In order to provide these services, plaintiff requires well trained pilots. Defendant no. 1 Capt. Naushad Ghori, was under the employment with plaintiff company as a First Officer II w.e.f. 14.03.05 on contractual basis in terms of letter of offer/appointment dt. 24.02.05. Defendant no. 1 had executed a bond of 'Indemnity and Service" dt. 08.03.05 alongwith two sureties being defendant no. 3 and 4 in favour of plaintiff company to serve plaintiff company for a minimum period of five years from the date of completion of training. Defendant no. 1 also gave an undertaking in the bond that if he fails to serve plaintiff for minimum period of five years, he will pay on demand a sum of Rs. 10 lacs to the plaintiff for 3 committed any breach of terms and conditions of such bond of Indemnity & Service. Under the bond, defendant no. 1, 3 and 4 further agreed to pay interest @ 18 % p.a. compounded quarterly till the date of payment for not serving the plaintiff company by defendant no. 1 for a period of five years from the date of completion of five years conversion training. It was further agreed by defendant no. 1, 3 and 4 that the amount of Rs. 10 lacs would not be reduced proportionately. In the bond, defendants had agreed that upon that although the cost of training was very high, however, the recoverable amount from the defendants on account of damages including the payment of salary during the period is quantified/fixed @ Rs. 10 lacs and and the liability of sureties shall be joint and several for committing breach of payment of "Indemnity and Services" by defendant no. 1. According to clause 11 of the bond, plaintiff company was free to sue the sureties i.e, defendant no. 3 and 4 individually at any time. Defendant no. 1 further agreed in terms of clause 8 of the bond of Indemnity and Service dt. 08.03.05 that unless he completes the period of bond, he shall not take any employment/assignment with any other airlines/air taxi operator or with any other employer carrying on the same business or allied business by whatever name described. Defendant no. 1 further agreed that he will not directly or indirectly take part in or associate himself with same venture or activities as that of plaintiff company during the period of service.
2. Defendant no. 1 was given extensive ground training and 4 conversion training on Bell Helicopter by plaintiff company at its costs. Defendant no. 1 tendered his resignation on 03.05.06 without assigning any reason. In the reply to the resignation letter dt. 03.05.06 of defendant no. 1, plaintiff sent letter dt. 14.08.06 to defendant no. 1 and Director General of Civil Aviation, Govt. of India, for compliance of terms and conditions of service bond. Defendant no. 1 started absenting himself from 03.11.06 onwards and has not rendered any service inspite of the requirement of completing five years service as per the bond of "Indemnity and Service" and hence committed breach of service bond. Defendant no. 1 also started serving some other airlines from 03.11.06 without taking any permission from plaintiff company. Plaintiff came to know that defendant no. 1 joined M/s. Global Vectra Helicorp Ltd. as pilot. Plaintiff company wrote a letter dt. 05.03.07 to defendant no. 1 as well as Director General of Civil Aviation, Govt. of India regarding defendant no. 1 being employed with other airlines/air taxi operator and breach of clause 8 of service bond. Plaintiff also wrote a letter dt. 20.11.07 intimating M/s Globle Vector Helicorp Ltd. as well as DGCA about the unauthorised employment of defendant no. 1 with M/s. Global Vectra Helicorp Ltd. M/s. Global Vectra Helicorp Ltd. vide letter dt. 27.05.08 informed that defendant no. 1 has resigned from its service on 17.10.07. Plaintiff got the information that subsequently, defendant no. 1 has joined and is still in the service of defendant no. 2 M/s. Heligo Charters Pvt. Ltd. which is in breach of service bond. The notice dt. 10.12.08 was issued by plaintiff company to defendant no. 1 5 calling upon defendant no. 1 to serve plaintiff company for agreed period of service agreement/bond of five period. Plaintiff company also called upon defendant no. 1, 3 and 4 to jointly and severally pay within 10 days the amount of Rs. 10 lacs alongwith compounded interest @ 18 % p.a. on quarterly basis on account of breach of service agreement/resignation w.e.f. 03.11.06. Defendants were also asked to pay interest till the date of payment. The pilot licence of defendant no. 1 can be terminated by Director General of Civil Aviation, Govt. of India, which is the licencing authority under the provisions of clause 8 of the bond. The employment of defendant no. 1 with defendant no. 2 is against the undertaking/obligation. The service of defendant no. 1 are required under public interest and the service of defendant no. 1 with plaintiff company falls under the exceptions wherein the enforcement of the contract of service is permissible under law. Defendant no. 1 is flying the aircraft/helicopter for the defendant no. 2 on the basis of experience and training obtained by defendant no. 1 during his employment with plaintiff at the cost of plaintiff. It would be against the public policy if defendant no. 1 is permitted to work with defendant no. 2 or any other employer during the bond period of five years from the date of completion of training. The service bond period of defendant no. 1 automatically stands extended for the period for which he has not rendered service. Due to breach of contract by defendant no 1, plaintiff company has suffered in its operation of helicopter flights committed to various state governments, etc. also facing administrative 6 and practical problems due to sudden non reporting on duty by defendant no. 1. Defendant no. 1, by not rendering the service to plaintiff for five years, has committed breach of bond and has become liable for the consequence of violation of clause 8 of service bond including cancellation of licence.
