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Geo Pictures Ltd., Kottayam Vs. Neelakandaru Gopalakrishnaru and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKerala High Court
Decided On
Case NumberA.S. No. 296 of 1965
Judge
Reported inAIR1971Ker274
ActsContract Act, 1872 - Sections 74 and 188
AppellantGeo Pictures Ltd., Kottayam
RespondentNeelakandaru Gopalakrishnaru and ors.
Appellant Advocate Varghese Kalliath, Adv.
Respondent Advocate T.N. Subramonia Iyer, Adv.
DispositionAppeal dismissed
Cases ReferredFateh Chand v. Balkishan Dass
Excerpt:
.....refinements made under the english common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. certainly it is open to him to prove that when damages have been stipulated in the contract the said amount represents a bona fide pre-estimate of the damages consequential to the breach complained of......of 'sri murali talkies' a theatre at sasthamcottah. the plaintiff's case is that sri. k. george vaidyan on behalf of the defendant entered into a contract with the plaintiff on 27-10-1951 for the supply of the print aryamala among other films to be screened in the theatre 'sri murali talkies' at sasthamcottah. the print of 'aryamala' was despatched to the defendant by the plaintiff on 9-2-1954. though the defendant exhibited the film in this theatre the collections were poor even during the first few days. the plaintiff therefore directed the defendant to return the print on 18-2-1954 by express bus. the screening of the film in the defendant's theatre was stopped on 18-2-1954. it is now admitted that when the defendant despatched the film it contained only 17 reels out of 21.....
Judgment:

Krishnamoorthy Iyer, J.

1. The appeal arises out of a suit instituted by the plaintiff for recovery of damages and of the film print of 'Aryamala'. The plaintiff a private limited company is the producer of the picture 'Aryamala'. The defendant is the proprietor of 'Sri Murali Talkies' a theatre at Sasthamcottah. The plaintiff's case is that Sri. K. George Vaidyan on behalf of the defendant entered into a contract with the plaintiff on 27-10-1951 for the supply of the print Aryamala among other films to be screened in the theatre 'Sri Murali Talkies' at Sasthamcottah. The print of 'Aryamala' was despatched to the defendant by the plaintiff on 9-2-1954. Though the defendant exhibited the film in this theatre the collections were poor even during the first few days. The plaintiff therefore directed the defendant to return the print on 18-2-1954 by express bus. The screening of the film in the defendant's theatre was stopped on 18-2-1954. It is now admitted that when the defendant despatched the film it contained only 17 reels out of 21 reels. The remaining 4 reels were obtained by the plaintiff from the defendant only on 16-9-1954 after suit. The plaintiff claimed damages at the rate of Rs. 250/- per day from 11-3-1954 till 16-9-1954.

2. The defendant broadly raised two contentions. One is that the contract is not binding on him since Sri K. George Vaidyan is not competent to enter into any contract on behalf of the defendant and even if the contract is binding the plaintiff is not entitled to claim any damages. The learned Judge found that Shri K. George Vaidyan is competent to enter into the contract on behalf of the defendant, the said contract is binding on him and the plaintiff is entitled to damages to the extent of Rs. 1140.46.

3. The appeal is filed by the plaintiff claiming damages at the rate of Rs. 250/- per day for the period in question. But in the appeal memorandum he has limited his claim to Rupees 10,000/- and paid court-fee thereon. A memorandum of cross-objections has been filed by the defendant contesting the decree allowing damages.

4. Two questions arise for consideration. One is whether the contract is binding on the defendant, and the other is whether the plaintiff is entitled to claim damages at the rate of Rupees 250/- per day for the period in question.

