Telangana High Court
R. Kistaiah, vs M/S. Nagarjuna Fertilizers And ... on 9 June, 2025
Author: G.Radha Rani
Bench: G.Radha Rani
HONOURABLE Dr.JUSTICE G.RADHA RANI
CITY CIVIL COURT APPEAL No.139 of 2015
JUDGMENT:
This appeal is filed by the appellant-plaintiff aggrieved by the judgment and decree dated 13.03.2015 passed in O.S. No.717 of 2007 by the XIII Additional Chief Judge, FTC, City Civil Court, Hyderabad.
2. For the sake of convenience, the parties are referred as arrayed before the trial court.
3. The plaintiff filed the suit seeking the relief of damages of Rs.20,00,000/- @ Rs.12,675/- per month from 10.10.1996 i.e. the date of his termination from service to 31.01.2010 i.e. the date of his superannuation had he been in service, along with costs of the suit.
4. As per the plaint averments, the plaintiff was appointed as Assistant Manager (Seeds Production) in the Seeds Division of M/s. Nagarjuna Fertilizers and Chemicals Limited (defendant company) by order dated 03.06.1995. The plaintiff reported for duty on 08.06.1995. Although he was designated as Assistant Manager (Seeds), he was attending to various works allotted to him from time to time. He was attending to the duties of Godown Keeper, Field Assistant, Procurement of 2 Dr.GRR,J CCCA No.139 of 2015 Seeds, Stocking, Dispatches etc. He was discharging his duties to the satisfaction of his seniors. While so, on 02.04.1996 an incident took place between him and one Sri Binni Mathews. Sri Binni Mathews assaulted him in the presence of others in the office. With regard to the indecent behaviour of Sri Binni Mathews, the plaintiff lodged a written complaint dated 03.04.1996. The Management, instead of taking action against Mr. Binni Mathews, issued charge sheet against the plaintiff on 06.04.1996 alleging that he abused Mr. Binni Mathews and used unparliamentary language against him and physically pushed him resulting in breaking his spectacles. In the charge sheet, no specific violation of the conduct rules or standing orders of the company, are referred to. The plaintiff submitted his explanation denying the charges. The same was received by the Management on 08.04.1996. One Sri K. Satya Murthy was appointed as Enquiry Officer vide proceedings dated 10.04.1996 to conduct enquiry into the charges alleged against the plaintiff. The enquiry was held on 18.04.1996. Vide proceedings dated 16.05.1996, the plaintiff was furnished with copy of the enquiry report dated 22.04.1996 requiring him to submit his explanation to the show cause notice and the dismissal from service, for which the plaintiff submitted his explanation dated 21.05.1996. 3
Dr.GRR,J CCCA No.139 of 2015 4.1. While the matter stood thus, the plaintiff was issued with charge sheet cum suspension order dated 17.05.1996 alleging that he established contact with one of the competitors of the defendant company and disclosed future seed production planning of the company. It was further alleged that he had contacted Cotton Seed Organizers at Kurnool and instructed to stop procurement of quantities. The said charge sheet was issued as a counter blast at the instance of the disgruntled elements enimical towards the plaintiff, for which the plaintiff submitted explanation dated 24.05.1996 and requested for raising suspension order. On receipt of the explanation to the show cause notice dated 21.05.1996, the Management vide letter dated 20.06.1996 decided to reopen the inquiry and conduct inquiry afresh. Thereafter, vide letter dated 02.07.1996, one Sri K. Sunderesam was appointed as Inquiry Officer to conduct inquiry into the charges. The plaintiff vide letter dated 06.07.1996 requested the Management to permit him to take assistance of an advocate on the ground that no co-employee was coming forward to assist the plaintiff in the departmental enquiry. The plaintiff also sought for a joint inquiry to be conducted with regard to allegations made by the plaintiff against Mr. Binny Mathews and the allegations made by Binny Mathews against him as both relate to one and the same incident. The management vide letter dated 10.07.1996 replied that a common inquiry would be conducted as the 4 Dr.GRR,J CCCA No.139 of 2015 witnesses were one and the same, but rejected the request of the plaintiff for engaging an advocate. The inquiry was conducted in an unfair manner. The Inquiry Officer did not explain the procedure in conducting the inquiry and he was also acting at the instance of the Presenting Officer of the Company. He recorded the statement of the plaintiff before recording the statement of the Management. The entire procedure was only a stage managed affair. The proceedings were conducted in violation of principles of natural justice. On that ground itself, the inquiry had to be held vitiated. The findings of the inquiry officer were not furnished to the plaintiff. While so, the management vide proceedings dated 10.10.1996 terminated the services of the plaintiff with immediate effect. In the said termination order the management reserved its right to proceed against the plaintiff with regard to charge sheet dated 17.05.1996 issued to him. The plaintiff contended that the termination order dated 10.10.1996 was wholly illegal, arbitrary and violative of principles of natural justice. Aggrieved by the same, the plaintiff made a representation dated 28.10.1996 to the Managing Director to reconsider the matter and to set aside the termination order dated 10.10.1996. But so far no orders were passed by the Managing Director of the Company. Having no other alternative, the plaintiff filed Industrial Dispute No.67 of 1996 before the Labour Court, Hyderabad. The same was dismissed by award dated 23.11.1998 on the 5 Dr.GRR,J CCCA No.139 of 2015 ground of jurisdiction. However, the Labour Court held that the removal of plaintiff from service was unjustified. Aggrieved by the said award, the plaintiff filed Writ Petition No.4270 of 1999 before the High Court of A.P. The same was also dismissed by order dated 25.02.2003 confirming the Award passed by the Labour Court.
4.2. The plaintiff further contended that the Company on the earlier occasion after the conclusion of the inquiry, furnished a copy of the inquiry report along with show cause notice. However, before issuing the impugned proceedings dated 10.10.1996 had not furnished the copy of the inquiry report. The findings of the management were in violation of the principles of natural justice. The proceedings dated 10.10.1996 referred to loss of confidence for which there was no material alleged against the plaintiff either in the charge sheet or in the departmental proceedings. For the first time the management came forward with wild and baseless allegations. The punishment imposed was shockingly disproportionate. The order of removal from service was highly unjustified. Ever since the termination of his services the plaintiff could not secure any alternate employment inspite of his best efforts. The Management was propagating that the plaintiff had indulged in grave misconduct, thereby he could not secure any alternate employment. Therefore, the plaintiff sought that he 6 Dr.GRR,J CCCA No.139 of 2015 was entitled for declaration to declare that the removal of him from service was unjustified and asked for his reinstatement or in the alternative for damages equivalent to the salary till the age of his retirement, which would have been earned by him, had he not been removed from service.
