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Concept of Damages An historical perspective

Concept of Damages took birth in the case of Rudal Shah when the Honble Supreme Court broke one more link in the shackles of restrictive interpretation and added another feather in the cap of Article 21 to crown the personal life and liberty of people. Post Rudal, there are a series of judgments which strengthened the power of Supreme Court and High Courts to compensate the victims or their dependents for the excesses done by the State machinery or on failure of State to take care when there was a duty imposed upon them to exercise reasonable care. There are cases ranging from conception after vasectomy to death due to open manholes to custodial death wherein Supreme Court has ventured to grant compensation. Over a period of time, the Honble Supreme Court has given a dynamic interpretation to the constitutional remedies provision under the Constitution so as to enhance the fundamental rights individual. Courts have awarded compensation for excesses committed by the state or for negligence of the State as well as examine the self-imposed restrictions of the Supreme Court in not awarding compensation in certain cases.1 Concept of Damages Pre-constitutional Judicial decisions A consideration of the pre-Constitution cases ( as to Governments liability in tort) begins with the a judgment of the Supreme Court of Calcutta in the case. P. & O. Steam Navigation Co. v. Secretary of State ,a servant of the plaintiff-company was proceeding on a highway in Calcutta, driving a carriage which was drawn by a pair of

horses belonging to the plaintiff. He met with an accident, caused by negligence of the servants of the Government. For the loss caused by the accident, the plaintiff claimed damages against the Secretary of State for India. Sir Barnes Peacock C. J. (of the Supreme Court) observed that the doctrine that the King can done wrong, had not application to the East India Company. The company would have been liable in such cases and the Secretary of State was thereafter also liable. On this holding, it was not necessary for Peacock C. J. to discuss the distinction between sovereign and nonsovereign functions. But he made a distinction between the two and observed, that if a tort were committed by a public servant in the discharge of sovereign functions, no action would lie against the Government, e.g., if the tort was committed while carrying on hostilities or seizing enemy property as prize. The doctrine of immunity for acts done in the exercise of sovereign functions, enunciated in the P & O case, was applied by the Calcutta High Court in Nobin Chander Dey v. Secretary of State2, (1873) ILR 1 Cal. 1. In that case, the plaintiff contended that the Government had made a contract with him for the issue of a license for the sale of ganja and had committed breach of the contract. The High Court held as under: (i) (ii) On the evidence, no breach of contract had been proved. Even if there was a contract, the act was done in exercise of sovereign power and, therefore it was not actionable. The High Court expressly followed the P& O ruling. The Madras and Allahabad view: Immunity confined to acts of State In Secretary of State v. Hari Bhanji,3 (1882) ILR 5 Mad. 273, the Madras High Court held that State immunity was confined to acts of State. Turner CJ, in coming to this

conclusion, pointed out that in the P & O Case (Supreme Court, Calcutta), Peacock CJ did not go beyond acts of State, while giving illustrations of situations where the immunity was available. The positions were thus explained (in the Madras case): The act of State, of which the municipal courts of British India are debarred from taking cognizance, are acts done in the exercise of sovereign power, which do not profess to be justified by municipal law..where an act complained of is professedly done under the sanction of municipal law, and in exercise of powers conferred by that law, the fact that it is done by the sovereign powers and is not an act which could possibly be done by a private individual does not oust the jurisdiction of the civil court. It should, however, be mentioned that the Madras judgment in Hari Bhanji also adds ,that the Government may not be liable for acts connected with public safety (even though they are not acts of State). The Madras High Court reiterated this view in Ross v. Secretary of State,4 AIR 1915 Mad. 434. The Allahabad High Court took a similar view in Kishanchand v. Secretary of State5, (1881), ILR 2 All 829. However, in Secretary of State v. Cockraf6, AIR 1915 Mad. 993; ILR 39 Mad. 35, making or repairing military road was held to be a sovereign function and the Government was held to be not liable, for the negligence of its servants in the stacking of gravel on a road resulting in a carriage accident injuring the plaintiff.