3. Plaintiff prayed in the suit as under :
"(i) pass a judgment and decree holding that the defendant no.
1 committed breach of service agreement/contract dt. 08.03.05 entered with plaintiff company.
(ii) pass a judgment and decree of declaration that the licence CHPL No. 642 standing the name of Capt. Naushad Ghori (defendant no. 1) R/o. 96/47, Sneh Nagar Main Road, Indore, M.P., stands terminated/cancelled on account of violation of service bond from the date of the resignation or any date thereafter.
(iii) pass a judgment & decree of permanent injunction against the defendant no. 1 restraining him from rendering services as a Pilot or incidental thereto to any organization or to the present employer being defendant no. 2 in violation of the contract with plaintiff dt. 08.03.05 for the balance period of bond or reasonable time.
(iv) pass a judgment and decree of permanent injunction against the defendant no. 2 restraining it forthwith from receiving any services or giving any employment to defendant no. 1 for the balance period of contract dt. 08.03.05.
(v) In the alternative to the enforcement of service bond for 7 rendering five years service, to pass a judgment and decree holding that the plaintiff is entitled to Rs. 14,32,750/as damages along with future interest @ 18 % p.a. compounded quarterly till the date of its realization against defendant no. 1, 3 and 4 for breach of contract as stated in the plaint and same are recoverable from defendant no. 1 and from defendant no. 3 and 4 being sureties who are also liable along with defendant no. 1 jointly and severally."
4. The defence putforth by defendant no. 1 in the written statement is as under :
5. The suit is barred by Section 41 of Specific Relief Act. The negative covenant contained in the bond of indemnity and service Ex. PW1/5 cannot be implemented by way of injunction. No injunction can be granted to prevent breach of contract, performance of which could not be specifically enforced. Grant of injunction in the present case would compel the defendant no. 1 to serve the plaintiff or it will lead to defendant no. 1 remaining idle. Plaintiff deliberately did not perform its own part as contemplated in the circular no. 208/2005 dt. 29.06.05 when the defendant no. 1 was promised for career progression. Defendant no. 1 became eligible for career progression from pilot A to pilot B on 22.04.05 as per the scheme of plaintiff. However, plaintiff deliberately did not give the benefit of career progression scheme to defendant no. 1. Defendant no. 1 was under employed and was not given enough flying hours by plaintiff deliberately. The remuneration of defendant no. 1 was based on flying hours. The career progression of 8 any pilot solely depends on his experience in terms of flying hours. The defendant was kept idle most of the time from the date of his joining in mid May 2006. During this period, defendant no. 1 was given flying hours as low as 18.81 hour per month as against the general flying hours of 90 hour per month as permitted by Director General of Civil Aviation, Govt. of India. Defendant no. 1 was thus compelled and forced to resign from the services of plaintiff and once he tendered his resignation in the month of May 2006 giving plaintiff six months notice as required by Director General of Civil Aviation, Govt. of India , the plaintiff started giving maximum flying hours to defendant no. 1. Plaintiff with a view to convince and pressurize defendant no. 1 to withdraw his resignation, started giving more and more flying hours to defendant no. 1 from 18.80 hours per month before the notice to 68.4 hour per month after notice of resignation. Defendant no. 1 resigned after complying with due procedure and requirement prescribed by Director General of Civil Aviation, Govt. of India. The negative covenant restraining the defendant no. 1 from rendering service as pilot to any organization is void abinitio. The negative covenant, the sole purpose of which is to avoid competition, cannot be treated to be a covenant by which covenantee seeks to protect its proprietary interest. It would clearly be against the public policy to compel defendant no. 1 to be forced to work the plaintiff merely because of the covenant. It would amount to compelling disgruntled employees to work for an equally disgruntled employer. There is no reasonableness of the 9 negative covenant allegedly signed by the parties. The bond of indemnity and service is biased, illegal, one sided, unconceivable, unreasonable and not for protection of any proprietary interest of plaintiff and against the public policy and therefore, void abinitio and cannot be enforced in court of law. Plaintiff filed replication rebutting the contentions raised and averments made in the written statement.
