Delhi District Court
Mohd. Fazil vs The Branch Manager on 29 November, 2019
IN THE COURT OF SH. JOGINDER PRAKASH NAHAR,
ADDITIONAL DISTRICT JUDGE-04, CENTRAL, TIS
HAZARI COURTS, DELHI
Suit No. 610041/16
MOHD. FAZIL
S/O LATE SH. MOHD. NASIR
M/S. HYATT TRADERS
R/O H.NO. 2438, THIRD FLOOR
TURKMAN GATE
DELHI-110006 ...... Plaintiff
VERSUS
THE BRANCH MANAGER
M/S. KOTAK MAHINDRA BANK LTD.
739, KATRA HARDAYAL
FIRST FLOOR, CHANDNI CHOWK
DELHI-110006 ...... Defendant
Date of Institution : 03.02.2015
Date of Judgment reserved on : 25.11.2019
Date of Judgment : 29.11.2019
JUDGMENT
SUIT FOR RECOVERY OF RS.15,00,000/- AS DAMAGES BRIEF FACTS AND REASONS FOR DECISION :-
1. The plaintiff has filed present suit for recovery of Rs.15,00,000/- against the defendant. Plaintiff has opened CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 1 of 30 current account no. 0911416310 in the name of M/s. Hyatt Traders with the defendant bank for business purpose. Plaintiff had to enroll with CPWD contractor for which plaintiff needed solvency certificate. In March 2014 plaintiff contacted Sh. Mani Kant Rai, Branch Sales Manager of the defendant bank who issued solvency certificate to the plaintiff dated 18.03.2014.
This certificate was deposited with CPWD and produced on record in evidence of PW-3 vide Ex.PW3/B. Plaintiff had deposited the said certificate with CPWD. The defendant knew that the certificate was so needed despite which when the CPWD had sent for verification of said certificate with the defendant bank then vide letter Ex.PW3/B by the Branch Manager of the defendant dated 17.05.2014 it was reported to CPWD that no such letter was issued from the said branch and signature of the said staff on the letter does not match with their record. Due to such conduct of the defendant bank plaintiff suffered loss in business reputation and also financial loss for not having contract from CPWD which would have been received by the plaintiff otherwise for a period of five years. Plaintiff cannot be compensated in terms of money. A written complaint in the month of August 2014 against Branch Manager Sh. Bineet Kapoor and Branch Sales Manager Sh. Mani Kant Rai was filed by the plaintiff. Evasive reply dated 27.08.2014 was issued to the plaintiff stating that Sh. Bineet CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 2 of 30 Kapoor had already informed about documents required for issuance of solvency certificate. The telephone conversation with Sh. Bineet Kapoor was recorded by the plaintiff. Written transcript of which is Ex.PW1/3 on record. In the said conversation defendant are asking application from the plaintiff on the basis of which solvency certificate was issued. Plaintiff has suffered mental agony. Hence a legal notice dated 19.09.2014 was issued to the defendant despite receipt of which the defendant has failed to pay compensation of Rs.15 lakhs to the plaintiff with pendente lite and future interest @ 24% p.a..
2. In the WS filed by the defendant it is submitted that plaintiff is not maintaining the current account with the stated account number. Plaintiff contacted the defendant for issuance of solvency certificate in March 2014 which could only be issued on receipt of written request alongwith formalities/documents required. Financial statement of the firm of the plaintiff was also required. This certificate can be issued to a customer where the account is atleast six months old and who has shown satisfactory conduct in last two quarters. The purpose of solvency certificate must be shown in request letter. Bank also charge a fee of Rs.10,000/- with service tax for issuance of such certificate. The signature of Sr. Manager on CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 3 of 30 the solvency certificate with the plaintiff is forged. There is no record with defendant bank for issuance of the said certificate. Defendant has no knowledge of recording of conversation with the plaintiff. The Sadar Bazar branch has no record of issuance of said certificate which does not match with the signature of Sr. Manager and Manager. Mental agony to plaintiff and losses are denied. It is submitted that plaintiff has not suffered any loss and it is prayed by the defendant that present suit of the plaintiff be dismissed.
3. Replication is filed by the plaintiff in which plaintiff has reaffirmed the averments made in the plaint and denied the averments of the defendant.