5. The respondent-defendant filed written statement contending that the suit filed by the plaintiff was not maintainable either in law or on facts. The suit was barred by limitation. Admittedly the cause of action arose on 10th October, 1996 when the plaintiff's service contract was terminated by the defendant preceded by a validly held domestic inquiry on the charges levelled against him vide charge-sheet dated 06.04.1996 which was assailed in the present suit only on 11.06.2003. The defendant admitted that the plaintiff was appointed as Assistant Manager (Seeds Production) in the Seeds Division of his Company in the Group 'A' of the Managerial cadre, in the year 1995 in the existing vacancy vide appointment letter dated 03.06.1995 on due consideration of the employment application form submitted by the plaintiff. The terms and conditions of the appointment order as well as the employment application form were self-explanatory. The relevant clause with regard to termination of employment was as follows:
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Dr.GRR,J CCCA No.139 of 2015 "Notice of Termination:
During your probation period, your services can be terminated by either party giving the other a written notice of one month or salary (Basic) in lieu thereof. After confirmation, your services can be terminated by either party giving the other a written notice of three months or salary (Basic) in lieu thereof."
5.1. The plaintiff as Assistant Manager (Seed Production) was exercising managerial duties attached to the office and looking after the entire seeds division production program amongst various functions with the help of four subordinates working under him including Mr. Binny Matthews. The plaintiff was in a responsible position to carry out policies of the defendant company, to chalk out programs with over all control of the affairs of the division to achieve the objects assigned to him from time to time by taking independent decisions. He was empowered to interact and conclude contracts on behalf of the defendant Company with its dealers. He was also empowered to take all such actions as would be necessary for a Manager to carry out his duties and functions in relation to the work performed by his subordinate staff.
5.2. The defendant further contended that while things stood thus, the plaintiff was reported to have committed certain serious acts of misconduct on 02.04.1996 and accordingly he was issued with a charge-
sheet dated 06.04.1996. The allegations were to the effect that he was 8 Dr.GRR,J CCCA No.139 of 2015 involved in a riotous and disorderly behavior in the office premises of the defendant. He was reported to have behaved in an indecent and indisciplined manner with fellow officers, by name, Mr. Binny Mathews of the same Department. Therefore, an inquiry was held into the charges on 18.04.1996 wherein the charges were found to have been established. Accordingly, he was served with a second show cause notice dated 16.05.1996 asking him as to why his services could not be terminated. The defendant in his letter dated 21.05.1996 alleged certain aspects relating to the inquiry conducted against him.
5.3. The defendant further contended that in view of the rival complaints against the plaintiff and the said Mr. Binny Mathews, against each other on 03.04.1996, with a view to dispel any misgivings it was decided to hold the inquiry denovo. Accordingly, a retired Judicial Officer was appointed as Inquiry Officer to inquire into the matter. A joint enquiry was conducted with regard to the complaint by the plaintiff as well as Mr. Binny Mathews. At the initial stage of inquiry, the Plaintiff requested the Enquiry Officer, vide his letter dated 06.07.1996, for being permitted to be represented by an Advocate. The said request was not acceded to since it was not required under law while inter alia informing that as the witnesses were common, a common inquiry would be 9 Dr.GRR,J CCCA No.139 of 2015 conducted. The defendant further submitted that the plaintiff had fully participated and availed all the opportunities given to him to defend his case, during the course of inquiry. The defendant further submitted that on every occasion whenever the witnesses were examined in support of the charges, the plaintiff used to seek time for cross-examining the witnesses and the same was readily acceded to by the Inquiry Officer to accommodate the plaintiff to enable him to avail the opportunity of cross- examining them, to meet reasonableness and fair play in the matter. The plaintiff had produced his own defense evidence by examining himself and produced an independent witness to defend his case. As many as 2 complainant witnesses (CW-1 & CW-2), 4 Management witnesses (MW-1 to MW-4) and 1 Defense witness (DW-1) were examined during the enquiry. After considering all the material facts and evidence, the Inquiry Officer gave his findings holding the plaintiff guilty of the charges leveled against him amounting to misconduct. The defendant further submits that the plaintiff was also issued with another charge-sheet-cum-suspension order dated 17.05.1996 having regard to the report that he had established contact with a competitor of the defendant company disclosing the production plans which was in violation of terms and conditions as agreed by the plaintiff during the time of appointment. Such acts were against the interests of the defendant company. In the meantime, as the findings of the 10 Dr.GRR,J CCCA No.139 of 2015 Inquiry Officer in connection with the charge-sheet dated 06.04.1996 were made available, the defendant company, while reserving its right to take further action in respect of the second charge-sheet-cum-suspension order, terminated the services of the plaintiff, by letter dated 10.10.1996 in as much as the acts of misconduct proved themselves were grave enough meriting dismissal and there were no mitigating or extenuating circumstances to take any lenient view in the matter. The defendant could also not repose any more confidence in the plaintiff to continue him in employment.
5.4. The defendant further submitted that there was even a complaint from one of the constituent seed production organizers that the plaintiff had collected some amount from them representing the defendant with a promise to supply Alumino Sulphos tablets, a rat poison and inspite of repeated requests, the plaintiff had neither supplied the tablets nor refunded the money. Therefore, the defendant lost confidence in the plaintiff, which was another factor, which compelled the defendant to terminate the services of the plaintiff.
5.5. The defendant further submitted that the inquiry conducted against the plaintiff was fair, proper and valid. In view of the above circumstances, the termination of the services of the plaintiff were fully 11 Dr.GRR,J CCCA No.139 of 2015 justified and the same was not liable to be interfered with by the Court. No relief could be granted to the plaintiff, much less the relief sought in the plaint and prayed to dismiss the suit with exemplary costs.
6. Basing on the said pleadings, the trial court framed the issue as follows:
Whether the plaintiff is entitled for damages as prayed for?
7. The plaintiff examined himself as PW.1 and got examined the driver, who was alleged to be present at the time of the quarrel between him and Sri Binny Mathews on 02.04.1996 as PW.2. Exs.A1 to A11 were marked on behalf of the plaintiff. The Assistant Manager - Legal of the defendant company was examined as DW.1. Exs.B1 to B7 were marked on behalf of the defendant.
8. The trial court on considering the oral and documentary evidence on record, dismissed the suit. Aggrieved by the said dismissal of the suit filed by him, the plaintiff preferred this appeal.
9. Heard Sri V. Narasimha Goud, learned counsel for the appellant-plaintiff and Sri GVS Ganesh, learned counsel for the respondent-defendant.
