Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home

2018 (12) TMI 1717

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... not a claim for a sum presently due and payable and the purchaser is not entitled, in exercise of the right conferred upon it under Clause 18, to recover the amount of such claim by appropriating other sums due to the contractor - it is not necessary for us to consider the other contention raised on behalf of the respondent, namely, that on a proper construction of Clause 18, the purchaser is entitled to exercise the right conferred under that clause only where the claim for payment of a sum of money is either admitted by the contractor, or in case of dispute, adjudicated upon by a court or other adjudicatory authority. Therefore the appellant had no right or authority under Clause. 18 to appropriate the amounts of other pending bills of the respondent in or towards satisfaction of its claim for damages against the respondent and the learned Judge was justified in issuing an interim Injunction restraining the appellant from doing so. As held by the Hon'ble Apex Court in UNION OF INDIA VERSUS RAMAN IRON FOUNDRY [1974 (3) TMI 105 - SUPREME COURT], where the claim is admittedly one for damages for the alleged breach of terms of the contract executed between the parties a petition .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... td., (TATRA in short) the predecessor-in-interest of the respondent Company, a company incorporated under the Companies Act, 1956 was carrying on business at Hosur, Tamil Nadu. 5. In the course of business, the petitioner and respondent-Company entered into and executed the contract for purchase and sale of Tatra Hemang Dump Trucks. That the name of the Company was changed and came to be known as 'Tatra Udyog Limited' and the same has been changed to 'Tatra Trucks India Ltd.' and then to 'Tatra Vectra Motors Ltd.', and now presently known as 'Vectra Advanced Engineering Private Limited'. 6. That the petitioner has been purchasing Dumpers/Trucks from time to time from the respondent-Company under various purchase orders and the petitioner has also entered into Annual Maintenance Contract (AMC) with the respondent. 7. It is contended that the respondent has committed a breach of the terms of the AMC contract and failed to provide the fleets of Trucks as agreed, to supplement those that have broken down. That, it was bound to provide the same under the AMC contract. That the respondent had failed to adhere to the guarantee clause to compensate the loss .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the maintenance work or repair of the vehicles does not affect the continuity of the mining operations and thus, preventing disruption of mining work. 14. It is further asserted that in lieu of the contract and the said Clause, the respondent has indeed supplied the replacement vehicles and even as on today, the petitioner Company continues to hold three Trucks belonging to the respondent even after the expiry of the contract period. 15. It is contended by the learned counsel for the petitioner that the respondent had agreed to compensate the number of hours which was lost on account of respondent's failure to replace the Trucks in time and that the respondent had also agreed to compensate the loss caused by calculating the damages at the rate of ₹ 100/- per hour and later, the offer was increased to ₹ 120/- per hour and hence, in view of the admitted compensation with regard to the man hours lost and the admission of the respondent to indemnify at the rate of ₹ 120/- per hour, the same is a matter of mere quantification and hence, it is to be construed as a debt as defined under law. 16. If that be the case, then the petitions are to be held as maintainable a .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... t the offer of settlement/proposal at the rate of ₹ 120/- per hour proposed by the respondent stood withdrawn. That the offer was made as a goodwill gesture with an intention of continuing the good business relationship with the petitioner and in the light of the fact that they have been carrying on business over the past several years and was a good will gesture without prejudice to their legal rights. As the petitioners were not wiling to appreciate the same, the offer stood withdrawn. 21. On perusal of the material on record produced along with the petitions and the statement of objections, it is apparent that the assertion on behalf of the petitioner has been specifically denied. 22. In that view of the matter, the points that falls for consideration in the present petitions are: 1. Whether the petitions are maintainable? and 2. Whether the amount claimed by the petitioner constitutes 'a debt' and thereby enabling the petitioner to maintain the instant Company petitions? 23. The petitioner has placed reliance on a number of rulings and citations both of the Hon'ble Apex Court and this Court. He would place reliance on the ruling rendered by the Hon'ble Ape .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Unlike in the referred case, in the case on hand there is a serious dispute with regard to the number of hours lost or if any hours are actually lost and the rate at which the compensation is to be awarded? 26. Furthermore, the Division Bench was pleased to rely on the Carriers Act under which a Statutory Liability is cast on the carrier to make good the loss, be it either for short delivery or for non-delivery. In the instant case, the rate of liquidated damages is not stated in the contract. Hence, the said judgment is distinguishable and is inapplicable to the facts of the case. 27. The petitioner has also placed reliance on one more ruling rendered by the High court of Madras in O.S. Appeals No. 18, 37 and 70 of 1962 decided on 19.11.1963 wherein the Court has observed as below: "10. Section 433 of the Indian Companies Act declares the circumstances in which a company may be wound up by the Court. That section provides that a company may be wound up by the court if it is unable to pay its debts. Section 434 defines when a company must be deemed to be unable to pay its debts. Sub-clause (a) of Section 434 states that if a creditor who is entitled to receive a sum of more t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ve if the defence is a substantial one, then to direct the parties to establish their claim by way of an independent action. In the considered opinion of this Court, the said ruling is of no assistance to the petitioner as the dispute pertains to unascertained loss which is sought to be compensated at an unasserted rate. Neither the quantum of hours lost nor the rate at which it is to be compensated are agreed upon nor is it forthcoming from any of the material on record. 28. Alternatively, the petitioner would also place reliance on the ruling rendered by this Court in the case of Anand Steels vs. Bharath Earth Movers Limited rendered in COP No. 51/1986 decided on 18.06.1987 to contend that quantification be made by calculating the debt at the rate of ₹ 120/- per hours and with regard to the balance sum of ₹ 480/- i.e. ₹ 600-₹ 120, the parties may be relegated to the trial Court. He would contend that the sum of ₹ 120/- offered by the respondent to compensate the loss may be considered as the admitted sum and with regard to the unasserted sum, the parties may be directed to approach the appropriate forum for reliefs. The case canvassed by the petition .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... r recovery of which the appellant is seeking to appropriate the sums due to the respondent under other contracts. The claim is admittedly one for damages for breach of the contract between the parties. Now, it is true that the damages which are claimed are liquidated damages under Clause. 14, but so far as the law in India is concerned, there is no qualitative difference in the nature of the claim whether it be for liquidated damages or for unliquidated damages. Sec. 74 of the Indian Contract Act eliminates the somewhat elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine pre-estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties: a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e terms: In my opinion it would not be true to say that a person who commits a breach of the contract incurs any pecuniary liability, nor would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party. As already stated, the only right which he has is the right to go to a Court of law and recover damages. Now, damages are the compensation which a Court of law gives to a party for the injury which he has sustained. But, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach. He gets compensation as a result of the fiat of the Court. Therefore, no pecuniary liability arises till the Court has determined that the party complaining of the breach is entitled to damages. Therefore, when damages are assessed, it would not be true to say that what the Court is doing is ascertaining a pecuniary liability which already existed. The Court in the first place must decide that the defendant is liable and then it proceeds to assess what that liability is. But till that determination there is no liability at all up .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Site Map - Recent || Site Map ||