4. On the pleadings of the parties and averments made following issues were framed in the suit on 08.12.2015:-
1. Whether the plaintiff is entitled to get a decree for a sum of Rs.15,00,000/- against the defendant, as prayed for? OPP
2. Whether the plaintiff is entitled for the interest on the aforesaid amount alongwith pendentelite and future interest, if so, at what rate? OPP CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 4 of 30
3. Whether the plaintiff has forged the signatures of the bank officials?OPD
4. Whether the plaintiff has followed the rules regarding issuance of Solvency certificate? OPD
5. Relief.
5. Plaintiff/Sh. Mohd. Fazil has got examined himself as PW-1, PW-2 is Sh. Israr Babu, Alternate Nodal Officer from Vodafone and PW-3 is Dharminder Singh, UDC from the office of Superintendent Engineer Delhi Centre Circle-I, CPWD and closed his evidence vide separate statement of plaintiff dated 25.07.2018. Defendant has examined the sole witness DW-1 Sh. Vishal Chadha in evidence and evidence of the defendant was closed vide order of the Court dated 20.08.2019.
6. Parties are heard and record perused. Issue-wise findings as follows:-
7. Issue no.1. Whether the plaintiff is entitled to get a decree for a sum of Rs.15,00,000/- against the defendant, as prayed for? OPP 7.1 It is admitted fact between the parties that plaintiff CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 5 of 30 has opened current account with the defendant bank. It is deposed by DW1 that the said account was opened with the help of Mr. Manikant Rai and this fact is again remains admitted in cross-examination. The defendant in his evidence by way of affidavit Ex.DW1/A at para no.6 as submitted that without compliance of above formalities it does not issue a solvency certificate. However no record for such guideline to the bank for issuance of such solvency certificate is produced before the Court by the defendant. Mere bald averments without supporting evidence are not suffice. The defendant has also not produced any record of the account of plaintiff or that of issuance of solvency certificate in other cases or guidelines of the defendant bank in this respect. Hence the above guidelines are not proved by the defendant on record. 7.2 It is deposed by PW1 that he had given a request letter for issuance of solvency certificate to Sh. Manikant Rai copy of which is not retained by the plaintiff. Sh. Manikant Rai is admittedly the employee of the defendant at the relevant time. Therefore deposition of Sh. Manikant Rai is the best piece of evidence in respect of what has transpired during issuance of such solvency certificate. Sh. Manikant Rai being under employment of the defendant could have been produced in evidence. Even when he is not in employment then the defendant could have made effort to call such witness both as CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 6 of 30 to issuance of solvency certificate Ex.PW3/B and also to report on his signatures on the same. Original of Ex.PW3/B is also proved by PW3 on record. The DW1 has deposed that a fee of Rs.10,000/- is charged on issue of first solvency certificate however no such record or receipt or necessary guideline are produced on record in this regard.
7.3 To the contrary it is deposed by DW1 in his evidence by way of affidavit Ex.DW1/A that plaintiff was informed in detail about issuance of solvency certificate. The plaintiff was informed that on receipt of request letter a solvency certificate could be issued. He was advised to carry financial statement of his firm. The DW1 nowhere deposed that plaintiff was intimated about charging of any fees in issuance of solvency certificate. Further, it is clear from the above that at the relevant time the plaintiff had requested for issuance of solvency certificate to the defendant. There was talk of issuance of solvency certificate between both the parties at the relevant time. Since plaintiff has deposed that he had given such letter to Sh. Manikant Rai the employee of the defendant then the relevant record/workdone by Sh. Manikant Rai in respect of issuance of solvency certificate could be produced by the defendant on record alongwith Sh. Manikant Rai. Both the above witness and evidence are in possession of the defendant. It is settled law that though the burden of proof is CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 7 of 30 on the plaintiff even then when the documents and evidence are in power and possession of the defendant then it is for the defendant to produce and prove such document and in absence of which adverse inference can be drawn against the defendant. The relevant citation is reproduced here as under :-
"Gopal, Krishnaji Ketkar vs Mahomed Haji Latif & Ors decided on 19 April, 1968, 1968 AIR 1413, 1968 SCR (3) 862 xxxxxxxx Lastly, reference should be made to the important circumstance that the appellant has not produced the account of the Dargah income. In the course of his evidence the appellant admitted that he was enjoying the income of plot No. 134 but he did not produce any accounts to substantiate his contention. He also admitted that "he had got record of the Dargah income and that account was kept separately." But the appellant has not produced either his own accounts or the account of the Dargah to show as to how the income from plot No. 134 was dealt with. Mr. Gokhale, however, argued that it was no part of the appel- lant's duty to produce the accounts unless he was called upon to do so and the onus was upon the respondents to prove the case and to show that the Dargah was the owner of plot No. 134. We are unable to accept this argument as correct. Even if the burden of proof does not lie on a party the Court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue. It is not, in our opinion, a sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the best evidence which is in their possession which could throw light upon the issues in controversy and to rely upon the abstract doctrine of onus of proof. In Murugesam Pillai v. Manichavasaka Pandara(1) Lord Shaw observed as follows:CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 8 of 30
"A practice has grown up in Indian procedure of those in possession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof, and failing, accordingly, to furnish to, the, Courts the best material for its decision.. With regard to third parties, this may be right enough-they have no responsibility for the conduct of the suit but with regard to the parties to the suit it is, in their Lordships' opinion an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the written evidence in their possession which would throw light upon the proposition."
