In the High Court of Nagpur Equivalent Citation: AIR 1952 Nag 32 Appellants Dominion of India Respondent All India Reporter Limited Decided on 12 March 1951 Bench Hon’ble Justice R. Kaushalendra Rao
According to section 73 of the Indian Contract Act (1872), when a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. This section defines the liability of a party who breaches the terms of a contract. The question in this case was whether the party can recover special damages from the other party under this section.
The respondent lost three volumes of Indian Digest in transit through railways. The volumes were booked by the respondent at Nagpur for being carried and delivered at Delhi railway Station. The consigned was addressed to the respondent by himself. The respondent brought a suit against the applicant for compensation for the loss of the three volumes. The respondent contended that the lost volumes were the part of a series and their loss rendered the remaining books unusable. Hence, they sought the price of the entire set of eight volumes as compensation. The trial court accepted the respondent’s contention and held the applicant liable to compensate the respondent for the entire set. The applicant filed a revision application from this judgment.
Whether the applicant is liable for the loss of three volumes or the entire set?
Contentions by the applicant
- The applicant is not liable to compensate the respondent for the entire set as the fact that the loss of the three volumes renders the set useless was not brought to the attention of the applicant and there is no proof as the same.
Contentions by the respondent
- The lost three volumes were part of a set and their loss renders the entire set useless. Hence, the applicant is liable to compensate the respondent for the entire set.
According to section 73 of the Indian Contract Act (1872), when a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. The same was applied in this case to hold the applicant liable only for the value of the three lost volumes.
In the instant case, the consignment consisted of three volumes and any loss arising during the usual course of things can only include the value of those three volumes. The respondent had failed to mention that the three volumes were the part of a set and that the loss of those volumes would render the set useless. The applicant had also not undertaken to compensate the respondent for the value of the entire set if the consignment was lost. Since, the respondent had himself furnished the value of the three lost volumes as Rs.42/- the Hon’ble court found it unnecessary to determine the cost of the missing volumes.
In the case of British Columbia Saw-Mill Co. v. Nettleship [(1868) L R 3 C P 499], the plaintiffs delivered to the defendant for carriage to Vancouver Island several cases of machinery intended for a saw-mill. The defendant knew generally that the cases contained machinery. Upon the arrival of the vessel, one of the caseswhich contained parts of the machinery without which the mill could not be erected, was missing. The plaintiffs were obliged to replace those parts from England. So, there was a delay of twelve months. The plaintiffs claimed by way of compensation not only the value of the lost case, but also the loss incurred by the stoppage of their works during the time the rest of the machinery remained useless owing to the absence of the lost parts. Here, Bovill C.J held that since the defendant had no knowledge of the significance of the lost parts, awarding damages for the delay in construction of the mill would be speculative.
The respondent was awarded interest from 1-9-1948 to 1-5-1949. The court relied on the cases Arjunsa Raghusa v. Mohanlal Harakchand [ILR (1938) Nag 308] and Brij Nath v. Lakshmi Narain [8 Luck. 35] where it was held that interest could be given either by way of damages or under some statute or under some contract but damages could not be awarded upon damages. Hence, the claim for the interest prior to the suit was disallowed.
In this case, the application of section 73 of the Indian Contract Act (1872) was in question. The Hon’ble Court while deciding what amounts to loss arising in the usual course due to breach of contract, held that such loss would only include the loss which was contemplated in the contract and of which both the parties were aware and nothing beyond that. Special damages can be recovered only when the special purpose of the contract is known to the other party. Otherwise, the loss incurred could only be confined to the terms of the contract.
Edited by Parul Soni
Approved & Published – Sakshi Raje