When nominal damages can be awarded to contractor in case of breach of contract?

 Though the plaintiff has not produced any material to show the extent of damage suffered due to withdrawal of the work orders, in this appeal two applications are filed under Order 41 Rule 27 of CPC to show that the plaintiff had purchased certain materials in furtherance of the work orders issued. A perusal of the documents produced along with the applications does not inspire confidence inasmuch as they can be treated only as invoices and pursuant thereto there is nothing on record to show that the materials have been purchased by the plaintiff, but however, that by itself, the claim of the plaintiff for loss/damages cannot be denied. In the absence of any concrete material to show the extent of damage suffered by the plaintiff, one will have to resort to maxim 'nominal damages'.

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

Regular Second Appeal No. 2119/2005

Decided On: 04.12.2007

Appellants: Vikas Electrical Service rep. by its Proprietor, M.T. Baddi
Vs.
Respondent: Karnataka Electricity Board (Now Hubli Electricity Supply Company Limited) by its Executive Engineer, O and M Division

Hon'ble Judges/Coram:
Ajit J. Gunjal, J.

 Citation: AIR2008Kant88,

1. The appeal is admitted to consider the following substantial question of law;

1. Whether the learned appellate Judge was justified in reversing the judgment and decree of the trial court without considering the oral and documentary evidence?

2. The claim of the plaintiff for damages was decreed by the learned trial Judge and the same was reversed. Hence the present appeal.

3. During the course of this judgment parties would be referred to as per their ranking in the trial court.

4. Facts in brief are as under:

The plaintiff is an electrical contractor doing electrical work. The defendant-board represented by the Executive Engineer called upon the plaintiff to execute the work at 33, 110 and 220 KV Stations, of KPTCL, Basavanabagewadi, worth Rs. 76,584/-, respectively. In this regard, the Superintending Engineer (Electrical), TL & SS KEB, Navanagar, Hubli issued three Office Memorandums and they were construed as work orders. The case of the plaintiff is that pursuant to the work orders he purchased the required material but however, he was not allowed to execute the work by the Executive Engineer, KEB Bijapur. Suffice it to say that the Executive Engineer (Electrical) vide communication dated 21-11-1997 withdrew the contract granted in favour of the plaintiff. According to the plaintiff, the said withdrawal amounts to frustration and he sought for damages. It is his further case that he made several representations o ailing upon the respondents to pay damages. Since the defendants did not consider representations made by the plaintiff, the present suit is filed claiming damages of Rs. 50,500/- with interest.

5. The defendants entered appearance and resisted the suit. They have filed written statement admitting the work orders issued in favour of the plaintiff. It is their contention that the Superintending Engineer is a necessary party, hence the suit is bad for non-joinder of necessary parties. They would also contend that the plaintiff has failed to comply with certain formalities and tried to raise a dispute without any substantial ground. They further contend that the plaintiff is a registered contractor with the Board and knows the norms of the Board and that they have not caused any breach of contract as alleged by the plaintiff. The sum and substance is that the plaintiff is not entitled for any damages.

6. On the basis of these pleadings, the learned trial Judge has framed six issues:

a) whether the suit is bad, for misjoinder of cause of action?

b) Whether the suit is bad for nonjoinder of necessary parties?

c) Whether this Court gets territorial jurisdiction to try this suit?

d) Whether the suit is maintainable in view of arbitration clause?

e) Whether works entrusted to plaintiff have been illegally and malafide withdrawn by defendant?

f) If so, whether plaintiff has sustained any loss by such withdrawal?

g) What order or decree?

7. During the course of trial, the plaintiff examined himself as PW-1 and marked Exs. P1-Pl9. The defendants examined DW-1 on their behalf and marked Exe. D1 to D5.

8. The learned trial Judge on the material issue has recorded a finding that the suit is not bad for non-joinder of necessary parties and that in the absence of any arbitration clause, the suit is maintainable. Thereafter having assessed the damages, the learned trial Judge decreed the suit awarding damages of Rs. 50,500/- with interest at the rate of 181 p.a. The said judgment and decree, when carried in appeal by the defendants, was reversed by the learned appellate Judge on the ground that there is no concluded contract and in the absence of any actual purchase made by the plaintiff, damages cannot be awarded. Hence this appeal.