This passage was cited with approval by this Court in a recent decision--Biltu Ram & Ors. v. Jainandan Prasad & Ors.(1). In that case, reliance was placed on behalf of the defendants upon the following passage from the decision of the Judicial Committee in Bilas Kunwar v. Desrai Ranjit Singh & OrS.(2) "But it is open to a litigant to refrain from producing any documents that he considers irrelevant; if the other litigant is dissatisfied it is for him to apply for an affidavit of documents and he can obtain inspection and production of all that appears to him in such affidavit to be relevant and proper. If he fails so to do, neither he nor the Court at his suggestion is entitled to draw any inference as to the contents of any such documents."
But Shah, J., speaking for the Court, stated: " The observations of the Judicial Committee do not support the proposition that unless a party is called upon expressly to make an affidavit of documents and inspection and production of documents is demanded, the Court cannot raise an adverse inference against a party withholding evidence in his possession. Such a rule is inconsistent with illustration (g) of s. 114 of the Evidence Act, and also an impressive body of authority."
7.4 Hence adverse inference is drawn against the CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 9 of 30 defendant for not producing the best evidence and witness in his power and possession and deposition of PW1 is believed that he had given a request letter to Sh. Manikant Rai for issuance of solvency certificate.
7.5 The defendant has deposed at para - 6 of evidence by way of affidavit Ex.DW1/A that these formalities are to be completed before issuance of solvency certificate. However no such printed guideline or guideline under signature of the competent officer of the defendant are produced on record and merely self serving statement cannot be relied upon. Where there has to be documentary evidence in certain respect then only documentary evidence has to be produced on record in this respect and oral evidence thereto will not be suffice in view of Sec.91 & 92 of Indian Evidence Act, 1872.
7.6 The defendant has claimed that plaintiff has forged signature in the solvency certificate by entering into conspiracy. However, for entering into conspiracy a minimum of two persons are required. The defendant has failed to disclose the name of other person with whom plaintiff had entered into conspiracy for issuance of the solvency certificate Ex.PW3/B and in absence of which it cannot be believed that there was any conspiracy. Further the plea of forgery taken up by the defendant is dealt with under Issue no.3 below burden of proof of which is on the defendant. It is held under issue no.3 below CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 10 of 30 that defendant has failed to prove forgery if any committed by the plaintiff in Ex.PW3/B and in absence of which it cannot be said that the plaintiff has committed any forgery in Ex.PW3/B. The finding under Issue no.3 be read as part of present issue and for the sake of brevity they are not repeated hereunder. 7.7 It was incumbent on the defendant to produce Sh. Manikant Rai and record of its manager who had dealt with the business of the defendant on 18.03.2014 when Ex.PW3/B was issued. The defendant had failed to produce the same. The Ex.PW3/B bears on letter head of the defendant with Sr.no.318. The defendant could have produced letter/ correspondence/record of the relevant date that no such serial number bears in its letter head and if it so bears then there is no such no.318 on the letter head or that the letter with Sr.no.318 is issued for some other purpose. In fact the defendant has not produced any evidence on record in this regard and not produced the relevant evidence for scrutiny of the course. In fact DW1 is not even aware that whether Sh. Manikant Rai was working with the bank at the time of incident which is contrary to the pleading of the defendant to para no.2 of the plaint that the letter should include the purpose for which such solvency certificate is required. It is nowhere the pleading of the defendant that Sh. Manikant Rai the Branch Sales Manager was not its employee on 18.03.2014.
CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 11 of 307.8 Ex.PW1/3 is the hard copy version of mobile phone recording dated 12.05.2014 to one person Sh. Bineet Kapoor having mobile no.8586969241. It is specifically deposed by PW1 that the said conversation had lasted 1 minute 24 seconds where Sh. Bineet Kapoor had requested for giving of request letter for issuance of solvency certificate. In the said recording Sh. Bineet Kapoor has stated that the said letter is not available with him. It is further stated that the bank had issued letter to the plaintiff. It is further stated that one letter of confirmation is received with Sh. Bineet Kapoor regarding issuance of the said letter to the plaintiff. Hence the solvency certificate was issued. There is no cross-examination to the plaintiff on Ex.PW1/3. Hence the above document has remained unrebutted and unimpeached document. Neither it is case of defendant that Sh. Bineet Kapoor is not his employee. Hence Ex.PW3/B is held to have been issued to the plaintiff by the defendant.
7.9 PW3 has proved original of Ex.PW3/B and the originality of same is not disputed by the defendant in cross- examination of PW3. The letter Ex.PW3/C dated 07.05.2014 was issued by CPWD to the defendant to verify correctness of Ex.PW3/B which was declined by the defendant vide letter dated 17.05.2014 vide Ex.PW3/D. This letter is also on letter head of defendant bearing Sr.no.298 signed by the Branch CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 12 of 30 Manager. In Ex.PW3/D the name of Branch Manager is not mentioned nor such name is mentioned in Ex.PW3/B. By such denial of issuance of Ex.PW3/B to CPWD the defendant had committed breach of contract with the plaintiff as plaintiff has account with the defendant and there is contract between customer and the bank for issuance of solvency certificate Ex.PW3/B. Ex.PW3/D is an admitted document which proves breach of contract by the defendant. Therefore it is held that the defendant has committed breach of contract. 7.10 Now it has to be seen that for such breach of contract whether the amount claimed by the plaintiff is justifiable or that there is liability of the defendant towards plaintiff. To claim damages the plaintiff must show that defendant was put in knowledge of the fact that he was going to submit Ex.PW3/B the solvency certificate through CPWD for such contract and for business of such amount.
7.10.1 Plaintiff has nowhere pleaded in the entire plaint that he had put the defendant in knowledge of the fact that the solvency certificate Ex.PW3/B was going to be used by him before CPWD for obtaining such contract for such amount. In absence of such pleading the plaintiff could not have proved the same in the evidence by any amount of evidence that the defendant had such knowledge and the amount of business contract plaintiff could have obtained from CPWD. The CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 13 of 30 solvency certificate Ex.PW3/B does not mention this fact though it is in the nature of declaration in rem. However defendant had come into notice of use of such letter by the plaintiff before CPWD. However, still the knowledge was not given by the plaintiff to the defendant. The nature of business and amount of contract was not known to the defendant. Therefore in not putting such knowledge with the defendant the liability for such damage does not arise with the defendant even though on this account loss has occasioned to the plaintiff. The relevant citation is reproduced here as under : "Kanchan Udyog Limited vs United Spirits Limited decided on 19 June, 2017 by the Hon'ble Supreme Court of India in Civil Appellate Jurisdiction Civil Appeal No.1168 of 2007.
"25. In the facts of the present case, it cannot be held that the breach alone was the cause for loss of anticipated profits, much less was it the primary or dominant reason.
xxxxx In the facts of the present case, it cannot be held that the breach by the respondent was the cause, much less the dominant cause for loss of anticipated profits by the appellant. In Galoo Ltd. (supra) the emphasis was on the common sense approach, holding that the breach may have given the opportunity to incur the loss but did not cause the loss, in the sense in which the word "cause" is used in the law. The following passage extracted therein from Chitty on Contracts, CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 14 of 30 26 th ed. (1989) Vol. 2, pp. 11281129, para 1785 may be usefully set out:
"The important issue in remoteness of damage in the law of contract is whether a particular loss was within the reasonable contemplation of the parties, but causation must also be proved: there must be a causal connection between the defendant's breach of contract and the plaintiff's loss. The courts have avoided laying down any formal tests for causation: they have relied on common sense to guide decisions as to whether a breach of contract is a sufficiently substantial cause of plaintiff's loss."