The Bombay view: Immunity available, only for acts of State

In the Bombay case of 1949- Rao v. Advani,7 AIR 1949 Bom. 277, 51 Bom LR 342, Chagla CJ and Tendolkar J., held that the Madras view (Hari Bhanji case) was correct. The Bombay case was not one of a claim to damages for tort, but related to a petition for certiorari to quash a Government order for the requisitioning of property, as proper notice had not been given. On appeal, the Supreme Court- State of Bombay v. Khushaldas Advani,8 AIR 1950 SC 222; (1950) SCR 621, reversed the High Court, holding that natural justice was not required to be observed, before requisitioning any property. B K. Mukherjea J. (as he then was), approved the Madras view and accepted the definition of act of State given in Eshugbayi v. Government of Nigerla9 (1931) AC 662, 671 (Privy Council). Other judges of the Supreme Court did not express any views on this point. Mukherjee J. took care to point out, that in the P & O case, the question at issue was, whether the Secretary of State for India could be sued for a tort committed in the course of a business. Whether he could be sued for cases not connected with business, was not at issue, in the P & O case. Other Case There are several other rulings of the pre-Constitution era on the subject of liability of the State in tort. However, for the purpose of the present report, it is considered unnecessary to go into them, since they mostly follow one or other of the cases . Post- Constitution Judicial decision Vidyawati Case A broad approach So far as the Supreme Court is concerned, State of Rajasthan v. Vidyawati,10 AIR 1962 SC 933 is the first post-Constitution judgment on the subject under consideration.

That was a case where the driver of a Government jeep, which was being used by the Collector of Udaipur, knocked down a person walking on the footpath by the side of a public road. The injured person died three days late, in the hospital. The legal representatives of the deceased sued the State of Rajasthan and the driver for compensation / damages for the tortuous act committed by the driver. It was found by the court, as a fact, that the driver was rash and negligent in driving the jeep and the accident was the result of such driving on his part. The suit was decreed by the trial court, and also by the High Court. The appeal against the High Court judgment was dismissed by the Supreme Court. Rudal Shah Period In Rudul Shah v. State of Bihar11 the Supreme Court has addressed itself to

1. http://papers.ssrn.com/ 11. AIR 1983 SC 1086 this situation and has fixed monetary liability on the State for a gross violation of the petitioners fundamental rights to life and personal liberty under article 21. The implications of the unanimous opinion of the three-member bench of the Court are far-reaching: the Supreme Court has served notice that it will create new remedies in its original jurisdiction under Article 32, where such remedies are indispensable to the vindication of the fundamental rights. In Khatri v. State of Bihar,12 better known as the Bihar Blindings case, the Court was faced with a situation where the police, the so-called guardians of the law, were found to have taken the laws into their hands and blinded suspected

criminals. In Hussainara Khatoon v. State of Bihar13 the Court found that under trial prisoners had served sentences longer than they would have undergone if they had been found guilty of the offences with which they had been charged. The list is longer, but what may be observed in all these cases is a lack of sensitivity to human dignity and a shocking lack of commitment on the part of the executive to the fundamental rights of citizens. It is true that this rarely happens in the case of the Central Government but in Peoples Union for Democratic Rights v. Union of India14 or the Asiad labourers case, it was found that the pre occupation of the Central Government with finishing the preparations for the IX Asian Games held

12. 1981 (2) Scale 531 13. AIR 1979 SC 1360 14. AIR 1982 SC 1473 in New Delhi in 1982 had some-how led it to overlook numerous violations of the labour laws as well as the fact that the contractors engaged to construct the various stadia etc. were paying their workers less than the statutorily fixed minimum wages. In Sebastian Hongray v. Union of India15 it was discovered that two persons, who had been taken into custody by the Indian Army in the State of Manipur, had disappeared mysteriously, and no trace could be found of them thereafter. An inference which may be drawn from these cases, although it does not claim to be substantiated by empirical evidence, is that it is usually illiterate and