6. After completion of pleadings, following issues were framed by the Court on dt. 02.09.11:
(i) Whether this Court does not have territorial jurisdiction in the present matter ? OPD
(ii) Whether the defendant no. 1 has committed breach of bond of indemnity and service and the terms of appointment as stated in the plaint ? OPP
(iii) Whether the pilot license of the defendant no. 1 is liable to be terminated or cancelled on account of violation of the service bond ?
OPP
(iv) Whether plaintiff is entitled to permanent injunction as prayed in the suit ? OPP
(v) Whether the plaintiff is entitled to the suit amount as alternative relief of damages from the defendants and compound interest thereon @ 18 % per annum ?
(vi) Whether plaintiff is entitled to any interest on damages ? If so, at what rate ? OPP
(vii) Whether the plaintiff is entitled to injunction restraining 10 defendant no. 2 from employing the defendant no. 1 in view of directive dt. 25.02.1993 of DGCA ? OP Parties.
(viii) Relief.
Issue wise findings of the Court are as under :
Issue No. 1
7. The Court framed the preliminary issue on territorial jurisdiction vide order dt. 02.09.11. However, perusal of record revealed that this issue has already been decided by ld. Predecessor on the application filed by defendant no. 1 u/o. 7 rule 11 CPC, which was dismissed vide order dt. 11.03.10.
Issue no. 2
8. The burden of proof of this issue was on plaintiff PW 1 Sanjeev Aggarwal in his evidence by way of affidavit deposed that defendant no. 1 had executed bond of indemnity and service dt. 08.03.05. Defendant in cross examination admitted that the bond of indemnity and service dt. 08.03.05 was forwarded to him by plaintiff company. Defendant no. 1 also admitted the offer of appointment Ex. PW1/4. In the bond of indemnity and service Ex. PW1/5, defendant no. 1 undertook to serve the plaintiff company for a period of five years.
9. In the bond of indemnity and service Ex. PW1/5, it is clearly laid down in clause 2 that defendant no. 1 shall not leave plaintiff company without permission of plaintiff company during the prescribed bond period of five years and on his failure, shall pay the bond amount. In clause 8 of bond of indemnity and service Ex.
11 PW1/5, defendant no. 1 agreed and bound himself to the plaintiff company that unless he has completed the bond period, he shall not take any employment/assignment with other airlines/air taxi operator and any other employer carrying on the same business or allied business in whatever name described.
10. PW 1 deposed that defendant no. 1 tendered his resignation on 03.05.06 without assigning any reason and thus committed breach of bond of indemnity and service. PW 1 further deposed that defendant during the period mentioned in the indemnity bond, first joined Global Vectra Helicorp and then defendant no. 2. Defendant no. 1 in written statement and in his evidence by way of affidavit did not dispute or deny that he resigned from plaintiff company on 03.05.06 or that he has joined defendant no. 2 during the period of five years mentioned in the bond of indemnity and service Ex. PW1/5. However, defendant no. 1 sought to give justification for his resignation from plaintiff company and joining defendant no. 2 in violation of bond of indemnity and service Ex. PW1/5. Defendant in his evidence by way of affidavit deposed that plaintiff deliberately and intentionally did not give benefit of carrier progression scheme to defendant no. 1. Defendant no. 1 deposed that remuneration of defendant no. 1 was based on flying hours and carrier progression of any pilot solely depends on his experience in terms of flying hours. Defendant no. 1 deposed that he was kept idle most of the time. Since his joining in April 05 to May 06 he was given average fling hours as low as 18.81 per month as against 12 the general flying hours of 90 hours per month as permitted by Director General of Civil Aviation, Govt. of India. Defendant no. 1 further deposed that he was underutilized and was suffering huge losses in terms of money as well as other experience. Defendant no. 1 deposed that he was compelled and forced to resign from the service of plaintiff company. Defendant no. 1 also alleged that the act and omission of plaintiff forced the defendant no. 1 to look for better prospect.