26. Wellesley Partners LLP (supra) itself carves out an exception to the principle that a contract breaker is liable for damage resulting from his breach, if at the time of making the contract, a reasonable person in his shoes would have had damage of that kind in mind as not unlikely to result from a breach. After noticing The Achilleas (2009) AC 61 it was observed:
"69......The Achilleas shows that there may be cases, where based on the individual circumstances surrounding the making of the contract, this assumed expectation is not well founded.
The observations noticed therein from para 23 and 24 of the Parabola case (2011) QB 477 are also considered relevant as follows:
"23....The next task is to quantify the loss. Where that involves a hypothetical exercise, the court does not apply the same balance of probability approach as it would to the proof of past facts. Rather, it CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 15 of 30 estimates the loss by making the best attempt it can to evaluate the chances, great or small (unless those chances amount to no more than remote speculation) taking all significant factors into consideration.
24.....The judge had to make a reasonable assessment and different judges might come to different assessments without being unreasonable. An appellate court will be slow to interfere with the judge's assessment.
27. The appellate court with reference to evidence has adequately discussed that the appellant failed to take steps to mitigate it losses under the Explanation to Section 73 of the Act. We find no reason to come to any different conclusion from the materials on record. If concentrates were available from M/s. VEC, the appellant had to offer an explanation why it stopped lifting the same after having done so for nearly a year, and could have continued with the business otherwise and earned profits as observed in Payzu Ltd. (supra). It could also have taken steps to sell the unit after its closure in May, 1989 rather than to do so belatedly in 1996. No reasonable steps had been displayed as taken by the appellant for utilisation of its bottling plant by negotiations with others in the business. Nothing had been demonstrated of the injury that would have been caused to it thereby.
28. That leaves the question with regard to reliance loss and the expectation loss. Whether the two could be maintainable simultaneously or were mutually exclusive? In Pullock & Mulla, 14 th Edition, Volume II, page 1174, the primary object for protection of expectation interest, has been described as to put the innocent party in the position which he would CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 16 of 30 have occupied had the contract been performed. The general aim of the law being to protect the innocent party's defeated financial expectation and compensate him for his loss of bargain, subject to the rules of causation and remoteness. The purpose of protection of reliance interest is to put the plaintiff in the position in which he would have been if the contract had never been made. The loss may include expenses incurred in preparation by the innocent party's own performance, expenses incurred after the breach or even precontract expenditure but subject to remoteness. The following passage from the same is considered appropriate for extraction:
"No Recovery for Both, the Expectation Loss and the Reliance loss." Although the rules as to damages seek to protect both the expectation and the reliance interests, the innocent party cannot ordinarily recover both expectation loss, viz., loss of profit, and reliance loss, viz., expenses incurred in reliance on the promise; that would involve double counting. He has to choose between the two measures.
However, he cannot claim reliance losses to put himself in a better position that if the contract had been fully performed: else, the award of damages for reliance losses would confer a windfall on the plaintiff, and would increase the damages in proportion to the claimant's inefficiency in performance, rather than in proportion to the gravity of the breach, and probably of normal principles of causation. In such cases, therefore, the plaintiff can recover the loss on account of the wasted expenditure or outlay only to the extent of the expected gain; and the onus of proving lies on the CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 17 of 30 party committing the breach to show that the reliance costs (or any part of them) would not have been recouped, and would still have been wasted, had the contract been performed."
29. In C & P Haulage (supra), which considers Cullinane (supra) also, it has been observed as follows:
"The law of contract compensates a plaintiff for damages resulting from the defendant's breach; it does not compensate a plaintiff for damages resulting from his making a bad bargain. Where it can be seen that the plaintiff would have incurred a loss on the contract as a whole, the expenses he has incurred are losses flowing from entering into the contract, not losses flowing from the defendant's breach. In these circumstances, the true consequence of the defendant's breach is that the plaintiff is released from his obligation to complete the contractor in other words, he is saved from incurring further losses. If the law of contract were to move from compensating for the consequences of breach to compensating for the consequences of entering into contracts, the law would run contrary to the normal expectations of the world of commerce. The burden of risk would be shifted from the plaintiff to the defendant. The defendant would become the insurer of the plaintiff's' enterprise. Moreover, the amount of damages would increase not in relation to the gravity or consequences of the breach but in relation to the inefficiency with which the plaintiff carried out the contract. The greater his expenses owing to inefficiency, the greater the damages."CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 18 of 30
7.11 The plaintiff is also required to prove that by breach of such contract he has suffered loss duly quantified and proved on record. Actual damage must be proved and not merely an anticipated loss. Plaintiff has claimed a sum of Rs.15 lacs towards damage.