9. Mr. Chandrakant R. Goulay, learned Counsel appearing for the plaintiff in support of the substantial question of law submits that most of the facts having bean admitted and the withdrawal of work orders being without any justifiable reason, the contract was frustrated. Hence the plaintiff is entitled for damages. He submits that the evidence adduced by the plaintiff as well as the defendants has not been considered by the learned appellate Judge.

10. Mr. N. Krishnanda Gupta, learned Counsel appearing for the defendants supports the judgment and decree of the learned appellate Judge. He submits that for certain reason beyond the control of the defendants, the work order had to be withdrawn. He further submits that there is no clause in the agreement that if the work is withdrawn, the plaintiff is entitled for damages.

11. It is not in dispute that the plaintiff was awarded three work orders by the defendants and pursuant thereto an agreement was also entered into between them. It is also not in dispute that the defendants subsequently withdrew the work orders. Apparently, whenever a contract is sought to be resiled by one of the parties, no doubt the other party is likely to suffer certain loss and damages. The evidence adduced by the defendants does not disclose any justifiable reason for withdrawing the work orders granted in favour of the plaintiff. Apparently, the plaintiff has suffered certain lose after withdrawal of the work orders. The question to be considered is the quantum of loss/damage suffered by the plaintiff.

12. Though the plaintiff has not produced any material to show the extent of damage suffered due to withdrawal of the work orders, in this appeal two applications are filed under Order 41 Rule 27 of CPC to show that the plaintiff had purchased certain materials in furtherance of the work orders issued. A perusal of the documents produced along with the applications does not inspire confidence inasmuch as they can be treated only as invoices and pursuant thereto there is nothing on record to show that the materials have been purchased by the plaintiff, but however, that by itself, the claim of the plaintiff for loss/damages cannot be denied. In the absence of any concrete material to show the extent of damage suffered by the plaintiff, one will have to resort to maxim 'nominal damages'.

13. Technically the law requires not damage but an injuria or wrong upon which to base a judgment for the plaintiff, and therefore an injuria, although without lose or damage would entitle the plaintiff to a judgment. Lord Halsbury L.C. in The Mediana's case (1800) AC 113 has said:

'Nominal damages' is a technical phrase which means that you have negatived anything like real damage, but that you are affirming by your nominal damages that there is an infraction of a legal right which, though it gives you no right to any real damages at all, yet gives you a right to the verdict or judgment because your legal right has been infringed.

It is sometimes said that the lair presumes or implies damages in every breach of contract or in every tortious invasion of a legal right, and that this therefore would justify an award of nominal damages in such cases without proof of actual loss. In support of this rationale, is often cited Holt C.J.'s famous dictum in Ashby v. White (1703) 2 Ld. R. 938.

Every injury imports a damage though it does not coat the party one farthing.

In the first place it explains nothing because it is a fiction, as those cases where there is clear evidence of no loss shown. In the second place it becomes confused with a very different type of case where the 1 aw is said to "presume damage". These are cases where the presumption is based upon the difficulty of assessing the loss, generally a non-pecuniary loss, of which the best example is the injury to the plaintiff's reputation protected by the tort or libel. Nominal damages may also be awarded where the fact of a loss is shown but the necessary evidence as to its amount is not given. This is only a subsidiary situation, but it is important to distinguish it from the usual case of nominal damages awarded where there is a technical liability but no loss. In the present case the problem is simply one of proof, one not of absence of loss but of absence of evidence of the amount of loss.

14. Having regard to paucity of evidence in respect of the loss suffered by the plaintiff, I am of the view that a compendious sum of Rs. 25,000/- would be just and reasonable in the circumstance of the case. The substantial question of law is answered accordingly.

15. The appeal is allowed in part. The judgment and decree of the courts below is modified as follows:

The plaintiff is entitled for a compendious sum of Rs. 25,000/- as damages which is inclusive of interest. The registry is directed to draw up a decree in terms of this judgment. The plaintiff is also entitled for proportionate costs in the trial court and in this court.

16. IA. 1/2006 and IA. 1/2007 filed for production of additional documents do not survive for consideration. Accordingly they stand rejected.

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