Skip to main content

Compensation dependent on damage clause in agreement not actual loss

If clause for damages present, Party entitled to reasonable compensation whether or not actual loss occurred

In Mahanagar Telephone Nigam Limited v. Haryana Telecom Limited, Mahanagar Telephone Nigam Limited ('MTNL') has filed present petition under Section 34 of Arbitration & Conciliation Act, 1996 challenging an Award dated 12th March, 2003 passed by Arbitral Tribunal ('AT') in disputes between MTNL and Respondent, Haryana Telecom Limited ('HTL'). AT held that, since MTNL failed to prove actual loss or damage on account of delayed delivery of goods and since, mere delay in supplies was unlikely to cause damages, question of even fixing a reasonable compensation under Section 74 of Indian Contract Act, 1872 ('ICA') did not arise. Consequently, MTNL was asked to refund HTL sum of Rs. 1,03,20,763 together with interest @ 12% from the date of Award till the date of payment.

The Delhi High Court held that in present case, it is not possible for Court to agree with submission on behalf of HTL that, MTNL was required to prove actual loss suffered by it. Purpose of first part of Clause 16.2 is to provide for a genuine pre-estimate of damages payable as LD even without requirement of having to prove actual loss. Section 74 of ICA emphasises that, in case of a breach of contract, party complaining the breach is entitled to reasonable compensation whether or not actual loss is proved to have been caused.

Comments

Post a Comment

Most viewed this month

Valuation Report of Jewellery once made is effective for Four Assessment Years

The division Bench of the Delhi High Court in Pr.Commissioner of Wealth Tax vs. Raghu Hari Dalmia held that a valuation report made by a registered valuer once adopted shall be in effect for four assessment years unless an event has occurred whereby the value is increased or decreased. The High Court made it clear that the event of “search” under Section 132 of the Income Tax Act, 1961 cannot compel the assessee to undertake a fresh valuation.
2 comments
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Mere Agreement To Sell The Leased Property To Tenant Would Not Terminate Landlord-Tenant Relationship

In CIVIL APPEAL Nos. 1237­1238 OF 2019, Dr. H.K. Sharma vs Shri Ram Lal, the tenant had objected against the eviction suit filed by the landlord, claiming that the landlord-tenant relationship between them had ceased to exist by virtue of an agreement for sale entered between them and that he has already paid some money in advance based on the agreement. The tenant contented as the landlord-tenant relationship did not exist, the landlord cannot evict him. The matter went through various forums and finally landed before the Supreme Court in appeal. The Supreme Court referring to the judgment in Shah Mathuradas Maganlal & Co. vs. Nagappa Shankarappa Malage & Ors., held that in the instant case the lease agreement included no clauses on the fate of the tenancy. A fortiori, the parties did not intend to surrender the tenancy rights despite entering into an agreement of sale of the tenanted property. In other words, if the parties really intended to surrender their tenancy ...
2 comments
Read more