7.11.1 The plaintiff is required to prove actual loss suffered by him in the contract. Plaintiff has not even disclosed in the pleadings or in evidence the value of amount of contract which could be obtained by him from CPWD. Therefore the amount for which work had to be done by the plaintiff was not in his own knowledge. In absence of such knowledge plaintiff could not have purchased man and material for such work to incur costs. Had plaintiff could not purchased necessary input for work then it is difficult to comprehend that what loss actually plaintiff has suffered. The plaintiff has to prove the loss/damage which had actually suffered by him for which compensation needs to be granted. The relevant citation is reproduced here as under :
"M/s. S.P. Virmani & Sons Pvt. Ltd. vs M/s. Otc Exchange of India on 9 March, 2018 of Hon'ble High Court of Delhi at New Delhi in Review Petition No.105/2018 in RFA No. 576/2005.
7. In my opinion there is also a legal issue on the basis of which this appeal has to be allowed and the suit for recovery filed by the appellant/plaintiff has to CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 19 of 30 be decreed. This is because of the provisions of Sections 73 and 74 of the Indian Contract Act, 1872. In law merely because there is a breach of contract such breach is not actionable unless because of the breach loss is caused to the aggrieved party. There can be forfeiture of an amount paid under a contract only when the aggrieved party is caused loss. Two relevant judgments in this regard are the judgments of the Constitution Bench of the Supreme Court in the case of Fateh Chand Vs. Balkishan Dass AIR 1963 SC 1405 and the recent judgment of the Supreme Court in the case of Kailash Nath Associates Vs. Delhi Development Authority and Another, (2015) 4 SCC
136. The relevant paras in the judgment in the case of Kailash Nath Associates (supra) are paras 34, 43 and 43.1 to 43.7 and these paras read as under: "34. In Fateh Chand v. Balkishan Das, this Court held: "The section is clearly an attempt to eliminate the somewhat elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine preestimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties: a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty..... * * * Section 74 of the Indian Contract Act deals with the measure of damages in two classes of cases (i) CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 20 of 30 where the contract names a sum to be paid in case of breach and (ii) where the contract contains any other stipulation by way of penalty. We are in the present case not concerned to decide whether a covenant of forfeiture of deposit for due performance of a contract falls within the first class. The measure of damages in the case of breach of a stipulation by way of penalty is by Section 74 reasonable compensation not exceeding the penalty stipulated for. In assessing damages the Court has, subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to all the circumstances of the case. Jurisdiction of the Court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation according to settled principles. The section undoubtedly says that the aggrieved party is entitled to receive compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. Thereby it merely dispenses with proof of "actual loss or damages"; it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, because compensation for breach of contract can be awarded to make good 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.(At page 526, 527) * * * Section 74 declares the law as to liability upon breach of contract where compensation is by agreement of the parties predetermined, or where there is a stipulation by way of penalty. But the application of the enactment is not restricted to cases where the CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 21 of 30 aggrieved party claims relief as a Plaintiff. The section does not confer a special benefit upon any party; it merely declares the law that notwithstanding any term in the contract predetermining damages or providing for forfeiture of any property by way of penalty, the court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated. The jurisdiction of the court is not determined by the accidental circumstance of the party in default being a Plaintiff or a Defendant in a suit. Use of the expression "to receive from the party who has broken the contract" does not predicate that the jurisdiction of the court to adjust amounts which have been paid by the party in default cannot be exercised in dealing with the claim of the party complaining of breach of contract. The court has to adjudge in every case reasonable compensation to which the Plaintiff is entitled from the Defendant on breach of the contract. Such compensation has to be ascertained having regard to the conditions existing on the date of the breach."
xxxxx xxxxx xxxxx
43. On a conspectus of the above authorities, the law on compensation for breach of contract Under Section 74 can be stated to be as follows:
43.1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine preestimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 22 of 30 only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation.