5. Ext. P10 is the contract in question. It is dated 27-10-1951. It shows that the contract is between the plaintiff and Sri K. George Vaidyan, Manager, 'Sri Murali Talkies'. Sasthamcottah on behalf of the defendant. The defendant would even deny that Sri K. George Vaidyan was the manager of 'Sri Murali Talkies'. The question has been very elaborately considered by the learned Judge in paragraph 10 of his judgment. We agree with the learned Judge in holding that the evidence of P. Ws. 1 and 9 and Exts. P1 to P10 will prove that Sri K. George Vaidyan was the manager of 'Sri Murali Talkies' during the said period. Ext. P10 contract is for the purpose of carrying on business for which Sri K. George Vaidyan has been appointed Manager and in viewof Section 188 of the Contract Act Sri K. George Vaidyan is lawfully competent to enter into Ext. P10 on behalf of the defendant. It is therefore binding on him. There is unimpeachable evidence to show that the said film was screened in the defendant's theatre 'Sri Murali Talkies' as Sasthamcottah during the relevant period.

6. There was no dispute before us regarding the liability of the defendant for damages if Ext. P10 is binding on him for the period from 11-3-1954 to 16-9-1954. The only dispute was in regard to the quantum of damages-Clause 29 (a) of Ext. P10 reads:

'The Exhibitor covenants to return the film and all the loan publicity materials immediately after the screening is over, freight paid to the Distributor or any other party as may be directed by him, in the condition in which they were delivered to the Exhibitor subject to reasonable wear and tear due to proper use thereof. Should the Exhibitor fail in this respect or delay in returning the print and loan publicity materials, he shall become liable to pay and shall pay the Distributor a sum of Rs. 250/- as liquidated damages for each day of such failure or delay. This sum shall be in addition to the pro rata fixed fee and/or percentage on the receipts of the Exhibitor for each day of screening as stipulated in the schedule.' Under the above clause the defendant had covenanted to pay Rs. 250/- per day by way of damages for the period of the delay in the return of the film. The submission on behalf of the plaintiff was that the above stipulation is a bona fide pre-estimate of the damages ascertained and provided for the parties and in the absence of any other evidence the plaintiff is entitled to get reasonable compensation at the rate of Rs. 250/- per day for the period in question.

7. Section 74 of the Indian Contract Act under which alone the sustainability of the plaintiff's claim depends reads:

'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.' The rest of the section is not relevant and is therefore omitted.

8. In Panna Singh v. Arjun Singh, AIR 1929 PC 179 in dealing with Section 74 of the Indian Contract Act their Lordships of the Judicial Committee said:

'The effect of Section 74 is to disentitle the plaintiffs to recover simpliciter the sum fixed in the contract whether penalty or liquidated damages. The plaintiffs must prove the damages they have suffered.'

9. But counsel for the plaintiff relying on the decision in Mahadeoprasad v. Siemens (India) Ltd., AIR 1934 Cal 285 pointed out that in cases where damages have been fixed by the parties unless the defendant shows that it is unreasonable or exaggerated the said amount should be decreed. Ameer Ali, J. pointed out with reference to Section 74 of the Contract Act that the contract made by the parties estimating their damages is in itself evidence if there is no other evidence of damage. The above observation was very much relied on by counsel for the plaintiff and stressed for a decree being granted in terms of the plaint as there is no other evidence to show that the said stipulation is unreasonable or is in the realms of penalty.

10. Explaining Section 74 of the Indian Contract Act Shah, J. in Fateh Chand v. Balkishan Dass, AIR 1963 SC 1405 at p. 1410 pointed out.

'The section is clearly an attempt to eliminate 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 the 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 amounts to be paid in case of breach, and stipulations by way of penalty.'

In view of the above observation the plea of the learned counsel for the plaintiff relying on AIR 1934 Cal 285 cannot be accepted. The burden is always on the plaintiff to prove the extent of damages. Certainly it is open to him to prove that when damages have been stipulated in the contract the said amount represents a bona fide pre-estimate of the damages consequential to the breach complained of. The burden is on the plaintiff to show that theagreed liquidated damages are the result of a genuine pre-estimate of damages. We are therefore of the view, that the learned Subordinate Judge is correct in fixing damages on the basis of the loss of profits accrued when the film was run in the defendant's theatre in the absence of any evidence on the part of the plaintiff. Counsel for the plaintiff prayed for a remand to enable him to prove the actual damage sustained. We do not think that at this distance of time we will be justified in acceding to the request of the counsel for the plaintiff.

11. We therefore dismiss the appeal and the cross-appeal. But we make no order as to costs in this Court.


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