11. It is clear from the averments of written statement and the deposition of defendant no. 1 that defendant no. 1 did not dispute that he has resigned from the service of plaintiff company and has joined some other company in violation of term and conditions of bond of bond of indemnity and service Ex. PW1/5. Section 37 of Indian Evidence Act lays down that the parties to a contract must either perform, or offer to perform, their respective promise, unless such performance is dispensed with or excused under the provisions of this act or by any other law. It is not in dispute that the bond of indemnity and service Ex. PW1/5 is a contract as it was made by the free consent of parties, competent to contract, for a lawful consideration, for lawful object and is not expressly declared to be void by any provision of Contract Act or by any other law. Defendant no. 1 was required to perform or offer to perform his part of performance contained in the contract i.e. bond of indemnity and service Ex. PW1/5. Performance of promise by defendant no. 1 can be dispensed with or excused under the provision of Contract Act or any other law. Defendant no. 1 in the 13 written statement or in his evidence has not indicated any provision of Contract Act or any other law under which the performance of promise contained in the bond of indemnity and service Ex. PW1/5 can be dispensed with. The fact that defendant no 1 was not given promotion despite being eligible for promotion or that he was not given sufficient flying hours, cannot be a ground or justification for not fulfilling the term and conditions contained in bond of indemnity and service Ex. PW1/5. Interestingly, defendant no. 1 in his evidence by way of affidavit submitted that he was compelled to resigned from the service of plaintiff and has resigned after compliance with due procedure and requirements prescribed by the Director General of Civil Aviation, Govt. of India. Defendant no. 1 nowhere says that he resigned after due compliance with the term and conditions of bond of indemnity and service Ex. PW1/5. Even otherwise, there is no provision in the bond of indemnity and service Ex. PW1/5 about the promotion of defendant no. 1. This fact was admitted by defendant no. 1 in the cross examination. Therefore, it stands proved on record that defendant no. 1 has committed breach of bond of indemnity and service Ex. PW1/5 and terms of appointment as stated in the plaint. Issue no. 2 is accordingly decided in favour of plaintiff and against the defendant. Issue no. 3
12. It is laid down in clause 8 of bond of indemnity and service Ex.
PW1/5 that if the pilot violates the conditions of the bond, plaintiff has undisputed right to approach the Licensing Authority and/or the Court 14 of Law for an appropriate injunction restraining the said pilot from taking up any such employment or rendering such services and that right of plaintiff shall be in addition to and without prejudice to any other right of the company regarding the claim of damages from defendant no. 1. It is nowhere laid down in the bond of indemnity and service Ex. PW1/5 that the licence of defendant no. 1 is liable to be terminated or cancelled on account of violation of service bond. Defendant no. 1 in para 15 of preliminary objection to written statement specifically averred that plaintiff has lodged a complaint against defendant no. 1 before the Director General of Civil Aviation, Govt. of India and the said complaint was investigated and the Director General of Civil Aviation, Govt. of India, dismissed the complaint. These averments were not specifically denied by plaintiff in its replication. In other words, plaintiff is deemed to have admitted that a complaint was made by plaintiff against the defendant no. 1 to the Director General of Civil Aviation, Govt. of India and the said complaint was dismissed. Therefore, the plaintiff has already approached the competent authority for cancellation of licence of defendant no. 1 and has been unsuccessful. No other evidence was led by plaintiff in this regard. Plaintiff has not been able to establish as to how the licence of defendant no. 1 can be terminated or cancelled on account of violation of bond of indemnity and service Ex. PW1/5. Accordingly, issue no. 3 is decided against the plaintiff and in favour of defendants.