poverty stricken or otherwise disabled people whose fundamental rights are grossly violated, resulting in permanent damage to them. It seems reasonable to presume that the so-called elite sections of society would not only be aware of their rights but also move quickly to have them enforced. Nevertheless one conclusion which it would be difficult to dispute is that in general these cases are indicative of a slide towards administrative anarcy. In the circumstances, a compensatory remedy must have seemed to the court in Rudul shah, at one stroke a method of vindicating the fundamental right of the petitioner as well as a means of curbing the governments propensity for violating them. The facts are not quite in Rudul shah, so it must suffice to state that the petitioner was found to have been illegally detained without any statutory justification for a period of 14 years after his acquittal of criminal charges at a

15. (1984) 1 Scale 629 sessions trial. The Court felt that this constituted a flagrant infringement of the petitioners fundamental right under article 21 not to be deprived of his life or liberty except according to procedure established by law. From the facts it is obvious that the seriousness of the loss suffered by the plaintiff i.e. the fourteen years lost in jail contributed in large measure to the enormity of the governments offence in the eyes of the Court, especially in the light of the fact that not even a misinterpretation of the relevant statutory provisions could have permitted such a travesty of the administrative process,16 resulting in a man being deprived of fourteen precious years of his life. In the event although the petitioner prayed for

monetary relief for his rehabilitation, reimbursement of his medical expenses and compensation for his illegal incarceration, the Court ultimately awarded the petitioner Rs. 30,000 as compensation in addition to the Rs. 5,000 already paid to him by the Government of the State of Bihar, in spite of the fact that he had already been released after the filing of the writ petition in 1983. Ordinarily the release of the petitioner from detention should have taken the case out of the ambit of the courts jurisdiction under article 32. Since there was no necessity to issue the writ of habeas corpus any longer. Further, the other public law remedies, like the prerogative writs, being basically nullificatory in character, would not have been capable of redressing the wrong done to the petitioner. In the circumstances there was hardly any option open to the Court or the petitioner. In the absence of a civil remedy founded directly on the violation

16. AIR 1983 SC 1088 of a constitutional right, the only remedy would have been to institute a civil suit for damages in tort against the State or its officers. There are two other decisions of the Supreme Court which must be mentioned here as they are often cited in support of the contention that the court can award compensation more easily and less controversially under Article 32 in the form of exemplary costs. In Deoki Nandan Prasad v. State of Bihar, 17 a sum of Rs. 25,000 was awarded to the petitioner as exemplary costs on the ground that he had been put to undue harassment by the State of Bihar, as it had not paid the arrears of salary due to him as per an earlier judgment of the Supreme Court.

While such an orders of the Court, the situation was not quite the same in Sebastian Hongray v. Union of India. Here the Court awarded Rs. 1, 00,000 each in the form of exemplary costs to the wives of two individuals who had disappeared after being taken into custody by the Indian Army in the State of Manipur. The award was based on the ground that the Union of India had failed to respond to the writ of habeas corpus issued earlier. It is difficult to understand how the Central Government could respond to the writ, after, as they claimed, the two individuals in question had been set free. In the circumstances, the award of exemplary costs related more to the cause of action than any (mis) conduct during the proceedings. In substance, it is submitted, the principles which govern the award of costs14 have not been correctly applied in the case of exemplary costs because it can logically be awarded against a party only for misconduct during the

17. AIR 1983 SC 1134 proceedings before the court and is not ordinarily awarded to penalize conduct prior to the institution of legal proceedings. It is not easy, therefore, to see how the court can award exemplary costs in such cases under article 32 without considering the issues raised by the award of compensation. Certain broad issues inherent in the award of compensation under article 32 may be articulated on the basis of the decision in Rudul Shah. On a general plane, there is the question of whether the powers of the Court under Clause (2) of article 32 of the Constitution may be exercised to create new remedies where traditional ones, prima facie, appear inadequate. At a more specific level, there is

