{"id":92867,"date":"2007-07-31T00:00:00","date_gmt":"2007-07-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/k-v-thomas-vs-instrumentation-ltd-on-31-july-2007"},"modified":"2017-07-20T01:14:16","modified_gmt":"2017-07-19T19:44:16","slug":"k-v-thomas-vs-instrumentation-ltd-on-31-july-2007","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/k-v-thomas-vs-instrumentation-ltd-on-31-july-2007","title":{"rendered":"K.V.Thomas vs Instrumentation Ltd. on 31 July, 2007"},"content":{"rendered":"
Kerala High Court<\/div>\n
K.V.Thomas vs Instrumentation Ltd. on 31 July, 2007<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nSA No. 230 of 1994()\n\n\n\n1. K.V.THOMAS\n                      ...  Petitioner\n\n                        Vs\n\n1. INSTRUMENTATION LTD.,PALAKKAD\n                       ...       Respondent\n\n                For Petitioner  :SRI.V.CHITAMBARESH\n\n                For Respondent  :SRI.U.K.RAMAKRISHNAN\n\nThe Hon'ble MR. Justice M.SASIDHARAN NAMBIAR\n\n Dated :31\/07\/2007\n\n O R D E R\n              M.SASIDHARAN NAMBIAR,J.\n            ===========================\n             S.A.  NO. 230    OF 1994\n            ===========================\n\n       Dated this the 31st day of July, 2007\n\n                     JUDGMENT\n<\/pre>\n
    Appellant   was   the   first   defendant    in<\/p>\n
O.S.20\/1985 on the file of Sub Court, Palakkad, a<\/p>\n
suit  filed  by  first  respondent  Company     for<\/p>\n
realisation of Rs.15,000\/- as damages on account of<\/p>\n
the breach of conditions provided under Ext.A1<\/p>\n
agreement.   Appellant was an employee of first<\/p>\n
respondent Company.  He was selected for training<\/p>\n
and sent to West Germany to undergo training   with<\/p>\n
M\/s.Heylig-Enstaedt  &  Co.     He  completed   the<\/p>\n
training and worked with first respondent Company<\/p>\n
for 1 = years.  Thereafter resigned.   At the time<\/p>\n
of sending the appellant for training, he executed<\/p>\n
Ext.A1 agreement  along with respondents 2 and 3 as<\/p>\n
sureties.  He had  undertaken to serve the Company<\/p>\n
for  a  period  of  three  years.    He   has  also<\/p>\n
undertaken  to   pay   a  liquidated   damages   of<\/p>\n
Rs.15,000\/- if he fails to serve the Company for<\/p>\n
S.A.230\/1994                2<\/span><\/p>\n
the     said  period.     The  suit   was  filed   for<\/p>\n
realisation     of   the  said   liquidated   damages.<\/p>\n
Appellant resisted the suit contending that the<\/p>\n
agreement is void and unenforceable.           It was<\/p>\n
contended that       though a liquidated damage is<\/p>\n
provided,    on   account  of  his  resignation  first<\/p>\n
respondent Company did not sustain any loss or<\/p>\n
damage and therefore he is not liable to pay the<\/p>\n
damages.      It was contended that he could not<\/p>\n
continue the work due to his     poor health and hence<\/p>\n
he is not liable to pay the     damages.  Trial court<\/p>\n
on the evidence of Pws.1 and 2, DW1 and     Exts.A1 to<\/p>\n
A12 held that Ext.A1 is not void but valid and<\/p>\n
defendants        are   bound  to   pay   the   amount<\/p>\n
stipulated in Ext.A1.        But holding that first<\/p>\n
respondent did not establish the actual damage<\/p>\n
sustained and finding that appellant had served the<\/p>\n
Company for half of the period provided under<\/p>\n
Ext.A1,     damage was fixed at half of the liquidated<\/p>\n
damages named      in Ext.A1. a decree for realisation<\/p>\n
of Rs.7500\/- with interest was passed.       Appellant<\/p>\n
S.A.230\/1994                 3<\/span><\/p>\n
challenged     the   decree  and  judgment  before  the<\/p>\n
Additional      District   Court,  Palakkad.      First<\/p>\n
respondent preferred a Cross Objection contending<\/p>\n