15 Issue no. 4 & 7
13. Both these issues are interconnected and are being decided simultaneously. Defendant has contended in the written statement that negative covenant contained in the bond of indemnity and service Ex. PW1/5 is hit by Section 27 of Indian Contract Act and is not enforceable. Section 27 of Indian Contract Act lays down an agreement by which one is restrained from exercising lawful profession, trade or business of any kind is to that extend is void.
Ld. counsel for defendant also relied upon (1983) ILR Delhi 213
- High Polymer Labs. Pvt. Ltd. Vs. R.K. Mukreja & Anr. In this case it was held that Section 27 of Contract Act is applicable when there is a contract in restraint of trade after the cessation of employment whether by resignation or in any other manner and such a restrictive covenant is void and unenforceable. However, such a restrictive covenant is enforceable and is not hit by Section 27 of the Contract Act if same is during the continuance of service of a whole time employee provided that such a covenant or contract is neither unreasonable nor unconscionable not excessively harsh nor one sided."
In AIR 1967 SC 1098 it was held that if the employee after having entered into the said agreement makes a breach of same and takes up another job, the injunction can be issued against him restraining him from taking up other employment.
14. It is laid down in clause 7 and 8 of bond of indemnity and service Ex. PW1/5 that if defendant no. 1 fails to complete his bond 16 period, he shall be liable to pay damages not exceeding Rs. 10 lacs to plaintiff. In other words, there is a stipulation in bond of indemnity and service Ex. PW1/5 for payment of compensation by defendant no. 1 to plaintiff on account of breach of term and conditions of bond of indemnity and service Ex. PW1/5 on the part of defendant no. 1. Section 14 of Specific Relief Act lays down that the contract for non performance of which compensation in money is an adequate relief, cannot be specifically enforced. In the present case, plaintiff can be adequately compensated for non fulfillment of term and conditions of the bond of indemnity and service Ex. PW1/5 on the part of defendant no. 1. Where on account of breach of agreement, compensation for loss or damages was determinable, grant of injunction is not permissible in view of bar of Section 14 (3)(c) of Specific Relief Act. Reference can be made to AIR 2005 Orissa 113.
15. It has been held in various judgments that the relief of injunction would be refused if it would indirectly compel the employee either to idleness or to serve the employer.
16. Coming to the facts of present case if the injunction as prayed for in the plaintiff granted it would indirectly compel the defendant either to idleness or to serve the plaintiff. Since the plaintiff can be adequately compensated for non compliance with term and conditions of bond of indemnity and service Ex. PW1/5 on the part of defendant no. 1, the negative covenant contained in the bond of indemnity and service Ex. PW1/5 cannot be specifically enforced. Section 41 (e) of Specific 17 Relief Act lays down that an injunction cannot be granted to prevent breach of performance of which would not be specifically enforced.
17. Ld. counsel for defendant no. 1 also relied upon 2000(4) Bom.
CR 487 - Jet Airways (I) Ltd. Vs. Jan Peter Ravi Karnik. In this case plaintiffs were refused injunction on the ground that the term and conditions of service as contained in the appointment letter have been altered to the detriments of defendant no. 1 for retrospective effects. There is no allegation of change of term and conditions by defendant in the present case and hence this judgment will not advance the case of defendant.
18. Ld. counsel for defendant also relied upon (1995) 5 Supreme Court Cases 545 M/s. Gujarat Bottling Co. Ltd. & Ors. Vs. Coca Cola Company and Ors. In this case dispute was between two corporations and the judgment was passed on an application filed by one of party for vacation of interim order. In the present case, the dispute is between employer and employee and the case is at the stage of final disposal. Therefore, the facts are clearly distinguishable and the judgment relied upon by ld. counsel for defendant will not held the defendant in any respect.