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Dr.GRR,J CCCA No.139 of 2015
10. Learned counsel for the plaintiff contended that the court below had not appreciated the evidence produced before it and failed to see that no power was available to the defendant to order for second enquiry. No reasons were assigned nor any provision was shown by the defendant for ordering the second enquiry, as such, the action of the defendant in terminating the plaintiff from service vide order dated 10.10.1996 was bad in law as well as against the principles of natural justice. The lower court failed to appreciate that no action was taken against Mr. Binny Mathews, when Mr. Binny Mathews pushed the plaintiff, due to which he sustained injury to lower jaw and for which the plaintiff lodged a complaint against him with the defendant. As such, the action of the defendant was discriminatory. Mr. Binny Mathews was continued in service whereas the plaintiff was terminated from service and consequently, the plaintiff was suffering without any employment for all these years. The lower court failed to appreciate that Mr. Binny Mathews had not stated in his evidence in the inquiry that the plaintiff abused him in an unparlimentary language. The charge sheet was not specific. The abusive words used against Mr. Binny Mathews by the plaintiff were not specified. The court below ought to have appreciated that the charge leveled against the plaintiff was vague and the termination order basing on such vague charges was not maintainable in law. No provision of law was mentioned in the charges to 13 Dr.GRR,J CCCA No.139 of 2015 show that the allegations leveled against the plaintiff would constitute misconduct. The court below failed to appreciate that on completion of second enquiry, the defendant failed to serve the plaintiff with the enquiry report nor called for the objections of the plaintiff. No show cause notice proposing to terminate the services of the plaintiff was given. The defendant straightaway came to the conclusion that the charges were proved and passed an order of termination of services of the plaintiff by adding an additional allegation of loss of confidence for which no opportunity was given to the plaintiff nor proved the ground for such loss of confidence against the plaintiff. Due to non-supplying the enquiry report nor calling for the comments on the enquiry report, and not issuing any show cause notice before termination of service, much prejudice was caused to the plaintiff as he lost an opportunity to put-forth his case and how the punishment of termination was not sustainable and relied upon the judgments of the Hon'ble Apex Court in:
1. Managing Director, ECIL, Hyderabad v. B. Karunakar and others 1,
2. State of Uttaranchal v. Kharak Singh2,
3. Punjab National Bank and others v. K.K. Verma 3'
4. Sawai Singh v. State of Rajasthan4, 1 (1993) 4 SCC 727 2 (2008) 2 SCC (L&S) 698 3 (2010) 13 SCC 494 14 Dr.GRR,J CCCA No.139 of 2015
5. Surath Chandra Chakrabarty v. State of West Bengal5,
6. Pradeep v. Manganese Ore India Ltd. 6,
7. M.S. Gill v. The Chief Election Commission 7 and of the Division Bench of the High Court of Andhra Pradesh in:
8. The Depot Manager, APSRTC v. Suresh Babu 8.
11. The learned counsel for the respondent-defendant, on the other hand, contended that the appellant-plaintiff was dismissed from service for proved mis-conduct. He raised an Industrial Dispute vide I.D. No.67 of 1996. An award was passed by the Labour Court-I, holding that the plaintiff was not a workman as he was holding a Managerial post. The observations of the Court on other aspects were not binding. The writ petition filed by the plaintiff was also dismissed, as such, the appellant filed a Civil Suit O.S. No.1337 of 2003 on the file of the II-Senior Civil Judge, City Civil Court, Hyderabad, seeking the relief of reinstatement. As the said relief was barred under law, the defendant filed a petition vide I.A. No.417 of 2004 under Order VII Rule 11 of CPC and the said petition was allowed rejecting the plaint. Aggrieved by which, the plaintiff 4 (1986) 3 SCC 454 5 (1970) 3 SCC 458 6 (2022) 3 SCC 683 7 (1978) 1 SCC 405 8 2019 (2) ALD 264 (DB) 15 Dr.GRR,J CCCA No.139 of 2015 preferred A.S. No.557 of 2005 and the same was disposed of on 19.07.2007 by the XII Additional Chief Judge, City Civil Court, Hyderabad (FTC), allowing the appeal in part setting aside the order of the trial court in rejecting the entire claim as the same was not in accordance with law and directed the trial court to return the plaint to the plaintiff for presenting the same before the proper court. Thereafter, the plaintiff preferred the present suit seeking the relief of damages. Section 73 of the Contract Act provides for damages for breach of contract. But, the contract of employment of the plaintiff with the defendant company stipulates a clause for termination. As per the contract, the appellant was entitled only for three months basic salary. No material was placed by the appellant before the trial court to show that he applied for jobs and he could not secure employment due to bad propaganda made by the defendant. There was no concept of back-wages in the matters before the Civil Court as in the case of Labour Court. Only after the proof that termination was illegal, the plaintiff was entitled for damages. The trial court, on considering all the aspects dismissed the suit filed by the appellant-plaintiff and relied upon the judgments of the High Court of A.P. in A.P. Flying Club, Hyderabad, represented by its Secretary v. S.C. Saxena9 and of the Karnataka High Court in M. Nanjappa v. M.P. 9 1980 (1) APLJ 347 16 Dr.GRR,J CCCA No.139 of 2015 Muthuswamy 10 and of the Hon'ble Apex Court in Pearlite Liners (P) Ltd. v. Manorama Sirsi 11 and Maharashtra State Cooperative Housing Finance Corporation Ltd. v. Prabhakar Sitaram Bhadange 12 and of the High Court of Jammu & Kashmir in Punjab National Bank v. VK Gandotra13.
12. Now, the points for determination in this appeal are:
1) Whether the appellant-plaintiff is entitled for damages as prayed for?
2) Whether the judgment of the trial court is in accordance with law and facts on record?
3) To what result?
13. POINT No.1:
Though the appellant-plaintiff filed the suit seeking the relief of damages, he filed his evidence affidavit stating that he was entitled for declaration to declare that his removal from service was unjustified and consequently sought for reinstatement or in the alternative for damages equivalent to the salary till the age of his retirement which would have been earned by him had he not been removed from service. The Hon'ble Apex Court in Pearlite Liners (P) Ltd. v. Manorama Sirsi (11 supra) by 10 AIR 1975 KARNATAKA 146 11 (2004) 3 SCC 172 12 (2017) 5 SCC 623 13 2025 SCC OnLine J&K 198 17 Dr.GRR,J CCCA No.139 of 2015 referring to its earlier judgment in Executive Committee of Vaish Degree College v. Lakshmi Narain [(1976) 2 SCC 58] held that:
"It is a well settled principle of law that a contract of personal service cannot be specifically enforced and a court will not give a declaration that the contract subsists and the employee continues to be in service against the will and consent of the employer. An employer cannot be forced to take an employee with whom relations have reached a point of complete loss of faith between the two."
14. The Hon'ble Apex Court in Maharashtra State Cooperative Housing Finance Corporation Ltd. v. Prabhakar Sitaram Bhadange (12 supra) also held that:
"Contract of personal services is not enforceable under the common law. Section 14, read with Section 41(e) of the Specific Relief Act, 1963, specifically bars the enforcement of such a contract. It is for this reason the principle of law which is well established is that the Civil Court does not have the jurisdiction to grant relief of reinstatement as giving of such relief would amount to enforcing the contract of personal services. However, as laid down in the cases referred to above, and also in Executive Committee of Vaish Degree College, Shamli & Ors. v. Lakshmi Narain & Ors., there are three exceptions to the aforesaid rule where the contract of personal services can be enforced:
(a) in the case of a public servant who has been dismissed from service in contravention of Article 311 of the Constitution of India;
(b) in the case of an employee who could be reinstated in an industrial adjudication by the Labour Court or an Industrial Tribunal; and
(c) in the case of a statutory body, its employee could be reinstated when it has acted in breach of the mandatory obligations imposed by the statute.
