Madras High Court
K.C.Thangavel vs Tamilnadu Newsprint And Papers Limited on 24 October, 2024
C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Dated : 24.10.2024
CORAM :
THE HONOURABLE MR.JUSTICE SUNDER MOHAN
C.M.A(MD)Nos. 1193 to 1202, 1289 to 1293 of 2024
and C.M.P(MD)Nos. 13887 to 13890, 13778 to 13782, 12532, 12533,
12535 to 12537, 12541, 12543 to 12545 and 12547 of 2024
In CMA(MD)No.1193 of 2024:
K.C.Thangavel ... Appellant/1st Respondent
Vs.
Tamilnadu Newsprint and Papers Limited,
(A Government of Tamil Nadu Enterprise),
Kagithapuram – 639 136
Karur District ... Respondent/Petitioner
PRAYER: Civil Miscellaneous Appeal is filed under Section 37 of the
Arbitration and Conciliation Act, 1996, against fair and decreetal order
dated 23.02.2023 passed in Arbitration O.P.No.71 of 2021 on the file of
the Principal District Judge, Karur.
In all the appeals:
For Appellant : Mrs.P.Jessi Jeeva Priya
For Respondent : Mr.AR.L.Sundaresan
Senior Counsel
for Mr.M.P.Senthil
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Page No.1 of 12
C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
C O M M ON O R D E R
The appeals have been filed under Section 37 of the the Arbitration
and Conciliation Act, 1996, challenging the orders passed under Section
34 of the Arbitration Act.
2. The issue involved in all the appeals is one and the same and
therefore, all the appeals are taken up together.
3. The facts leading to the filing of these appeals are as follows:
a) The appellants had entered into a lease agreement with the
respondent on various dates in the years 2011 and 2012, by which, they
agreed to hand over the land for lease to the respondent for a period of
six years;
b) As per the agreement, during the period of lease, the respondent
would be permitted to plant eucalyptus/pulp trees; and the appellants
would be entitled to a lease rent of Rs.4,000/- (Rupees four thousand
only) per annum for an acre of land;
c) The respondent could not adhere to the terms of the agreement
as they could not cultivate the land for certain reasons, and hence, they
terminated the agreement unilaterally even before the expiry of six years.
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C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
The appellants were aggrieved by the said action.
d)The agreement contains an arbitration clause. Therefore, the
appellants sought for appointment of an Arbitrator and the Arbitrator was
appointed by this Court.
e)The Arbitrator found that the respondent had committed breach
of contract and directed the respondent to pay damages equivalent to the
lease rent for the balance lease period, damages for the loss caused since
the appellants had no opportunity to plant the second crop and towards
expenses incurred for plucking out and removal of roots and flattening
the land.
f) The respondent challenged the Arbitrator's award before the
District Court under Section 34 of the Arbitration Act. The District Court
found that the award is liable to be set aside in respect of compensation
under two heads (ie) towards damages caused due to the inability to plant
second crop and towards expenses for plucking out and removal of roots
as it was against the basic notions of justice. However, the District Court
confirmed the award as regards the direction to pay the lease rent for the
balance lease period.
g) The instant appeals have been filed challenging the said order
passed under Section 34 of the Arbitration Act by the District Court.
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C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
4.a) Mrs.Jessi Jeeva Priya, learned counsel for the appellants
would submit that the award of the Arbitrator is in accordance with law;
that in any case, it is neither perverse, illegal or opposed to public policy
and therefore ought not to have been interfered with under Section 34 of
the Arbitration Act.
4.b) The learned counsel submitted that as per the agreement, the
respondent was bound to maintain the land in such a manner, so that at
the end of the lease period, the appellants are able to cultivate the land;
that because of non-maintenance, they could not cultivate the land and
lost the opportunity to plant the second crop; and therefore, the
compensation awarded by the Arbitrator cannot be called perverse or
opposed to public policy and hence the District Court under Section 34
of the Arbitration Act ought not to have set aside the award under two
heads.
4.c) The learned counsel further submitted that the Arbitrator had
awarded the compensation by invoking the provisions of the Contract
Act and not as per the terms of the agreement as erroneously found by
the District Court and therefore, the order under Section 34 of the
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C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
Arbitration Act is liable to be set aside.
5. Mr.AR.L.Sundaresan, learned Senior Counsel appearing for the
respondent, per contra, submitted that under the lease agreement, the
appellants would at the best be entitled to the lease rent for a period of
six years; that even assuming that the respondent committed a breach, the
appellants would be entitled to damages equivalent to the rent for the
balance lease period left after the termination, which has been rightly
ordered by the Arbitrator; that the Arbitrator had awarded the
compensation under the other heads (ie) loss towards the second crop
and loss due to the expenses incurred for flattening the land, which were
neither contemplated under the agreement nor in law; and that therefore,
the District Court was right in setting aside the award under those two
heads; and hence the appeals deserve to be dismissed.
6. This Court gave its anxious consideration to the submissions
made on either side and carefully perused the materials available on
record.