43.2. Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.
43.3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the Section. 43.4. The Section applies whether a person is a Plaintiff or a Defendant in a suit.
43.5. The sum spoken of may already be paid or be payable in future.
43.6. The expression "whether or not actual damage or loss is proved to have been caused thereby"
means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre estimate of damage or loss, can be awarded.
43.7. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application." (underlining added)"
7.11.2 Hence plaintiff has to prove such loss/damage to him under Sec.73 of Indian Contract Act, 1872. In fact necessary pleadings as to suffering of such actual loss are absent. Even CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 23 of 30 when it is taken that the plaintiff could have earned a certain percentage of profit in awarding of such contract then the value of such contract of such amount has to be shown on record. However there is no evidence in this respect from PW3. Further, the plaintiff is required to put a value on his right taking into account that someone might pay something for it when the plaintiff seeks compensation for the lost chance which was so held in citation titled Mallon Vs. Halliwells (2012) EWCA CIV 1212 and referred at page no.1138 of the Book titled the Indian Contract Act, 1872, 15th Edition by Pollock & Mullah revised by Sh. R. Yashod Vardhan & Ors. It was further held in citation McDermott International Inc. V. Burn Standard Co. Ltd., (2006) 11 SCC 181 AIR 2006 SCW 3276, Associate Builders Vs. DDA, (2015) 3 SCC 49 referred at page no.1138 of the Book titled the Indian Contract Act, 1872, 15 th Edition by Pollock & Mullah revised by Sh. R. Yashod Vardhan & Ors that where neither the payability of the claim for loss of opportunity nor its quantification was proved then no damage can be awarded under the said head.
7.11.3 In view of the above it is held that the plaintiff has failed to prove on record payability of a claim for such loss of opportunity nor its quantification is proved and therefore no damage can be awarded to the plaintiff. Accordingly present issue is decided against the plaintiff and in favour of the CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 24 of 30 defendant.
8. Issue no.2. Whether the plaintiff is entitled for the interest on the aforesaid amount alongwith pendente lite and future interest, if so, at what rate? OPP 8.1 This findings under issues no.1 are equally applicable under the present issue and be read as part of the present issue. The same are not repeated herein for the sake of brevity.
8.2 The plaintiff is required to prove loss for claim of interest and for that plaintiff could have earned such compensation in the form of interest on the amount of such loss. It is already held above under issue no.1 that plaintiff has failed to prove loss/damage and on this account alone plaintiff is not entitled to interest. Further the plaintiff has claimed interest @ 24% p.a. There was no contract between the parties as to any interest. In fact it is mentioned by the defendant in Ex.PW3/B that the above certificate is issued without any commitment and engagement on the part of the defendant. Monetary consideration is absent between plaintiff and defendant in issuance of this certificate. The plaintiff has failed to prove in his entire evidence of PW1 that how he could have earned from the money with him such high rate of interest in the form of compensation. A mere claim in absence of specific evidence and pleadings that defendant had been earning such CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 25 of 30 amount of compensation with the money available with him does not prove the case of the plaintiff. In the facts and circumstances of the case had the plaintiff been able to prove damage /loss then damage in the form of interest @ 6% p.a. under Sec.34 of CPC are held justifiable as the defendant knew that plaintiff is in the business and he is using this account for the purpose of business only. In doing such business plaintiff had to incur costs and in normal saving account interest @ 4% p.a. is normally granted by the scheduled banks. The commercial rate of interest is higher than the saving bank account interest. Since the plaintiff has failed to prove the damage/loss and on this account it is held that plaintiff is not entitled to interest. Accordingly present issue is decided against the plaintiff and in favour of the defendant.