18
Dr.GRR,J CCCA No.139 of 2015 Even when the employees falling under any of the aforesaid three categories raise dispute qua their termination, the Civil Court is not empowered to grant reinstatement and the remedy would be, in the categories
(a) and (c), by way of writ petition under Article 226 of the Constitution or the Administrative Tribunal Act, as the case may be, and in the category (b), it would be under the Industrial Disputes Act. An employee who does not fall in any of the aforesaid exceptions cannot claim reinstatement. His only remedy is to file a suit in the Civil Court seeking declaration that termination was wrongful and claim damages for such wrongful termination of services."
15. Admittedly, the appellant-plaintiff does not fall under any of the above three categories. He was not in public employment to attract Article 311 of the Constitution of India or he falls under the category of a workman so as to attract the Industrial Disputes Act. The defendant was not a statutory body and there was no statute governing the service conditions of the plaintiff. The relationship between the plaintiff and the defendant was based on a contract between two private parties. The appointment letter marked under Ex.A6 governs the terms of employment. It would disclose that the applicant i.e. the plaintiff would be in probation for a period of six months from the date of his joining which could be extended at the discretion of the Management by another period of three months at a time upto a maximum of six months. At the end of probation period, if his performance was to the satisfaction of the Management, he 19 Dr.GRR,J CCCA No.139 of 2015 would be confirmed in that position, in writing. It was also mentioned under the head "Notice of Termination" that:
"During your probation period, your services can be terminated by either party giving the other a written notice of one month or salary (Basic) in lieu thereof. After confirmation, your services can be terminated by either party giving the other a written notice of three months or salary (Basic) in lieu thereof."
The age of retirement is shown as that it would be on the 5th day of April following the completion of 58 years of age.
16. There are also several other terms and conditions and benefits that would be given to the employee mentioned in the appointment letter marked under Ex.A6. The basic pay was shown as Rs.4,000/- per month and that he was entitled for a HRA of Rs.1,400/- per month, Conveyance Allowance of Rs.850/- per month, Grade Allowance of Rs.1,500/- per month, Field allowance of Rs.200/- per month, Children Education allowance to a maximum of Rs.200/- per month, Group Reward Scheme Rs.400/- per month, Medical reimbursement of Rs.800/- per month, Uniform Maintenance reimbursement of Rs.350/- per month and Leave Travel Assistance upto Rs.5,000/- per calendar year. It would also disclose that the employee along with the dependent family members were covered under a comprehensive group medical insurance scheme and that the employee was covered by personal accident insurance scheme for a sum of 20 Dr.GRR,J CCCA No.139 of 2015 Rs.3,00,000/- and group savings linked insurance scheme providing life insurance coverage of Rs.75,000/- and other rules and regulations.
17. PW.1 in his cross-examination stated that he joined in the defendant company 1½ years ago and admitted that as per the conditions stipulated in Ex.A6, he could be removed from service during probation, thereafter by issuing notice of three months or three months salary. He admitted that he had not filed any document to show that his probation was declared. However, DW.1-Assistant General Manager, Legal, of the defendant company, during his cross examination admitted that after probation, the appellant-plaintiff was confirmed in his services and that after confirmation of the services, to terminate any employee, three months prior notice had to be issued. He also admitted that he had not filed any prior notice of terminating the appellant-plaintiff from his services.
18. As seen from the appointment letter, the plaintiff was appointed in the defendant company in June, 1995 and the charge sheet was issued against him for the incident occurred on 02.04.1996 and an Inquiry Officer, by name, K. Satya Murthy, was appointed initially and an inquiry report was also furnished to the appellant-plaintiff on 22.04.1996 requiring him to submit his explanation to the show cause notice of dismissal from service for which he submitted his explanation on 21.05.1996 and 21 Dr.GRR,J CCCA No.139 of 2015 subsequently, basing on his representation, the inquiry was reopened and one Mr. Sunderasam, a retired Judicial Officer was appointed to conduct inquiry afresh.
19. Ex.B2 is the copy of the inquiry report dated 03.09.1996. The termination order was dated 10.10.1996. The contention of the learned counsel for the appellant-plaintiff was that the inquiry report was not furnished to the plaintiff and that the same would amount to violation of principles of natural justice and as such, the order of termination was liable to be set aside. The learned counsel for the appellant relied upon the judgments of the Hon'ble Apex Court in Managing Director, ECIL, Hyderabad and others v. B. Karunakar and others (1 supra) on the aspect that the denial of the report of the inquiry officer is a denial of a reasonable opportunity and breach of the principles of natural justice. It was also held therein that the delinquent employee, therefore, be entitled to a copy of the report even if the statutory rules do not permit furnishing the copy of the report or silent on the subject.
20. It is considered relevant to extract the paras relied by the learned counsel for the appellant-plaintiff in the above judgment:
"29. Hence it has to be held that when the Inquiry Officer is not the disciplinary authority, the delinquent employee has right to receive a copy of the inquiry Officer's report 22 Dr.GRR,J CCCA No.139 of 2015 before the disciplinary authority arrives at its conclusions with regard to the guilt or innocence of the employee with regard to the charges levelled against him. That right is a part of the employee's right to defend himself against the charges levelled against him. A denial of the Inquiry Officer's report before the disciplinary authority takes its decision on the charges is a denial of reasonable opportunity to the employee to prove his innocence and is a breach of the principles of natural justice.
30. Hence the incidental questions raised above may be answered as follows:
(i) Since the denial of the report of the Inquiry Officer is a denial of reasonable opportunity and a breach of the principles of natural justice, it follows that the statutory rules, if any, which deny the report to the employee are against the principles of natural justice and, therefore, invalid. The delinquent employee will, therefore, be entitled to a copy of the report even if the statutory rules do not permit the furnishing of the report or are silent on the subject.
(ii) The relevant portion of Article 311(2) of the Constitution is as follows:
"(2) No such person as aforesaid shall be dismissed or removed or reduced in rank except after an enquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges."
Thus the Article makes it obligatory to hold an inquiry before the employee is dismissed or removed or reduced in rank. The Article, however, cannot be construed to mean that it prevents or prohibits the inquiry when punishment other than that of dismissal, removal or reduction in rank is awarded. The procedure to be followed in awarding other punishments is laid down in the service rules governing the employee. What is further, Article 311(2) applies only to members of the civil services of the Union or an all India service or a civil service of a State or to the holders of the civil posts under the Union or a State. In the matter of all punishments both 23 Dr.GRR,J CCCA No.139 of 2015 Government servants and others are governed by their service rules. Whenever, therefore, the service rules contemplate an inquiry before a punishment is awarded, and when the Inquiry Officer is not the disciplinary authority the delinquent employee will have the right to receive the Inquiry Officer's report notwithstanding the nature of the punishment.