the question of whether compensation in the form of damages or otherwise can be awarded for the violation of the fundamental rights, under article 32. It is the thesis of this article that an examination of the fundamental rights and the scheme for their enforcement leads inevitably to the conclusion that the Supreme Court is bound to remedy violations of the fundamental rights through the creation of new remedies under article 32, if they are necessary for the enforcement of the rights, and that this has always been implicit in the judicial treatment of the fundamental rights. Chief Justice Chandrachud certainly is of this opinion. He appears to have based his decision to award compensation to the petitioner in Rudul Shah on two complementary considerations both of which were based on the strength of the right guaranteed in article 21 itself. From the point of view of the petitioner, he suggested that in these circumstances, the refusal of the court to pass an order of compensation in favour of the petitioner [would] be doing mere lip service to his fundamental right to liberty which the State Government has so grossly violated. Article 21 which guarantees the right to life and liberty [would] be denuded of its significant content if the power of the court were limited to passing orders of release from illegal detention. The other equally important consideration which impelled the court to take the drastic step of fixing monetary liability on the State in its article 32 jurisdiction was that one of the telling ways in which the violation of that right [could] reasonably be prevented and due compliance with the mandate of article 21 secured, [was] to mulct its violators in the payment of monetary compensation. In the Courts opinion, administrative sclerosis leading

to flagrant infringements of the fundamental rights [could] not be corrected by any other method open to the judiciary to adopt. Historical Background of Damages The numerous scholarly work of Akhil Amar establish that damages were intended to play a central , if not pre eminent, role in remedying infringements of constitutional rights. Marshalling the historical evidence relating to the pre-Ratification Era, Amar convincingly shows that the Framers recognized that the Constitution conferred legal rights to persons against the government and that there should be adequate redress, including the imposition of monetary liability, whenever those rights were violated. The Framers firmly believed that the vindication of constitutional rights would require direct damages suits by individuals against the government. This belief was grounded in the long-standing English law tradition of allowing suits against government officials by victims of illegal searches or seizures. Civil damages effective deterrence of constitutional misdoings, is sufficient justification, in the Supreme Courts view , for extra-compensatory damages. The numerous scholarly work of Akhil Amar establish that damages were intended to play a central , if not pre eminent , role in remedying infringements of constitutional rights. Marshalling the historical evidence relating to the pre-Ratification Era, Amar convincingly shows that the Framers recognized that the Constitution conferred legal rights to persons against the government and that there should be adequate redress, including the imposition of monetary liability, whenever those rights were violated. The Framers firmly believed that the vindication of constitutional rights

would require direct damages suits by individuals against the government. This belief was grounded in the long-standing English law tradition of allowing suits against government officials by victims of illegal searches or seizures. Civil damages effective deterrence of constitutional misdoings, is sufficient justification, in the Supreme Courts view, for extra-compensatory damages. Presuming damages represents an encroachment upon the parties right under the Seventh Amendments Trial by Jury determine whether, and what amount of, damages should be awarded for a constitutional infraction. It also permits a court to disregard a jurys determination that on damages should be awarded to a plaintiff. The Reexamination Clause of the Seventh Amendment was designed to prevent a court form disturbing this finding. In addition to these doctrinal shortcomings, there are practical pitfalls to presuming constitutional damages. In light of the ease with which intangible harms can be redressed with monetary awards under existing compensatory damages law, presumed damages would appear to represent a gratuitous recovery. Federal courts have removed the evidentiary barriers that used to block awards of compensatory damages for intangible mental and emotional harms and now routinely permit such awards based solely on a plaintiffs uncorroborated testimony. The supposed gap that the presumed damages remedy is intended to fill may no longer exist. In cases where constitutional tort claims can be aggregated through the class action procedure, presumed damages, particularly when used to supplement to a compensatory damage recovery, can threaten a municipality with fiscal ruin.