that      trial court should have granted the damages<\/p>\n
of Rs.15,000\/-as named      in Ext.A1. Learned District<\/p>\n
Judge on reappreciation of evidence found that even<\/p>\n
according to appellant Rs.39,000\/- was incurred by<\/p>\n
the Company for the training of the appellant at<\/p>\n
West Germany and therefore the liquidated damage<\/p>\n
fixed in Ext.A1 is reasonable. He modified the<\/p>\n
decree      for reaslisation of the entire amount named<\/p>\n
in Ext.A1.     It is challenged in the second appeal.<\/p>\n
      2.      Appeal   was  admitted  formulating   the<\/p>\n
following substantial questions of law.<\/p>\n
      1) Whether the courts below were justified in<\/p>\n
law    in    granting  a  decree  for  compensation  as<\/p>\n
prayed,      overlooking  the   fact  that  the   party<\/p>\n
complaining      of  breach  is  entitled  only  to   a<\/p>\n
reasonable compensation, irrespective of the amount<\/p>\n
stipulated in the contract as liquidated damages?<\/p>\n
      2)    In the absence of any pleading much less<\/p>\n
S.A.230\/1994                 4<\/span><\/p>\n
any     proof   to  show  the  discontinuance  of  the<\/p>\n
operation of the machine and the resultant loss of<\/p>\n
income, were the courts below correct in law in<\/p>\n
passing the impugned decree?         Is not proof of<\/p>\n
damages a sine qua non to claim compensation?<\/p>\n
      3)     When the first defendant has admittedly<\/p>\n
served the plaintiff company for half the period<\/p>\n
specified in the contract after training, does it<\/p>\n
not go a long way in mitigation of damages?        Has<\/p>\n
not the lower appellate court erred in reversing<\/p>\n
the decree of the trial court in that regard?<\/p>\n
      3.    Learned counsel appearing for appellant and<\/p>\n
first respondent were heard.\n<\/p>\n
      4.    The finding of    courts below that Ext.A1<\/p>\n
agreement is not void and is valid and binding on<\/p>\n
the appellant was not challenged.        The challenge<\/p>\n
was only against the quantum of      compensation fixed<\/p>\n
by the first appellate court.         Ext.A1 agreement<\/p>\n
admittedly executed by       appellant along with the<\/p>\n
other      defendants   provide  for   payment   of   a<\/p>\n
liquidated damages of Rs.15,000\/- in the event of<\/p>\n
S.A.230\/1994               5<\/span><\/p>\n
the failure of the appellant to serve the Company<\/p>\n
for the agreed period of three years.  Clause 7 of<\/p>\n
Ext.A1 agreement reads:-\n<\/p>\n
        “That the employee shall not<\/p>\n
        leave the   services  of  the<\/p>\n
        Company during the period of<\/p>\n
        this bond.  In the event of<\/p>\n
        the     employee     leaving,<\/p>\n
        abandoning or resigning the<\/p>\n
        service of   the  company  in<\/p>\n
        breach of the terms of this<\/p>\n
        bond before the expiry of the<\/p>\n
        training period as well as<\/p>\n
        thereafter for the reamining<\/p>\n
        terms of the bond, he shall<\/p>\n
        not directly   or  indirectly<\/p>\n
        engage in or carry on of his<\/p>\n
        own accord or in partnership<\/p>\n
        with others, the business at<\/p>\n
        present being carried on by<\/p>\n
        the Company   and  shall  not<\/p>\n
S.A.230\/1994               6<\/span><\/p>\n
        serve   in    any   capacity,<\/p>\n
        whatsoever or be associated<\/p>\n
        with any   presons,  firm  or<\/p>\n
        company  carrying   on   such<\/p>\n
        business for the remainder of<\/p>\n
        the   said  period   and   in<\/p>\n
        addition to pay the Company<\/p>\n
        as   liquidated  damages   an<\/p>\n
        amount     of     Rs.15,000\/-<\/p><\/blockquote>\n
\n        (Rs.Fifteen  thousand   only)<\/p>\n