19. Accordingly, both these issues are decided against the plaintiff and in favour of defendants.
Issue no.5 and 6
20. It has been proved on record that there exists a valid contract 18 between the parties in the form of bond of indemnity and service Ex. PW1/5. Defendant in his written statement as well as evidence by way of affidavit has contended that bond of indemnity and service Ex. PW1/5 is biased, illegal, one sided, unconceivable, unreasonable and not for protection of any proprietary interest of plaintiff and against the public policy and therefore void abinitio and cannot be enforced in court of law. An agreement can be declared as void when same has been entered into in violation of provisions of Indian Contract Act viz viz. when same is vitiated by coercion, fraud, undue influence, mispresentation, absence of consent,, absence of consideration, etc.
21. In Central Inland Water Transport Corporation Ltd. and Anr. Vs. Brojo Nath Ganguly and Anr. (1986) 3 SCC 156, the Hon'ble Supreme Court held as under :
" The Indian Contract Act does not define the expression 'public policy' or 'opposed to public policy'. From the very nature of things, the expressions 'public policy', 'opposed to public policy', or ' contrary to public policy' are incapable of precise definition. Public policy, however, is not the policy of a particular government. It connotes some matter which concerns the public goods and the public interest."
22. Defendant has not been able to demonstrate as to how negative covenant in the bond of indemnity and service Ex. PW1/5 is against the public policy. The bond of indemnity and service Ex. PW1/5 cannot be termed as against the public policy merely because it 19 compelled defendant no. 1 to work for plaintiff for a stipulated period.
23. Defendant has not come out with a clear cut plea as to why bond of indemnity and service Ex. PW1/5 is void. Just because performance of term and conditions of bond of indemnity and service Ex. PW1/5 was inconvenient for the defendant no. 1, same cannot be declared as void agreement.
24. It has also been established on record that the agreement between parties viz. bond of indemnity and service Ex. PW1/5, has been breached by defendant no. 1. Section 73 and 74 of Indian Contract Act deals with the consequence of breach of contract. Section 73 lays down when a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
Section 74 lays down as 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 20 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.
25. Ld. counsel for defendant relied upon 2012 VIAD (Delhi) 429 Alfa Bhoj Pvt. Ltd. Vs. New Delhi Municipal Council. The facts of case and the law laid down is summarized in para 13 of this judgment which is being reproduced herein as under :
26. "In the facts of the case before the Supreme Court in Fateh Chand (supra) there was an Agreement to Sell which provided for forfeiture of earnest money of 1000/, and there was also an additional clause entitling forfeiture of the part price paid in advance of 24,000/. In the absence of any pleading and proof as to loss suffered, the Supreme Court disallowed the claim to forfeit the amount of 24,000/. The facts of the case before the Supreme Court are strikingly similar to the facts of the present case, and in fact the facts of the case before me are on much stronger footing than the facts of the case of the Supreme Court in the case of Fateh Chand (supra) for applicability of the provision of Section 74 of the Contract Act. This I say so because whereas in the case of Fateh Chand (supra) there was a specific clause entitling forfeiture even of the advance price, in the present case there is no term/condition of the tender whereby the defendant is entitled to forfeit the part of the advance licence fee paid. Accordingly, once there is no clause 21 entitling forfeiture of the advance licence fee and there is no loss which is pleaded and proved by the defendant (i.e, even assuming there was a clause of forfeiture of advance license fee paid), yet, in terms of the decision of the Supreme Court in Fateh Chand (supra), the defendant is not entitled to forfeit the advance license fee paid. Admittedly, and as already stated above, there is no pleading and proof of any loss having been caused to the defendant."
27. It is, therefore, obvious that the facts of present case are entirely different from the case relied upon by ld. counsel for defendant. In the present case, there is no clause for forfeiture of part price or of earnest money as bond of indemnity and service Ex. PW1/5 merely provides for damages to the tune of Rs. 10 lacs along with interest.
28. It is, therefore, obvious that the facts of present are entirely different from the case relief upon by ld. counsel for defendant. In the present case, there is no clause for forfeiture of part price or of earnest money as bond of indemnity and service Ex. PW1/5 merely provides for damages to the tune of Rs. 10 lacs along with interest for breach of condition there of.
