Case: Wg. Cdr. Ashwini Kumar Handa (Retd.) Vs. Union of India &amp; Others

incorporated, which would be enforceable in law. These are:(i) Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd., 2003(2) R.C.R.(Civil) 554 : (2003) 5 SCC 705 "(1) Terms of the contract are required to be taken into consideration before arriving at the conclusion whether the party claiming damages is entitled to the same.(2) If the terms are clear and unambiguous stipulating the liquidated damages in case of the breach of the contract unless it is held that such estimate of damages/compensation is unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation and that is what is provided in section 73 of the Contract Act.(3) Section 74 is to be read along with Section 73 and, therefore, in every case of breach of contract, the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree. The court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of the breach of a contract.(4) In some contracts, it would be impossible for the court to assess the compensation arising from breach and if the compensation contemplated is not by way of penalty or unreasonable, the court can award the same if it is genuine pre-estimate by the parties as the measure of reasonable compensation."(ii) Subir Ghosh v. Indian Iron and Steel Company, 1976 SCC OnLine Cal 222 wherein the Calcutta High Court laid down the following proposition of law:"It was contended for the appellant that the agreement was one-sided, against public policy and constituted restraint on trade and that the claim by the company came specifically within section 74 of the Contract Act, 1872, and notwithstanding the amount on the breach of the covenant. Normally, when the amount payable is either disproportionately more than the actual damage suffered on the breach or remain the same irrespective of the varying damages which may be suffered due to breach of different covenants, the amount so payable partakes the nature of penalty. In the instant case what was payable under the bond reasonably represents the damage which the company is likely to suffer in case the appellant leaves the company in the midst of the training, and as such, the amount so payable is nothing but a genuine pre-estimate of the damage which the company is liable to sustain in the event of breach on the part of the appellant."9. We may observe at the outset that the judgments in Oil & Natural Gas Corporation Ltd. and Subir Ghosh would not be applicable in the instant case as in those judgments provisions of the Indian Contract Act pertaining to damages/liquidated damages were dealt with. On the other hand, in the instant case we are concerned with the statutory provision under which leave was granted to the appellant herein. Moreover, those cases dealt with the issue of pre-estimated liquidated damages. In the instant case, the recovery made by the respondent is not of any damages but of pay and allowances which were given to the appellant during the period the appellant was on study leave. This matter, therefore, has to be looked into keeping in mind the following aspects:(i) the appellant, while serving with the respondent, had availed two years study leave;(ii) this study leave was granted to him in terms of Army Instructions 13/78 pursuant to which the appellant submitted Service Guarantee Certificate;(iii) as per the said Service Guarantee Certificate, the appellant was liable to serve for nine years from the date of return from study leave;(iv) only on the ground of ill health the appellant could be relieved earlier; and(v) in the event of leaving the job without completing nine years of service after return from study leave, the appellant was liable to refund the pay and allowances given to him during study leave.In the aforesaid facts, question of proportionate deduction does not arise at all.10. It is stated at the cost of repetition that undertaking in the form of Service Guarantee Certificate did not specify any compensation or damages to be paid by the appellant to the respondent in the event the appellant did not serve for nine years on joining after the study leave. In that eventuality, his request for proportionate deduction might have been relevant on the ground that he had served for 6 years 8 months out of the nine years and, therefore, is not liable to pay the entire compensation as per the stipulation in the bond. On the contrary, here is a case where the employer had paid him salary and allowances even for the period he did not work and was on study leave. This payment was made subject to the condition that after his return the appellant would serve for entire nine years. As he has not served for that period, the employer is entitled to receive back the pay and allowances given during the period of study leave, in terms of the Army Instructions coupled with the service guarantee certificate.Learned counsel for the respondent is right in his submission that validity of the aforesaid Instruction has not been questioned by the appellant.11. As far as argument of discrimination is concerned, there are no foundational facts in support of this argument. No such plea was taken either before the AFT or in the instant appeal. Only with the additional documents, communication dated February 6, 2014 is enclosed which the appellant has received under the Right to Information Act, 2005 in respect of Surg Cdr Haresh Maini. On the basis of this document, oral submission was made at the time of arguments. It is not known as to under what circumstances recovery of proportionate cost was made in his case. Moreover, in the absence of pleadings, the respondents did not have any opportunity to explain the same. Therefore, such a plea cannot be allowed in the facts of this case.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]9. We may observe at the outset that the judgments in Oil & Natural Gas Corporation Ltd. and Subir Ghosh would not be applicable in the instant case as in those judgments provisions of the Indian Contract Act pertaining to damages/liquidated damages were dealt with. On the other hand, in the instant case we are concerned with the statutory provision under which leave was granted to the appellant herein. Moreover, those cases dealt with the issue ofliquidated damages. In the instant case, the recovery made by the respondent is not of any damages but of pay and allowances which were given to the appellant during the period the appellant was on study leave. This matter, therefore, has to be looked into keeping in mind the following aspects:(i) the appellant, while serving with the respondent, had availed two years studythis study leave was granted to him in terms of Army Instructions 13/78 pursuant to which the appellant submitted Service Guarantee Certificate;(iii) as per the said Service Guarantee Certificate, the appellant was liable to serve for nine years from the date of return from study leave;(iv) only on the ground of ill health the appellant could be relieved earlier; and(v) in the event of leaving the job without completing nine years of service after return from study leave, the appellant was liable to refund the pay and allowances given to him during studythe aforesaid facts, question of proportionate deduction does not arise at all.10. It is stated at the cost of repetition that undertaking in the form of Service Guarantee Certificate did not specify any compensation or damages to be paid by the appellant to the respondent in the event the appellant did not serve for nine years on joining after the study leave. In that eventuality, his request for proportionate deduction might have been relevant on the ground that he had served for 6 years 8 months out of the nine years and, therefore, is not liable to pay the entire compensation as per the stipulation in the bond. On the contrary, here is a case where the employer had paid him salary and allowances even for the period he did not work and was on study leave. This payment was made subject to the condition that after his return the appellant would serve for entire nine years. As he has not served for that period, the employer is entitled to receive back the pay and allowances given during the period of study leave, in terms of the Army Instructions coupled with the service guarantee certificate.Learned counsel for the respondent is right in his submission that validity of the aforesaid Instruction has not been questioned by the appellant.11. As far as argument of discrimination is concerned, there are no foundational facts in support of this argument. No such plea was taken either before the AFT or in the instant appeal. Only with the additional documents, communication dated February 6, 2014 is enclosed which the appellant has received under the Right to Information Act, 2005 in respect of Surg Cdr Haresh Maini. On the basis of this document, oral submission was made at the time of arguments. It is not known as to under what circumstances recovery of proportionate cost was made in his case. Moreover, in the absence of pleadings, the respondents did not have any opportunity to explain the same. Therefore, such a plea cannot be allowed in the facts of this case.