Every violation or infringement of a right confers a right on the injured party to recover compensation. This right is called by the Jurist Salmond as a sanctioning right which is of two kinds, i.e.:I) The right to receive pecuniary penalty; II) The right to exact and receive the damages or other pecuniary compensation. The British and Indian Laws are unfamiliar with the former kind. The later form of right is most important and relief with this form of right is remedial in its nature. Awarding of compensation to injured party against the wrongdoer is punished by giving penal redress to the injured or simple compensation is given. In either case, the law simply awards compensation to the sufferer. This compensation is awarded in the shape of damages which is awarded according to certain rules which are known as measures of damages. Damages are defined as pecuniary compensation recoverable by the process of law by a person who has sustained an injury through the certain act or omission of

18. http:/www.1911 encyclopedia.org/Damages another. Lexstone in his commentary defined damages as spices of property i.e. acquired and lost suit and judgment at law. The injured party has unquestionably a vague and indeterminate right to get some damages. The damages may also be defined as disadvantage suffered by a person as a result of the act or default of another. The basic object of the damages is to compensate the plaintiff, for all the lose he has suffered so far again as money can do it.

It is to be noted that while considering the topic of damages, two questions arise for determination:(i) The question of liability i.e. whether damages are due at all or in other words whether the person against whom the complaint was lodged is liable or not for the damages; (ii) The question as to quantum of damages; The basic object of the damages is to compensate the plaintiff for all the loss suffered due to the fault of other party. Definition of Damages The term damage may be defined as the monetary compensation payable by the defaulting party to the aggrieved party for the loss suffered by him. The aggrieved party may therefore bring an action for damages against the party who is guilty of the breach of the contract. And the party, guilty of the breach, is liable to pay damages to the aggrieved party. The primary aim of damages is to compensate the aggrieved party, and to place him in the same position which he would have occupied had the breach of contract not occurred. It may, therefore, be noted that the damages are given by way of compensation for the loss suffered by the aggrieved party, and not for the purpose of punishing the default party. The term damages is the amount of money which the law awards or imposes as pecuniary compensation, recompense, or satisfaction for an injury done or a wrong sustained as a consequence either of a breach of a contractual obligation or a tortuous act.19

Blackstone in his commentaries regards damages as a a species of property that is acquired and lost by suit and judgment at law. He further states about damages that: The injured party has unquestionably a vague and indeterminate right to some damages or other, the instant he receives the injury; and the verdict, of the jurors and the judgment of the court thereupon, do not in this case, so properly vest a new title in him. They do not give but define the right20 Moreover, the definition of damages was given in the case of Aetna Casualty & Surety Co. v. Hanna21 as a pecuniary compensation or indemnity which may be recovered in the courts by any person who has suffered loss, detriment, or injury, whether to his person, property, or rights, through the unlawful act or omission or negligence of another.

19. Wilson v. Donouan. (DCLA) 218 F. Supp. 944. 20. Book II. Ch. 26. p. 438. 21. (CA 5 Fla) 224 FZD 499 : 53 ALR 2d 1125 (22 Am Jur 2d Restatement. Contracts 326 (a). Damages may be defined as the disadvantage which is suffered by a person as a result of the act or default of another. Injuria is damage which gives rise to a legal right to recompense; if the law gives no remedy, there is absque injuria, or damage, without the right to recompense. Therefore, the meaning of damages in a statute is a matter of construction. Where a tortfeasor has paid damages to an injured person, the tortfeasor has not suffered damages within the Law Reform

(Contributory Negligence) Act. 1945, in the circumstances which existed in that case there would now be a right to contribution by virtue of the combined operation of the Law Reform (Married Women and Tortfeasors)Act, 1935; Section 6(1)(c), and the Law Reform (husband and wife) Act. 1962. In the case of a collision at sea, a tortfeasor who has paid damages to an innocent person has suffered damage or loss within the Maritime Conventions Act. 1911, under Section 11, and may recover contribution from a joint tortfeasor. While Expenses of lifting a sunken ship, recoverable under a local Act, have been held not to be damages.22 Although the words damages and injury, are sometimes used synonymously, there is a material distinction between them. Injury is the illegal invasion of a legal right; 23 damage is the loss, hurt, or harm which results from the injury; 24 22. Stonedale No. 1 (owners) v. Manchester Ship Canal Co,. (1956) A.C. 1: (1955) 2 All ER 689 (H.L.) 23. Bowman v. Davenport. 243 lowa 1135:53. NW 2d 249. 63 at 835. 24. Hanna V. Martin (Fla). 49 So 2nd 585 (22 Am Jur 2d). and damages are the recompense or compensation awarded for the damage suffered.25 In popular sense, the word damage frequently means depreciation caused by a wrongful or a lawful act; but in statutes or other legal instruments giving compensation for damages, the word refers to some actionable loss, injury, or harm which results from the unlawful act, omission, or negligence of another. But

