TMI Blog2009 (11) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... with law. - CO. PETITION NO. 367 OF 2009 - - - Dated:- 20-11-2009 - DR. D.Y. CHANDRACHUD, J. Sandeep Parikh and Kamlesh A. Patel for the Petitioner. Harinder Toor and Ms. Dipti Shah for the Respondent. ORDER 1. By an agreement dated 22-5-2008, the Petitioner appointed the Respondent as an exclusive agent for designated branding sites situated within the premises of a shopping mall. Shorn of detail, the Petitioner permitted the Respondent to display advertisements at the mall, in a theatre and upon ticket jackets. During the term of the agreement there were disputes over whether all the facilities under the contract were made available by the Petitioner to the Respondent. On 29-8-2008 the Petitioner, while reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been claimed thereon. The total claim is in the amount of Rs. 25.02 lakhs on which interest at the rate of 18 per cent has been claimed. 3. The maintainability of the Petition has been questioned. The Respondent which has filed an affidavit in reply in these proceedings submits that a substantial part of the debt or dues alleged in the Petition is for loss or damages sustained on an alleged breach by the Respondent of the agreement dated 22-5-2008. It is urged that the determination of loss or damages will require evidential proof which lies beyond the summary nature of proceedings for winding up. It has been urged that no debt can be held to be due and payable unless the extent or loss of damages has been ascertained. 4. On the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. In case Sadhrta Retail Pvt. Ltd. fails to make payment or if the cheque is dishonoured for any reason whatsoever of the Royalty/MG amount for a period of any one month during the term of this Agreement then E-City Media shall be at liberty to terminate this Agreement after giving 7 days notice and dispose of the rights herein granted to Sadhrta Retail Pvt. Ltd. in any manner as E-City Media may deem fit and proper and in such an event Sadhrta Retail Pvt. Ltd. shall make good the losses and damages which may be suffered by E-City Media. On occurrence of such an event, Sadhrta Retail Pvt. Ltd. shall be liable to pay to E-City Media on demand the entire Royalty/MG amount mentioned in this Agreement with interest at 18 per cent per annum. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cas. 391 1 . Mr. Justice R.V. Raveendran (as the Learned Judge then was) speaking for the Division Bench formulated the propositions of law which emerge from judgments of the Supreme Court and the High Court. The Court held as follows : "( i )A Debt is a sum of money which is now payable or will become payable in future by reason of a present obligation. The existing obligation to pay a sum of money is the sine qua non of a debt. Damages is money claimed, by, or ordered to be paid to, a person as compensation for loss or injury. It merely remains a claim till adjudication by a Court and becomes a debt when a Court awards it. ( ii )In regard to a claim for damages (whether liquidated or unliquidated), there is no existing obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not convert a claim for damages into a claim for unascertained sum due. Liability to pay damages arises, only when a party is found to have committed breach. Ascertainment of the amount awardable as damages is only consequential." (p. 729) 9. On behalf of the Petitioner, however, reliance was sought to be placed on the judgment of the Supreme Court in SAW Pipes Ltd. s case ( supra ). The judgment of the Supreme Court in SAW Pipes Ltd. s case ( supra ) holds that where the terms of a contract make an unambiguous stipulation for the payment of liquidated damages in the event of breach, a party guilty of a breach is required to pay compensation named in the contract unless it is held that the estimate of damages is unreasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t if parties, when they make a contract, know that a particular loss is likely to result from a breach, it is open to them to agree upon the payment of a named sum as compensation in the event of breach. In such a case it may not be necessary to lead evidence to prove damages unless the Court arrives at the conclusion that no loss is likely to occur by the breach. Where the Court comes to the conclusion that a term contemplating damages is by way of penalty, it would be open to the Court to grant reasonable compensation not exceeding the amount named in the contract on proof of damages. These observations of the Supreme Court will indicate that where a claim arises on account of damages for breach, the claim by its very nature requires adju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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