(iii) Since it is the right of the employee to, have the report to defend himself effectively, and he would not know in advance whether the report is in his favour or against him, it will not be proper to construe his failure to ask for the report, as the waiver of his right. Whether, therefore, the employee asks for the, report or not, the report has to be furnished to him.
(iv) In the view that we have taken, viz., that the right to make representation to the disciplinary authority against the findings recorded in the inquiry report is an integral part of the opportunity of defence against the charges and is a breach of principles of natural justice to deny the said right, it is only appropriate that the law laid down in Mohd. Ramzan Khan's case (AIR 1991 SC 471) (supra) should apply to employees in all establishments whether Government or non-Government, public or private. This will be the case whether there are rules governing the disciplinary proceeding or not and whether they expressly prohibit the furnishing of the copy of the report or are silent on the subject. Whatever the nature of punishment, further, whenever the rules require an inquiry to be held, for inflicting the punishment in question, the delinquent employee should have the benefit of the report of the Inquiry Officer before the disciplinary authority records its findings on the charges levelled against him."
21. In State of Uttaranchal v. Kharak Singh (2 supra) also, the Hon'ble Apex Court by relying upon its earlier judgments in Associated 24 Dr.GRR,J CCCA No.139 of 2015 Cement Co. Ltd. vs. The Workmen and Anr. [(1964) 3 SCR 652] Managing Director, ECIL, Hyderabad and Ors. v. B. Karunakar and Ors.; Radhey Shyam Gupta v. U.P. State Agro Industries Corporation Ltd. [MANU/SC/0788/1998]; Syndicate Bank and Ors v. Venkatsh Gururao Kurati [MANU/SC/0670/2006] and A.N. D'Silva v. Union of India [MANU/SC/0328/1961] held that:
"On receipt of the enquiry report, before proceeding further, it is incumbent on the part of the disciplinary/punishing authority to supply a copy of the enquiry report and all connected materials relied on by the enquiry officer to enable him to offer his views, if any."
22. Punjab National Bank and others v. K.K. Verma (3 supra) was also to the effect of non-supplying of inquiry report to the delinquent and it was held therein that:
"Such conduct prejudiced respondents since he was denied opportunity to make submissions on adverse findings and to prove his innocence.
It was held therein that:
"Thus, the right to represent against the findings in the inquiry report to prove one's innocence is distinct from the right to represent against the proposed penalty. It is only the second right to represent against the proposed penalty which is taken away by the 42nd Amendment. The right to represent against the findings in the report is not disturbed in any way. In fact, any denial thereof will make the final order vulnerable.
It was then submitted that non supply of inquiry report is inconsequential if the employee does not show as to how he is prejudiced thereby. ECIL V.B. Karunakar ((1993) 4 25 Dr.GRR,J CCCA No.139 of 2015 SCC 727), S.K. Singh v. Central Bank of India and Ors. [1996 (6) SCC 415] and Haryana Financial Corporation and Anr. v. Kailash Chandra Ahuja [2008 (9) SCC 31] were relied upon in support. There cannot be any grievance with respect to the proposition. In the present case however, we are concerned with a situation where the finding of the inquiry officer on a charge has been reversed by the Disciplinary Authority, which was not the case in any of the three cases. Besides, by not giving the inquiry report and the adverse order of the disciplinary authority, the respondent was denied the opportunity to represent before the finding of guilt was arrived at and thereby he was certainly prejudiced."
23. All the above cases were rendered under Article 311 (2) of the Constitution of India first proviso (after 42nd Amendment). Only in the first case of Managing Director, ECIL v. B. Karunakar, it was held that the law laid down in Mohd. Ramzan case i.e. Union of India And Ors v. Mohd. Ramzan Khan [(1991) 1 SCC 588] should apply to employees in all aspects whether Government or non-Government, public or private and further held that it would be the case whether there were rules governing the disciplinary proceedings or not and even whether they expressly prohibit the furnishing of the copy of the report or were silent on the subject, the delinquent employee should have the benefit of the report of the enquiry officer before the disciplinary authority records its findings on the charges leveled against him.
24. As the said observations made by the Hon'ble Apex Court are also binding on the private parties and no evidence is adduced by the 26 Dr.GRR,J CCCA No.139 of 2015 respondent-defendant that a copy of the inquiry report was furnished to the appellant-plaintiff before issuing the termination order, the non-supply of the enquiry report to the plaintiff is considered as violation of principles of natural justice. However, the effect of non-supply of the enquiry report to the delinquent was also considered by the Hon'ble Apex Court in the same case of Managing Director, ECIL v. B. Karunakar (1 supra) and held as follows:
"30. (v) The next question to be answered is what is the effect on the order of punishment when the report of the Inquiry Officer is not furnished to the employee and what relief should be granted to him in such cases. The answer to this question has to be relative to the punishment awarded. When the employee is dismissed or removed from service and the inquiry is set aside because the report is not furnished to him, in some cases the non- furnishing of the report may have prejudiced him gravely while in other cases it may have made no difference to the ultimate punishment awarded to him. Hence to direct reinstatement of the employee with back-wages in all cases is to reduce the rules of justice to a mechanical ritual. The theory of reasonable opportunity and the principles of natural justice have been evolved to uphold the rule of law and to assist the individual to vindicate his just rights. They are not incantations to be invoked nor rites to be performed on all and sundry occasions. Whether in fact, prejudice has been caused to the employee or not on account of the denial to him of the report, has to be considered on the facts and circumstances of each case. Where, therefore, even after the furnishing of the report, no different consequence would have followed, it would be a perversion of justice to permit the employee to resume duty and to get all the consequential benefits. It amounts to rewarding the dishonest and the guilty and thus to stretching the concept of justice to illogical and exasperating limits. It amounts to a "unnatural expansion of natural justice" which in itself is antithetical to justice.27
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31. Hence, in all cases where the Inquiry Officer's report is not furnished to the delinquent employee in the disciplinary proceedings, the courts and Tribunals should cause the copy of the report to be furnished to the aggrieved employee if he has not already secured it before coming to the Court! Tribunal, and give the employee an opportunity to show how his or her case was prejudiced because of the non-supply of the report. If after hearing the parties, the Court, Tribunal comes to the conclusion that the non-supply of the report would have made no difference to the ultimate findings and the punishment given, the Court/Tribunal should not interfere with the order of punishment. The Court/Tribunal should nut mechanically set aside the order of punishment on the ground that the report was not furnished as is regrettably being done at present. The courts should avoid resorting to short-cuts. Since it is the Courts/ Tribunals which will apply their judicial mind to the question and give their reasons for setting aside or not setting aside the order of punishment, (and not any internal appellate or revisional authority), there would be neither a breach of the principles of natural justice nor a denial of the reasonable opportunity. It is only if the Courts/ Tribunals find that the furnishing of the report would have made a difference to the result in the case that should set aside the order of punishment. Where after following the above procedure the Courts/Tribunals sets aside the order of punishment, the proper relief that should be granted is to direct reinstatement of the employee with liberty to the authority, management to proceed with the inquiry, by placing the employee under suspension and continuing the inquiry from the stage of furnishing him with the report. The question whether the employee would be entitled to the back-wages and other benefits from the date of his dismissal to the date of his reinstatement if ultimately ordered should invariably be left to be decided by the authority concerned according to law, after the culmination of the proceedings and depending on the final outcome. If the employee succeeds in the fresh inquiry and is directed to be reinstated, the authority should be at liberty to decide according to law how it will treat the period from the date of dismissal till the reinstatement and to what benefits, if any and the extent of the benefits, he will be entitled. The reinstatement made as a result of the setting aside of the inquiry for failure to furnish the report should be treated as a reinstatement for the purpose of holding the fresh inquiry from the stage of furnishing the report and no more, 28 Dr.GRR,J CCCA No.139 of 2015 where such fresh inquiry is held. That will also be the correct position in law."