9. Issue no.3. Whether the plaintiff has forged the signatures of the bank officials?OPD 9.1 The plaintiff has specifically pleaded that Sh. Manikant Rai, Branch Sales Manager had issued a certificate to the plaintiff dated 18.03.2014 which plaintiff had deposited before CPWD and produced by CPWD in deposition of PW3 Sh. Dharmender Singh vide Ex.PW3/B. The original record was produced by PW3. In the solvency certificate Ex.PW3/B there are two signatures of Manager at left and right hand side CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 26 of 30 respectively. It also bears the stamp of the defendant bank with signature. It bears Sr. no.318 of the letter pad and the date of issuance is dated 18.03.2014. The certificate is in the nature of declaration that to whom it may concern. The defendant pleads that this certificate is forged as the signature of bank officials are forged. Hence the burden of proof of the present issue is on the defendant. If the signature are forged then defendant is required to prove the true and correct signature on record. No correct signature of the manager at relevant date are produced by the defendant. Merely a statement that the said signature does not pertain to any manager or manager Sh. Manikant Rai is not sufficient as it is a self serving statement. The defendant has not produced record maintained by him in ordinary course of nature to see that what record is actually maintained by the defendant which must not be tampered with. In absence of production of such record by the defendant it cannot be said that there is no such record or that the record is not tampered with. Neither the defendant has produced the signature of Senior Manager, Branch Manager or Manager Sh. Manikant Rai to ascertain that these signature does not pertain to any of the manager. In fact the original signature of the manager or officials of the defendant must be in possession of defendant only and not with the plaintiff. Therefore the defendant is in better position than plaintiff to CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 27 of 30 prove the correct signature of its official. The defendant has failed to produce best evidence in his possession. In fact DW1 has deposed that he has not produced any record related to bank account of the plaintiff. Nor does he know that Sh. Manikant Rai was working in the bank at the time of incident. The only witness of defendant DW1 is speaking on the basis of bank record and no bank record is produced by the defendant in respect of his senior manager or manager after comparison with which it could be said that whether solvency certificate was issued under signature of senior manager and manager or not. In fact defendant could have got compared the handwriting of his manger or senior manager with the documents available with him and defendant also could have produced such manager and senior manager in evidence in defence to disprove such signature. Hence it is held that the defendant was able to produce such evidence and has not produced it and therefore unfavourable inference in required to be drawn against the defendant under sub-Sec.(g) of Sec.114 of Indian Evidence Act, 1872 in that had such document been produced as to signature of manager and senior manager and the record maintained by the bank in ordinary course then it would have went against the defendant being unfavourable to him. The defendant has failed to discharge burden of proof under the present issue that forgery on solvency certificate Ex.PW3/B CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 28 of 30 was caused by the plaintiff. In fact in spite of production of original of solvency certificate by PW3 no action as to forgery is taken by the defendant against the plaintiff and which is not a reasonable conduct of prudent man under ordinary course of nature. In such circumstances of the case, it is held that defendant has failed to prove forgery in Ex.PW3/B and accordingly present issue is decided against the defendant and in favour of the plaintiff.
10. Issue No.4 - Whether the plaintiff has followed the rules regarding issuance of Solvency certificate? OPD 10.1 This findings under issue no.1 are equally applicable under the present issue and be read as part of the present issue. The same are not repeated herein for the sake of brevity.
10.2 It is already held above under issue no.1 that the defendant has failed to put notice of such rules to the plaintiff nor the defendant has proved such rules on record in evidence of DW1. Oral averments in this respect are held not sufficient as it is settled law that where there is documentary evidence then the direct evidence must have been produced. The defendant has not produced best evidence which are written signed policy of its bank and which must be in public domain CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 29 of 30 and must also be in notice of the plaintiff being in such public domain. Defendant has failed to prove the same. Defendant has failed to produce best evidence before the Court. Adverse inference is therefore drawn against the defendant under Sub- Sec.(g) of Sec.114 of Indian Evidence Act that had such evidence been produced then it would have been unfavourable to the defendant. In view of the above it is held that the defendant has failed to prove notice of its rules to the plaintiff of which compliance is desired. In absence of such notice plaintiff could not have complied with the same. Accordingly it is held that defendant has failed to discharge burden of proof under the present issue. The present issue is decided against the defendant and in favour of the plaintiff.
11. Relief The issues No.1 & 2 are decided against the plaintiff and in favour of the defendant and Issues no.3 & 4 are decided against the defendant and in favour of the plaintiff. Hence the suit of the plaintiff stands dismissed.
Decree sheet be prepared accordingly and file be consigned to Record Room.
Announced in the open Court on 29.11.2019. (JOGINDER PRAKASH NAHAR) ADDL. DISTRICT JUDGE-04 CENTRAL/TIS HAZARI COURT/DELHI CS No. 610041/16 Mohd. Fazil v. The Branch Manager M/s. Kotak Mahindra Bank Ltd. Page 30 of 30