Psts Logistics Pvt Ltd v. The Chairman
IN THE HIGH COURT OF JUDICATURE AT MADRAS
(ORDINARY ORIGINAL CIVIL JURISDICTION) MONDAY, THE 10TH DAY OF SEPTEMBER 2018 THE HON'BLE MR. JUSTICE M.GOVINDARAJ O.A. No.53 of 2016 in C.S. No.54 of 2016 PSTS Logistics Pvt. Ltd., rep. by General Manager, Finance/ Authorised Signatory, Mr.M.Kannan, 2nd Floor, Wavoo Mansion, 48, Rajaji Salai, Chennai-600 001.
... Applicant/Plaintiff -Versus1. The Chairman,
2. The Traffic Manager, 1 & 2 are at Chennai Port Trust, Rajaji Salai, Chennai-600 001. ... Respondents/Defendants Original Application praying that this Hon'ble Court be pleased to issue an ad-interim injunction restraining the respondents/defendants, their men, agents, servants or any other person claiming through or under them, from in any manner, whatsoever, interfering with the peaceful possession and enjoyment of the licensed area. This original application coming on this day before this court for hearing, the Court made the following order: The Original Application has been filed seeking an order of interim injunction restraining the respondent/ defendants their men, agents, servants or any other person claiming through or under them, from in any manner whatsoever interfering with the peaceful possession and
enjoyment of the licensed area.
2. The plaintiff challenged the notice issued by the respondent demanding penalty of Rs.84,35,763/-. According to the applicant/plaintiff they are licensee under the 1st respondent for the open/covered storage spaces.
3. As per the terms and conditions attached to the allotment order of the respondent/defendant, the respondent entitled to collect penalty at the rate specified under Clause (5) of the allotment order.
4. As per the Section 48 of the Major Port Trust Act, 1963, the scale of trade was revised by the Port Trust and accordingly, license fee has been enhanced by the respondent/defendant. As per the revision made by the respondent, the applicant has also been paying enhanced license fee and there is no arrears as on date. However, the respondent, by letter dated 27.10.2015 claimed a sum of Rs.84,35,763/- as penalty. The said notice is now under challenge in the Civil Suit as the same is violative under Section 74 of the Indian Contract Act, 1872.
Section 74 Compensation for breach of contract where penalty stipulated for:- When a contract has been broken, if a sum is named in the contract as
the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
5. In support of his contention, the learned counsel for the applicant would rely upon the judgment of Hon'ble Supreme Court in Kailash Nath Associates vs. Delhi Development Authority and another reported in 2015 4 SCC 136, wherein it is held as follows:-
(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."
6. In the instant case, the demand made by the respondent is penal in nature. As per Section 74 of Contract Act, the party complaining of the breach is entitled to get a reasonable compensation. Whether the penalty specified in the allotment order is reasonable or in terrorem can be decided only after trial. The contention that the respondent has not at all suffered any loss or damage cannot be accepted. The factum of proving the actual loss suffered by the defendant in the contract
is the subject matter of the trial. When the demand made by respondent itself is under challenge, any coercive action in the meanwhile will cause irreparable injury. As of today, admittedly there are no arrears of payment of enhanced license fee.
7. The learned counsel appearing for the respondent would also submit that the possession of the applicant/plaintiff has not been disturbed so far. On considering the materials available before this Court, this Court finds that the applicant/plaintiff has made out a prima faice case to grant the relief of interim injunction.
8. In such circumstances, Status-quo prevailing as on today shall be maintained till the disposal of the Civil Suit. The Original Application is allowed accordingly. Sd./-M.G.R.J.
10/09/2018 //Certified to be true copy// Dated at Madras this the day of 2020. jj 06/01/2020 COURT OFFICER(O.S.) From 25th Day of September 2008 the Registry is issuing certified copies of the Orders/Judgments/Decrees in this format.