25. The other contention raised by the learned counsel for the appellant-plaintiff was that the charges framed against the appellant- plaintiff were vague. The un-parliamentary language alleged to be used by him was not mentioned in the charges and it was also not specified under what statutory rule or provision he was charged, as such, the same was also against the principles of natural justice and relied upon the judgment of the Hon'ble Apex Court in Sawai Singh v. State of Rajasthan (4 supra), wherein it was held that:
"Charges involving consequences of termination of service must be specific, though a departmental inquiry is not like a criminal trial. There is no such rule that an offense is not established unless it is proven beyond doubt. But in a departmental inquiry entailing adverse or penal consequences like loss of job which means loss of livelihood, there must be fair play in action, there must be investigations into the charges in accordance with the principles of natural justice insofar as these are applicable in a particular situation. The justice must always be with the scheme of the Act and the subject matter case. It is not possible to lay down any rigid rules as to which principle of natural justice is to be applied. There is no such thing as technical natural justice. The requirements of natural justice depend upon the facts and circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter to be dealt with and so on. Concept of fair play in action which is the basis of natural justice must depend upon the particular lis between the parties. Beyond all rules and procedures such fairness is the sine qua non."29
Dr.GRR,J CCCA No.139 of 2015
26. He also relied upon the judgment of the Hon'ble Apex Court in Surath Chandra Chakrabarty v. State of West Bengal (5 supra), wherein it was held that:
"The learned Judge, found that the Enquiry Officer S. K. Gupta was biased against the appellant before he held the enquiry. It was further found that no particulars and other necessary details were given in the charges and they were vague resulting in noncompliance with Rule 55 of the Civil Services (Classification, Control and Appeal) Rules and the necessary particulars were not supplied in spite of the repeated objections of the appellant to the charges being vague and indefinite. In the opinion of the learned Judge the trial was vitiated for want of definite charges. It was held that the appellant had been duly appointed as member of the Fire Service of the State and that a contract in terms of Art. 299 of the Constitution was not necessary. Issues 2 and 4 were not pressed. Reading the prayer in the light of the averments in the plaint the learned Judge granted a declaration that the purported removal of the appellant was void and inoperative and he remained or was still in government service. He was held entitled to salary and other benefits from the date of his suspension till the date of the judgment. It was particularly mentioned that the parties had worked out the figures of the salary and allowances etc. at Rs. 69,636/- for which a decree was granted together with interest at 6% per annum till the date of realization. The respondent filed an appeal to the Division Bench of the High Court. We do not consider that we need refer to all the points dealt with by the Division Bench. In our judgment the Division Bench was wholly in error in reversing the decision of the learned Single Judge on one of the crucial points, namely, non- compliance with Fundamental Rule 55 and complete vagueness and indefiniteness of the charges on which no proper enquiry could be held. It is incomprehensible how the details as to date, time, place and person etc. would not have made the charges more definite as appears to have been the opinion of the Division Bench. We are unable to agree that the details without which a delinquent servant cannot properly defend himself are a matter of evidence. In this connection reference may be made to Fundamental Rule 55 which provides, inter alia, that without prejudice to the provisions of the Public 30 Dr.GRR,J CCCA No.139 of 2015 Servants Enquiry Act 1850 no order of dismissal removal or reduction shall be passed on a member of service unless he is informed in writing of the grounds on which it is proposed, to take action and has been afforded an adequate opportunity of defending himself. The grounds on which it is proposed to take action have to be reduced to the form of a definite charge or charges which have to be communicated to the person charged together with a statement of the allegations on which each charge is based and any other circumstance which it is proposed to be taken into consideration in passing orders has also to be stated. This rule embodies a principle which is one of the basic contents of a reasonable or adequate opportunity for defending oneself. If a person is not told clearly and definitely what the allegations are on which the charges preferred against him are founded he cannot possibly, by projecting his own imagination, discover all the facts and circumstances that may be in the contemplation of the authorities to be established against him.
Now in the present case each charge was so bare that it was not capable of being intelligently understood and was not sufficiently definite to furnish materials to the appellant to defend himself. It is precisely for this reason that Fundamental Rule 55 provides, as stated before, that the charge should be accompanied by a statement of allegations. The whole object of furnishing the statement of allegations is to give all the necessary particulars and details which would satisfy the requirement of giving a reasonable opportunity to put up defence. The appellant repeatedly and at every stage brought it to the notice of the authorities concerned that he had not been supplied the statement of allegations and that the-charges were extremely vague and indefinite. In spite of all this no one cared to inform him of the facts, circumstances and particulars relevant to the charges. Even if the Enquiry Officer had made a report against him the appellant could have been given a further opportunity at the stage of-the second show cause notice to adduce any further evidence if he so desired after he had been given the necessary particulars and material in the form of a statement of allegations which had never been supplied to him before. This could undoubtedly be done in view of the provisions of Art. 311 (2) of the Constitution as they existed at the material time. The entire proceedings show a complete disregard of Fundamental Rule 55 in so far as it lays down in almost mandatory terms that the charges, must 31 Dr.GRR,J CCCA No.139 of 2015 be accompanied by a statement of allegations. We have no manner of doubt that the appellant was denied a proper and reasonable opportunity of defending himself by reason of the charges being altogether vague and indefinite and the statement of allegations containing the material facts and particulars not having been supplied to him. In this situation, for the above reason alone, the trial judge was fully justified in decreeing the suit."