7. The admitted facts are that the appellants and the respondent
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C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
entered into a lease agreement for a period of six years. As per the terms
of agreement, the respondent was permitted to plant eucalyptus/pulp trees
and entitled to remove it at the end of the lease period and the lease
period could be extended for a further period of six years, if there is a
mutual agreement. The fact that the respondent terminated the lease
agreement before the expiry of the agreement unilaterally is not in
dispute.
8. The only question is as to what would be the compensation
payable to the appellants for the said breach. As per the agreement, the
appellants are not entitled to receive any amount from the respondent at
the end of the lease period except for the lease amount. However, this
clause cannot be pressed into service because the lease was terminated
even before the lease period. Hence, the appellants would certainly be
entitled to the compensation for the breach under Section 73 of the
Contract Act. As per the terms of the agreement, if the lease had
continued for the entire period contemplated under the appellants, the
appellants would have been entitled to lease rent of Rs.4000/- (Rupees
four thousand only) per annum for six years. This has been awarded by
the Arbitrator as damages after deducting the lease amount paid already
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C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
and has been rightly confirmed by the District Court.
9. However, in addition to the said compensation, the Arbitrator
had also awarded an additional sum towards the loss that had been
purportedly caused due to the denial of opportunity to plant and harvest
the second crop. The agreement does not contemplate payment of
damages for the said reason. The agreement would state that during the
period of lease, the respondent has to maintain the land in the best
possible manner and hand it over at the end of the period of six years.
The award of compensation towards denial of opportunity to plant the
second crop is based on an erroneous appreciation of the evidence and
contrary to Section 73 of the Contract Act. The terms of the agreement
does not guarantee any such right or opportunity to the appellants.
Section 73 of the Contract reads as follows:
''73.Compensation for loss or damage caused by breach
of contract.—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.
Such compensation is not to be given for any remote and
indirect loss or damage sustained by reason of the
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C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
breach''.
The above provision makes it clear that the compensation cannot be
given for any remote or indirect loss or damage sustained by reason of
the breach even assuming that the appellants would have suffered a
remote or indirect loss. The possession of the land was handed over
before the expiry of the lease period and the appellants were also
awarded the lease amount for the total period of six years. Therefore, this
Court is of the view that apart from the lease rent, the appellants had not
suffered any other loss and the award passed by the Arbitrator suffered
from patent illegality. Therefore, the District Court was right in setting
aside the compensation under the said head in an application under
Section 34 of the Arbitration Act as it was vitiated by an illegality
apparent on the face of the award.
10. As rightly pointed out by the learned Senior Counsel, this
would not amount to modification of the award. The law in the regard is
well settled that if the award is passed under one or more heads,
compensation under anyone of those heads can be set aside and it would
not amount to modification.
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C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
11. The District Court had set aside the award under another head
namely, the expenses incurred by the appellants for plucking and
removing the roots and flattening the land and building of the bunds. The
award under the said head by the Arbitrator is not perverse or opposed to
public policy. Therefore, the District Court had no jurisdiction to set
aside the award under that head under Section 34 of the Arbitration Act.
The appellants are therefore entitled to compensation awarded under the
head towards plucking and removing of roots and flattening the land.
12. In paragraph No.51 of the award, the Arbitrator has given a
tabulation of the heads of compensation under which the appellants are
entitled to. Out of the three heads mentioned, the appellants are entitled
to compensation mentioned in S.Nos.1 and 3, which relates to the lease
amount and expenses towards plucking and removal of roots and
flattening of land. The damages for loss caused because of inability to
plant second crop is mentioned in S.No.2, which is set aside by the
District Court and confirmed by this Court. Therefore, the appellants are
not entitled to compensation under the said head.
13. This Court by an earlier order dated 26.09.2024 directed the
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C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
respondent to pay their admitted liability, which pertains to the lease rent
payable to the appellants within a period of three weeks. However, it is
reported that the respondent has not paid the said amount even as on
date. The learned counsel for the respondent expressed difficulty in
complying with the said order. There cannot be any excuse for delaying
the said payment and hence that portion of the amount shall be paid on or
before 05.11.2024. As regards the compensation towards plucking out,
removal of roots and flattening the land, which is the other head of the
compensation to which the appellants are entitled to, the respondent shall
pay the same within a period of three weeks from the date of receipt of a
copy of this order.
14. In fine, these appeals are partly allowed. No costs.
Consequently, connected miscellaneous petitions are closed.
24.10.2024
Index : Yes / No
Neutral Citation : Yes / No
CM
Note: Registry is directed to upload this judgment
in the official web-site on 29.10.2024
https://www.mhc.tn.gov.in/judis
C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
To
1. The Principal District Judge, Karur.
2. The Section Officer,
V.R.Section,
Madurai Bench of Madras High Court,
Madurai.
https://www.mhc.tn.gov.in/judis
C.M.A.(MD)Nos.1193 to 1202, 1289 to 1293 of 2024
SUNDER MOHAN, J.
CM
Judgment made in
C.M.A(MD)Nos. 1193 to 1202,
1289 to 1293 of 2024
and C.M.P(MD)Nos. 13887 to 13890,
13778 to 13782, 12532, 12533, 12535 to
12537, 12541, 12543 to 12545 and 12547 of 2024
24.10.2024
https://www.mhc.tn.gov.in/judis