when used to signify the money which a plaintiff ought to recover, the word damage or damages is never in any sense synonymous with or collateral to, the terms example, fine, penalty, revenge, discipline, or

chastisement.26 Compensation Word Compensation is not universally used is legal systems of the world. In some countries the terms-restitution damage reparation etc. are used. The most common meaning of compensation is money payable for loss sustained. Broadly speaking compensation means a money payable by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss or be made whole in respect of his injury.27

25. Turcotte v. De Witt. 333 Mass 389: 131 NE 2d 195 (22 Amjur 2d 26. Fay v. Parker. 53 NH 342. 27. Aiyar, P.Ramnatha, the Law Lenicon 367) (1997) Compensation is a common remedy both is public law and private law in Indian legal system. Under public law of crimes, compensation has been popular with punishment is old days. The recent trend of judiciary to the victims wherever possible e.g. award of compensation to rape victims (DDWWF v. UOI,281995 SCC (Cr.7) or award of compensation for custodial deaths.29 In private Law of torts, it is only remedy available to the wronged person.

Law is this area is in developing stage and Supreme Court has taken revolutionary steps in awarding compensation through its writ jurisdiction under article 32. High Courts are also moving ahead in this direction under article 226 of constitution. Awarding of compensation through writs is a recent growing trend. Payment of compensation for victim of crime is an old concept. It is an established proposition is the history of penology. It is one of the primitive element of punishment. This concept was present is different countries is various forms. In the early stages of common law, restitution or payment of compensation by offender was often the only remedy available for attacks made upon the person or property of citizen. Jeremy Bentham put the rationale of compensation to the victims of crime this way -those who have suffered by crime, are abandoned to their evil condition. The society which they have contributed to maintain and which ought to protect them, owes them however, an indemnity when its protection has not been effected30.(The Works of Jeremy Bentham 589 (1962)

29. D.K.Basu v. State of W.B. AIR 1997 SC 610. In England, the idea of compensation was deeply rooted in the Anglo-Saxon period of English legal system. During that period, two types of punishments were prevalent, i.e, fines and corporal punishments. The fines were called the wer, bot and wite. Ho Oppeheimer has remarked that in the early history of mankind, it became customary to commute private vengeance for money payment31. (Oppenheimer H, The Rationale of punishment 10) Legal Import of Damage

In considering the legal import of term damage. It is however, necessary to bear in mind that the injury for which pecuniary compensation is awarded in an action at law, may have been caused by the defendant, or by anyone for whose acts or omissions the law holds the defendant responsible, and that the injury complained or may be result of a breach of contract, or tort. Object of Damages The object of damages is to compensate the plaintiff for what he has lost, means to say what would have been in his pay packet when he took it home.32 The object of damage is to put the plaintiff in as good a position, as far as money can do it, as if the promise had been performed. In fraud, the defendant has been guilty of a deliberate wrong by inducing the plaintiff to act to his determent. The object of damages is to compensate the plaintiff for all the loss he has suffered, so far, again, as money can do it. In contract, the damages are limited to what may