29. The principle and consideration for issuance of compensation/damages in case of breach of contract were laid down in Appeal (civil) 7419 of 518 (2001) Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd as (1) Terms of the contract are required to be taken into consideration before arriving at the conclusion whether 22 the party claiming damages is entitled to the same. (2) If the terms are clear and unambiguous stipulating the liquidated damages in case of the breach of the contract unless it is held that such estimate of damages/compensation is unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation and that is what is provided in S. 73 of the Contract Act. (3) S .74 is to be read alongwith S. 73 and, therefore, is every case of breach of contract, the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree. The Court is competent to award reasonable compensation in case of breach of a contract. (4) In some contracts, it would be impossible for the Court to assess the compensation arising from breach and if the compensation contemplated is not by way of penalty or unreasonable, the Court can award the same if it is genuine preestimate by the parties as the measure of reasonable compensation.
30. It is clearly laid down in bond of indemnity and service Ex.
PW1/5 that if defendant no. 1 fails to complete his bond period successfully, defendant no. 1 along with sureties shall jointly and severally compensate the plaintiff for all expenses incurred by it on account of and in connection with his services. It is further laid down that the said expenditure shall not only include the loss of business revenue/opportunities but also expenses/liquidated damages to be 23 suffered, expenses to be incurred to make another person to obtain experience to fly independently, salary of the pilot during the period, cost of supervision, cost of trainings, skill test, proficiency test, checks and other losses/expenses suffered due to leaving of the company by defendant no. 1. It is further laid down in clause 7 that although the above mentioned cost would be fairly high amount, however, in case of breach of any condition of this bond by the pilot, defendant no. 1 alongwith the sureties shall be liable to pay and reimburse to the plaintiff by way of damages, the amount of plaintiff but the said recoverable amount of damages shall not exceed Rs. 10 lacs. Therefore, a sum of Rs. 10 lacs mentioned in the bond of indemnity and service Ex. PW1/5 is a genuine, pre estimated measure of reasonable compensation. Plaintiff is entitled as per section 74 of Contract Act to a reasonable compensation not exceeding the amount mentioned in the contract which his Rs. 10 lacs in the present case. Defendant no. 1in his notice for resignation Ex. PW1/7 stated that he is willing to pay the bond amount of Rs. 10 lacs on prorate basis. Defendant has not challenged the correctness or admissibility of notice of resignation Ex. PW1/7 either in the pleadings or in evidence. It is, therefore, obvious that defendant no. 1 was willing to pay the bond amount of Rs. 10 lacs on prorate basis. It is clearly laid down in bond of indemnity and service Ex. PW1/5 that a sum of Rs. 10 lacs as agreed in the bond shall not be reduced proportionately. Therefore, the contention of defendant no. 1 in the resignation notice Ex. PW1/7 is against the indemnity 24 bond. Plaintiff has successfully proved that defendant no. 1 has committed breach of indemnity bond and hence, plaintiff is entitled to damages to the tune of Rs. 10 lacs from the defendants.
31. Plaintiff is claiming interest @ 18% p.a. compounded quarterly on the basis of stipulation in this regard in the bond of indemnity and service Ex. PW1/5. The rate of interest provided in the bond of indemnity and service Ex. PW1/5 and claimed in the suit appears to be on the higher side. Accordingly, it is held that plaintiff is entitled to interest @ 12% p.a. from the date of breach of agreement i.e, 03.11.06 till filing of suit alongwith interest @ 6% p.a. from the date of decree till realization. Both these issues are decided accordingly. Relief.
32. In view of finding of the Court on issue no. 2, 3, 4, 5, 6 and 7, the suit of plaintiff is dismissed so far as the relief of declaration claimed in clause (a), (b), (c) and (d) of the prayer clause are concerned. The suit of plaintiff is decreed so far as the relief of compensation of interest claimed in the clause (e) of prayer clause is concerned.
33. Plaintiff is accordingly held to be entitled to compensation to the tune of Rs. 10 lacs alongwith interest @ 12 % p.a. from the date of breach of agreement i.e, 03.11.06 till the filing of suit alongwith further interest @ 6% p.a. from the date of decree till realization. Decree sheet be prepared accordingly. File be consigned to Record Room.
Announced in open Court ( Sandeep Yadav )
on 19.11.13 Addl. District Judge 2 (SouthEast)
Saket Courts, New Delhi