27. In the light of the principles reiterated by the Hon'ble Apex Court, when the charge sheet dated 06.04.1996 issued to the appellant- plaintiff is seen, it would show that it is issued as follows:
"CHARGE SHEET It is reported against you that on April 2, 1996, at around 6:30 p.m., in the Assistant Manager (Finance) cabin of our Seeds Office, you have abused Mr Binny Mathews, Marketing Officer, using un-parliamentary language and physically pushed him, resulting in breaking his spectacles. Further, you have also threatened him that you will beat him if he comes out of the office. It is also reported that the above incident has occurred in the presence of Mr G Chakravarty, Manager (Marketing) and Mr N Sunil Kumar, Assistant Manager (Finance).
You are aware that such a violent act of yours of using un-parliamentary language, abusing a colleague and threatening to mishandle him, amounts to riotous and disorderly behavior and is against office discipline. Such behavior of yours is highly un-becoming of the responsible position that you are holding and brings disrepute to the Company.
Please give your explanation in writing for the above charges within 48 hours of the receipt of this charge sheet as to why disciplinary action should not be taken against you. If we do not receive your explanation within 48 hours, we will be forced to construe that the above allegations are true and you have no explanation whatsoever to offer and appropriate disciplinary action shall be initiated against you."32
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28. The charge sheet would give all the details like the date, time, place, the acts committed by the appellant-plaintiff against the other employee. It also specifically states that the appellant-plaintiff physically pushed Mr. Binny Mathews resulting in breaking his spectacles and that the appellant-plaintiff also threatened him that he would beat him if he would come out of the office. The names of the witnesses before whom the incident occurred were also stated in the charge sheet itself. It also specifies that such a violent act of the appellant-plaintiff against a colleague, abusing him, threatening to mis-handle him amounts to riotous and disorderly behavior and was against the office discipline and the same was unbecoming of the responsible position that the appellant-plaintiff was holding and brings dis-repute to the company. Thus, this Court does not find any merit in the allegations of the learned counsel for the appellant- plaintiff that the charge sheet is vague and devoid of material particulars and that the appellant-plaintiff was denied of any reasonable opportunity of defending himself by the reason of charges being vague.
29. The High Court of Jammu and Kashmir in Punjab National Bank v. V.K. Gandotra (13 supra) while considering a similar aspect whether the services of the plaintiff could be terminated by giving a one month notice and as such, the claim of the plaintiff that he would have 33 Dr.GRR,J CCCA No.139 of 2015 remained in the service up to 60 years entitling him to salary till his retirement is tenable or not, opined that:
"A contract of private employment is not similar to the public employment and in such private employment there is no scope of applicability of the principles of administrative law/public law. A contract of employment which provides termination of services by one month's notice, then, at best the employee will only be entitled to one month's pay in terms of the employment contract. An employee is not entitled to any relief of continuation in services or pay with consequential benefits for alleged remaining period of services till the date of his superannuation.
As per the provision of Section 14(1)(c) of the Specific Relief Act, 1963, a contract which is determinable in nature cannot be specifically enforced. Since the service contract in the present case is determinable by one month's notice, there does not arise the question of giving any reliefs which tantamount to enforcement of a determinable contract.
Thus, in a contract of personal service, the court normally would not give a declaration that the contract subsists and employee even after having been removed from service can be deemed to be in service against will and consent of the employer and the present case does not fall in any of the recognized exceptions narrated by Supreme Court in Executive Committee of Vaish Degree College v. Lakshmi Narain [(1976) 2 SCC 58]."
30. Thus, even if non-supply of the enquiry report is considered as violation of principles of natural justice and when the appellant-plaintiff is entitled to seek the declaration of his termination as wrongful, he could only seek for the consequential relief of damages for wrongful termination, but was not entitled to seek for reinstatement or back-wages. The judgments relied by the learned counsel for the appellant-plaintiff in 34 Dr.GRR,J CCCA No.139 of 2015 Pradeep v. Manganese Ore India Ltd. (6 supra) and M.S. Gill v. The Chief Election Commission (7 supra), are pertaining to the employees who fall under the category of either one of the three as mentioned in the judgment of the Hon'ble Apex Court in Executive Committee of Vaish Degree College v. Lakshmi Narain [(1976) 2 SCC 58], but not for private employees.
31. Coming to the issue of assessing the quantum of damages, the judgment of the High Court of A.P. in A.P. Flying Club, Hyderabad, represented by its Secretary v. S.C. Saxena (9 supra) is helpful. It stated the principles for assessing damages as follows:
"Where the relevant Rule or contract prescribes a certain period of notice of termination, that should normally furnish the basis for assessing the damages, in case of wrongful termination. The period of notice so prescribed cannot however be taken as a firm or unalterable rule. The proper test would be to look at the nature of the employment, the employment market in that behalf, and to determine what is the reasonable period within which the employee can secure an alternative employment. It would thus be a question of fact in each case, and the period may vary having regard to the nature of the post, or even from time to time. If the post is an ordinary post requiring no special skill and having a large market, the period of obtaining re-employment would be shorter. In such a case, the notice period may probably furnish the basis. But if the employment is of a specialized nature, the openings for which are few and far in between, the period would naturally be longer. Sticking to the period of notice prescribed by the rule or the contract would not, in all cases, do justice to the parties. After all, a person is entitled to be compensated for wrongful termination of his service, and the just period would be the reasonable period within which the employee, by making reasonable 35 Dr.GRR,J CCCA No.139 of 2015 efforts, is likely to obtain an alternate and substantially similar or equal employment. The principle would be the same even where the Rules or the contract do not provide the notice, or the notice period."
32. The Karnataka High Court in M. Nanjappa v. M.P. Muthuswamy (10 supra) held that:
"If the plaintiff having established the breach of the contract alleged by him, fails to establish that he has taken all reasonable steps to mitigate the damages consequent on the breach of the contract, he will be debarred from claiming damages from the defendant to the extent he could have mitigated the damages by taking reasonable steps."
33. By extracting Section 73 of the Contract Act, the Karnataka High Court held that:
"9. Section 73 of the Contract Act, hereinafter referred to as the Act, which provides for compensation for the breach of contracts, reads as follows:
"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.
When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such 36 Dr.GRR,J CCCA No.139 of 2015 person had contracted to discharge it and had broken his contract.
Explanation: In estimating the loss or damages arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account."