32. Halsuburys Laws of England. 4th edn vol. 12. p. 412. reasonably be supposed to have been in the contemplation of the parties. The defendant is bound to make reparation for all the actual damage directly flowing from the fraudulent inducement. The person who has been defrauded is entitled to say: The works of Jeremy Bentham 589 (1962) Openheimer. H, The Rationale of Punishment. I would not have entered into this bargain at all but for your representation. Owing to your fraud, I have not only lost all the money I paid you, but, what is more, I have

been put to a large amount of extra expense as well and suffered this or that extra damages. All such damages can be recovered, and it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen.33 Damages and Compensation Distinguished There is an evident distinction, almost etymological in nature between the terms damages and compensation, which is not to be ignored. While the term damages is used in reference to pecuniary recompense awarded in reparation for a loss or injury caused by a wrongful act or omission, the term compensation is used in relation to a lawful act which caused the injury in respect of which an indemnity is obtained under the provisions of a particular statute.

33. Cooper v. Fifth Brown Ltd. (1963) 2 All E.R. 31 at p. 32 In case of Doyle v. Olby (Iron Mongers) Let. 34 their Lordship held: The expression compensation is not ordinarily used as equivalent for damages. It is used in relation to a lawful act which has caused injury. therefore, that word would not, I think, include damages at large. There are certain special terms which are frequently used in connection with the subject of damages, though the acquired special meaning in legal phraseology, are not at all distinct and separate from the one another.

Generally speaking, there are three kinds of damages. The first one what are known as Nominal Damages, the second. General or Ordinary Damages and the third, Special Damages.35 The word compensation means, any actual loss suffered by a party. For example, if trees had to be cut or certain structure had to be altered or demolished, in that case a question of paying compensation would arise but the question as to what loss a party would suffer in case he was prevented from making any construction or using the roof would not come within the meaning of the word compensation. It would come under the wider definition of the word damages.36 34. (1969) 2 All. E.R. 199 at 122 35. Per Esher. M.R,. in Dixon v. Calcraft, (1892) 1 Q.B. 458 61 L.J. Q.B. 579: 66L.T.T. 544: per Mukherjee. J,. in Mohammad Mazahard Ahad v. Mohammad Azimuddin, AIR 1923 Cal 511. 36. Union of India v. Ram Chandra, AIR 1975 All 221 at 225. Damages are also distinguishable from debt, and from a sum payable under contractual liability to pay a certain sum on a given event (other than breach). But include sums payable under claims for a reasonable price or remuneration for goods sold or services rendered and claims under an insurance policy when the quantum of damage has been proved.
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It can be said that

damages, should be any attempt at rigid classification. It is but to recognize that. Since in a court of law compensation for physical injury can only be assessed and fixed in monetary terms, the best that courts can do is to hope to achieve some

measure of uniformity in paying the damages. As far as possible it is desirable that two litigants whose claims corresponds should receive similar treatment, just as it is desirable that they should both receive fair treatment.38 Personal Injury Lawyers-Whats The Difference between Punitive and Compensatory Damages? There are two main types of damages in personal injury suitscompensatory and punitive damages. What are the differences between the two? Compensatory damages are awarded in order to make the victim whole again, meaning the monies awarded to the victim are meant to compensate for the loss,

37. Halsburys Law of England. 4th Ed. Vol. 12. p. 413. 38. Singh (an infant) v. Toong Fong Omnibus Co. Ltd,. (1964) 3 All. E.R. 925 at 927. injury, or harm suffered as a result of the defendants actions. They cover all financial expenses and other aspects associated with the personal injury. For example, if a negligent driver destroys your 1994 Ford and injures your back, you will be awarded monies in the amount of the value of the 1994 Ford and the amount of the medical bills for your back. Compensatory damages include, but are not limited to: loss of wages, pain and suffering, emotional stress, mental harm, permanent disability, medical bills, and replacement or repair of property. Punitive (exemplary) damages are usually awarded to the victim in addition to compensatory damages when they are considered to be mad equate. Sometimes they are awarded to prevent under compensation, but the monies awarded