        which  includes  the   amount<\/p>\n
        that the Company might have<\/p>\n
        spent   on   the   employee’s<\/p>\n
        training    together     with<\/p>\n
        interest  thereon  calculated<\/p>\n
        at a fixed Government rate in<\/p>\n
        force at the relevant time<\/p>\n
        for Government loans from the<\/p>\n
        date of demand.”<\/p><\/blockquote>\n
The    argument  of  learned  counsel appearing for<\/p>\n
appellant is that apart from the oral evidence of<\/p>\n
S.A.230\/1994                 7<\/span><\/p>\n
DW1, there is no evidence to prove the actual<\/p>\n
damage suffered by       first respondent Company and<\/p>\n
when Ext.A1 provides for        payment of damages of<\/p>\n
Rs.15,000\/- for       not serving a period of three<\/p>\n
years in the Company and appellant served      half of<\/p>\n
the period, the quantum of damages cannot exceed<\/p>\n
half of the liquidated      damages provided in Ext.A1<\/p>\n
and    therefore     first   appellate court   was  not<\/p>\n
justified in enhancing the compensation      granted by<\/p>\n
the trial court.       It was also argued that Ext.A1<\/p>\n
shows that Rs.15,000\/- was fixed inclusive of the<\/p>\n
expenses met by the Company to send the appellant<\/p>\n
to West Germany for training and as the Company was<\/p>\n
benefited by the service of the appellant for half<\/p>\n
of the period provided under Ext.A1, the damages<\/p>\n
could     only  be   half  of  the  liquidated  damages<\/p>\n
provided in Ext.A1 and therefore the decree is not<\/p>\n
sustainable.\n<\/p>\n
      5.      Learned   counsel  appearing  for   first<\/p>\n
respondent argued that as found by      first appellate<\/p>\n
court,      appellant himself admitted that Company had<\/p>\n
S.A.230\/1994               8<\/span><\/p>\n
spent more than Rs.39,000\/- for sending     appellant<\/p>\n
to West Germany for training and evidence also<\/p>\n
establish     that  without the trained  person   the<\/p>\n
machines cannot be worked and as a result of the<\/p>\n
resignation of the appellant another person has to<\/p>\n
be sent to West Germany for training and naturally<\/p>\n
the said expenses has to be additionally met by the<\/p>\n
Company and therefore the liquidated damages of<\/p>\n
Rs.15,000\/- in Ext.A1 is very reasonable and in<\/p>\n
such circumstance, even without   evidence as to the<\/p>\n
actual loss sustained, the damages awarded by the<\/p>\n
first appellate court is perfectly reasonable and<\/p>\n
correct and warrants no interference.<\/p>\n
      6. Section 73 of the Contract Act provides that<\/p>\n
when a contract is broken, what is recoverable is<\/p>\n
the actual loss sustained.       Section 74 of the<\/p>\n
Contract     Act  provides that whether  a  loss   is<\/p>\n
suffered or not a party is        entitled to    the<\/p>\n
liquidated damages     provided  under the contract.<\/p>\n
But Sections 73 and 74 are to be read together.<\/p>\n
whether a liquidated damage is named or not, a<\/p>\n
S.A.230\/1994                9<\/span><\/p>\n
party is entitled to realise only that damage<\/p>\n
which he actually sustained. The question is when<\/p>\n
Ext.A1      agreement  stipulates  for   payment   of<\/p>\n
Rs.15,000\/-     as  liquidated damages,  whether  the<\/p>\n
first respondent is entitled to realise the entire<\/p>\n
amount      without  evidence  on  the  actual   loss<\/p>\n
sustained.\n<\/p>\n
      7. An identical question was considered by this<\/p>\n
Court in F.A.C.T. Ltd v. Ajayakumar    (I.L.R.1991<\/a>(1)<\/p>\n
Kerala 549.       As in this case at the time of<\/p>\n
undergoing training, the trainee had executed an<\/p>\n
agreement undertaking to pay a liquidated damages<\/p>\n
of    Rs.10,000\/-.     The  question  considered  was<\/p>\n