It cannot be disputed that Section 73 of the Act provides for compensation for breach of contracts whether they are commercial contracts or service contracts. It is clear from Section 73 of the Act that the defendant, who committed the breach of the contract, has incurred a liability to pay compensation to the plaintiff that 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 the contract. The arguments of learned counsel for both parties, centred on the proper construction to be put on the explanation to Section 73 of the Act. Explanation to Section 73 of the Act is required to be taken into consideration by the Court for the purpose of remedying the loss or damage arising from the breach of the contract. The explanation makes it clear that the Court must take into account the means which existed for remedying the inconvenience caused by the non-performance of the contract. It is not disputed that the Court is under a duty to take into account the means which existed of remedying the inconvenience caused by the non-performance of the contract. Whereas Sri Jagadeesa Sastry maintains that the explanation imposed a statutory duty on the party who alleges that the other party has committed the breach of the contract, of taking reasonable steps to mitigate the damages flowing from the breach of the contract, it is asserted by Sri Somasundara that it is for the party committing the breach of the contract to establish that the means of remedying the inconvenience caused by the breach of the contract, did exist and that such means were unreasonably not availed of by the other party. In M/s. Murlidhar Chiranjilal's case, the Supreme Court examined the scope of Section 73 and the explanation thereto, while dealing with a case arising out of a breach of contract of sale of goods. After examining the scope of Section 73 of the Act, the Supreme Court has laid down the principles on which damages for the breach of contracts have to be determined. In para 9 of the 37 Dr.GRR,J CCCA No.139 of 2015 judgment, the principles have been stated in the following terms:
"The two principles on which damages in such cases are calculated are well-settled. The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed; but this principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps. (British Westing- house Electric and Mfg. Co. Ltd. v. Underground Electric Ry. Co. of London, (1912) AC 673 at p.
689). These two principles also follow from the law as laid down in Section 73 read with the explanation thereof."
10. Though the case dealt with by the Supreme Court was of a breach of a commercial contract of sale of goods, as the decision was rendered on the construction of Section 73 read with Explanation thereof, the principles laid down by the Supreme Court are of general application in respect of all breaches of contracts to which Section 73 of the Act applies. The general principles deducible from the judgment of the Supreme Court are as follows:--
(i) As far as possible a party who has proved a breach of the contract is to be placed, as far as money can do it, in as good a situation as if the contract had been performed.
(ii) A statutory duty is cast on the plaintiff who has proved the breach of the contract of taking all reasonable steps to mitigate the loss consequent on the breach of the contract.
(iii) If the plaintiff, who proves the breach of the contract but fails to prove that he took all reasonable steps to mitigate the loss consequent on the breach of the contract, he will be debarred from claiming damages to the extent he could have mitigated the same by taking such steps.
11. It is clear from the decision of the Supreme Court that in a suit for damages for breach of the contract, the 38 Dr.GRR,J CCCA No.139 of 2015 plaintiff has not only to establish the alleged breach of the contract, but he has further to establish that he has discharged the statutory duty cast upon him by the Explanation to Section 73 of the Act. The statutory duty, which he is required to discharge, is to take all reasonable steps to mitigate the loss consequent on the breach of the contract. The clear effect of the judgment of the Supreme Court is to place the burden on the plaintiff, who has proved the breach of the contract, of further establishing that he has taken all reasonable steps to mitigate the loss consequent on the breach of the contract. The question as to whether the plaintiff has taken all reasonable steps to mitigate the loss consequent on the breach of the contract, is a question of fact to be decided having regard to the facts and circumstances of each case. If the plaintiff places material before the Court in support of his case that he has taken all reasonable steps to mitigate the loss consequent on the breach of the contract, it would be open to the defendant to place material before the Court and to establish that the steps taken by the plaintiff are not reasonable steps to mitigate the loss having regard to the facts and circumstances of the case. It is then for the Court to weigh the evidence produced by the parties and come to the conclusion as to whether the plaintiff has taken all reasonable steps to mitigate the loss consequent on the breach of the contract. If the Court on facts comes to the conclusion that all reasonable steps were taken by the plaintiff, he would be entitled to secure a decree for damages. If, however, the plaintiff having established the breach of the contract alleged by him, fails to establish that he has taken all reasonable steps to mitigate the damages consequent on the breach of the contract, he will be debarred from claiming damages from the defendant to the extent he could have mitigated the damages by taking reasonable steps.
13. The decision of the Madhya Pradesh High Court in Pannalal Jugatmal's case [AIR 1963 MadhPra 242] is consistent with the view taken by the Supreme Court. The learned District Judge has not properly understood the ratio of the decision of the Madhya Pradesh High Court. This is what the Madhya Pradesh High Court has laid down in Pannalal Jugatmal's case:
"Damages are compensatory and not penal and one who has suffered loss from breach of contract must take every reasonable step that is available 39 Dr.GRR,J CCCA No.139 of 2015 to him to mitigate the extent of damages caused by the breach. He cannot claim to be compensated by the party in default for loss which is really due not to the breach but to his own failure to behave reasonably after the breach. This rule is incorporated in the explanation to Section 73 of the Contract Act. The explanation casts a burden upon the person complaining of breach of the contract to show that he did not possess means of remedying the inconvenience caused by the non- performance of the contract. The law, for wise reasons, imposes upon a party subjected to injury from breach of a contract the active duty of making reasonable exertions to render the injury as light as possible."
This decision fully supports the case of the defendant as the view taken therein is consistent with the decision of the Supreme Court.
34. In the light of these principles, when the case of PW.1 is looked into, PW.1 stated in his cross-examination that he was having 15 years service in Seed Industries but, he had not filed any document to show that he tried to secure a job in any of the Seed Company subsequent to his removal from the service by the defendant. He also admitted that several seed companies were established in India. He stated that due to bad propaganda made by defendant, he could not secure the job, but admitted that he had not filed any document to show that the defendant made false propaganda against him.
35. Thus, the person having 15 years of experience in the Seed industry and after his working in the respondent-defendant company for a 40 Dr.GRR,J CCCA No.139 of 2015 period of 1`½ years stating that he could not secure any job, is unbelievable. However, as the appointment letter of the appellant-plaintiff marked under Ex.A6 would disclose that the services of the employee can be terminated by giving a written notice of one month or salary (basic) in lieu thereof, during probation period and after confirmation of service can be terminated by giving a written notice of three months or salary (basic) in lieu thereof and as DW.1 admitted in his evidence that the services of the appellant-plaintiff were confirmed and that no written notice was given to him, the appellant-plaintiff is entitled for three months salary in lieu of notice as damages.
36. As the appellant-plaintiff claimed an amount of Rs.12,675/- as his salary per month for claiming damages of Rs.20,00,000/-, the same can be taken for assessing the damages. As such, the appellant-plaintiff was entitled to an amount of Rs.38,025/- (Rs.12,675 x 3) towards damages. As such, point No.1 is answered accordingly in favour of the appellant- plaintiff holding that he is entitled to Rs.38,025/- as damages.
37. POINT No.2:
In view of the above discussion made by this Court, the judgment of the trial court is liable to be set aside.41
Dr.GRR,J CCCA No.139 of 2015
38. POINT No.3:
In the result, the appeal is allowed setting aside the judgment and decree dated 13.03.2015 passed in O.S. No.717 of 2007 by the XIII Additional Chief Judge, FTC, City Civil Court, Hyderabad. The appellant-
plaintiff is entitled to Rs.38,025/- towards damages. No costs.
Miscellaneous Applications pending, if any, shall stand closed.
_____________________ Dr. G.RADHA RANI, J Date:09.06.2025 KTL