whether it is necessary to prove the actual damage<\/p>\n
sustained by the Company to realise the liquidated<\/p>\n
damages.      The  learned single Judge analysing the<\/p>\n
previous decisions held that the    effect of Section<\/p>\n
74 is only to disentitle the party from getting<\/p>\n
whatsoever is provided in the document, whether as<\/p>\n
penalty or liquidated damages and confining the<\/p>\n
S.A.230\/1994               10<\/span><\/p>\n
claim     within reasonable  limits  subject  to  the<\/p>\n
maximum of the amount so fixed.      In a case where<\/p>\n
monetary value of the loss or damage is incapable<\/p>\n
of proof, court can assess reasonable damage even<\/p>\n
if actual damage or loss is not proved.       It was<\/p>\n
held that in a case in which the Company sustained<\/p>\n
damage, but actual quantum of loss is incapable of<\/p>\n
proof and the claim is based on the pre estimate<\/p>\n
made by the parties,      nothing prevents the court<\/p>\n
from assessing reasonable compensation from the<\/p>\n
facts and circumstances of the case.      It was held<\/p>\n
that when the liquidated damages claimed in the<\/p>\n
agreement it is a genuine pre estimate       which is<\/p>\n
reasonable    that compensation could be awarded.<\/p>\n
      8. On the evidence   first appellate court was<\/p>\n
justified in granting the entire liquidated damages<\/p>\n
named      in Ext.A1.  Evidence of appellant himself<\/p>\n
establish     that  Company  had   spent  more   than<\/p>\n
Rs.39,000\/- for sending     appellant for training to<\/p>\n
West Germany.    The Company had spent that amount so<\/p>\n
that it would get the benefit of the service of the<\/p>\n
S.A.230\/1994               11<\/span><\/p>\n
appellant.    Appellant himself admitted that without<\/p>\n
the service of a trained employee, the machines<\/p>\n
cannot be worked.     It is also in evidence that on<\/p>\n
account     of  the  resignation  of  the  appellant,<\/p>\n
another person has to be sent     to West Germany for<\/p>\n
training and that expense was also to be met by the<\/p>\n
Company, which would not have been the case if the<\/p>\n
appellant     continued his service in the Company as<\/p>\n
undertaken in Ext.A1.      In such circumstance, as<\/p>\n
rightly     found  by  the   first  appellate  court,<\/p>\n
Rs.15,000\/- named in     Ext.A1 is a very reasonable<\/p>\n
genuine       pre  estimate  of  damages.    In  such<\/p>\n
circumstances, I find no reason to interfere with<\/p>\n
the quantum of damages fixed by the first appellate<\/p>\n
court.\n<\/p>\n
      The appeal is dismissed.\n<\/p>\n<\/p>\n
                                 M.SASIDHARAN NAMBIAR
\n                                          JUDGE
\ntpl\/-\n<\/p>\n
M.SASIDHARAN NAMBIAR, J.\n<\/p>\n<\/p>\n
   ———————\n<\/p>\n
    S.A..NO.230 \/94\n<\/p>\n
   ———————\n<\/p>\n<\/p>\n
       JUDGMENT<\/p>\n
     31st JULY,2007<\/p>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court K.V.Thomas vs Instrumentation Ltd. on 31 July, 2007 IN THE HIGH COURT OF KERALA AT ERNAKULAM SA No. 230 of 1994() 1. K.V.THOMAS … Petitioner Vs 1. INSTRUMENTATION LTD.,PALAKKAD … Respondent For Petitioner :SRI.V.CHITAMBARESH For Respondent :SRI.U.K.RAMAKRISHNAN The Hon’ble MR. Justice M.SASIDHARAN NAMBIAR Dated :31\/07\/2007 O R D E R M.SASIDHARAN NAMBIAR,J. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,21],"tags":[],"class_list":["post-92867","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nK.V.Thomas vs Instrumentation Ltd. on 31 July, 2007 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/k-v-thomas-vs-instrumentation-ltd-on-31-july-2007\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"K.V.Thomas vs Instrumentation Ltd. on 31 July, 2007 - 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