usually reimburse the victim in excess of their injuries. These penalties are not meant to compensate the victim, but to punish the defendant or deter others from engaging in a similar action as the defendant. They are usually only awarded when the defendants actions are found to be international, willful; or malicious. Categorizations of Damages Damages for breach of contract may be categorized in three different ways. Expectation damages compensate the claimant for not receiving an benefit under a contract that they would have received if it had been properly performed. This category may also be referred to as damages for loss of bargain. Reliance damages are damages to compensate for losses suffered as a result of relying on the performance of the contract: if the contract is not performed some flow on benefit is lost by the claimant. These damages generally reflect expenditure spent on matters peripheral to the contract in question. Consequential damages are those damages or losses of profits, damage to property, liability to third parties or some other flow on effect from the failure to perform on the part of the defendant. Consequential damages are by far the most broad and therefore most common heads of damages claims. Kinds of Damages 1. General and Special Damages Damages are of two kinds: general and special damages, general damages are non-pecuniary losses, which can not be calculated in terms of money. Such non-pecuniary losses are thus:

b.

In respect of pain, suffering and shock suffered by the plaintiff by the assault;

c.

Loss of the amenities of life, such as, the plaintiff suffers by reduced enjoyment of life due to the damages caused by the assault and which may, apart from any material or pecuniary loss, be dependent upon the loss of amenities;

d. Loss of expectation of life; e. Inconvenience and discomfort; and f. Exemplary damages where the conduct of the defendant was so outrageous or scandalous that more punitive damages need be awarded against him and in favour of plaintiff. On the other hand, damages are such damages which can be computed in terms of money. Special damages can be laid and proved only in terms of money, while on the other hand, general damages are defined as matters which can not be stated in terms of money and include such things as bodily or mental suffering, loss of reputation and the like, while special damages, have to be pleaded and proved. In Bungo Steel Furniture Pvt. Ltd. v. Union of India 39, the arbitrator estimated the measure of damages as equivalent to the value of the steel used up in making the component parts, that is the legal proposition upon which the arbitrator bases his award and the question was whether that legal proposition was correct. The amount representing the value of the steel used up in making the component parts of the unfinished 2,528 bins could not be the true measure of damages for their non-acceptance. The normal rule for computing the damages for

non-acceptance of 2,528 unfinished bins would be the difference between the contract price and the market at the place of delivery, the market price of the controlling market place or the price prevailing in the controlling market may be taken into consideration. It was argued for the appellant that this rule may not apply because the bins were not completely fabricated, but, in that case the measure of damages would be the difference between the contact price on the one hand, and the cost of labour and material required for the manufacture of the component parts of the 2.528 unfinished bins on the other. In other words, the arbitrator ignored the provisions of Section 73 of the Indian Contract Act and awarded damages to the appellant on a wrong legal basis. The award of the arbitrator, therefore, is bound to be vitiated by an error of law apparent on the face of it.

39. AIR 1967 S.C. 378 at 381. Under American law, the compensatory and punitive damages
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are recognized.

Moreover in cases where parties undertake in their contract to fix the damages recoverable upon a breach thereof the damages are spoken of as liquidated damages41. The term damages also includes nominal damages given in vindication of a breach of duty which does not result in any actual loss.42 II. Nominal damages Nominal damages, as a technical phrase, which means damages in name only and not in amount. Such damages are awarded, not as compensation for the injury, but merely in recognition of the plaintiffs right and of the technical

infraction thereof by the defendant. Nominal are intended only where the plaintiff has sustained injuria sine damnum, that is, where a right of the said claimant has been infringed, but not so as to cause any sensible damages.43 The case must be one in which the plaintiff has cause of action owing to infringement of civil right but in which no real damage has been caused to him,
44

or where a breach of duty has been committed against him, but has not in fact produced any actual damage45 or where he fails to prove that he has suffered any 40. 22 Am Jur 2d. Lt 11. Lt 236. 41. 22 Am Jur 2d. Lt 212. 42. 22 Am Jur 2d. Lt 5. 43. Bishu Singh v. A.W.N. Wyatt, 14 CLJ 5W: 111C 729. at 735. 44. Kumud Kanta Chakraburtty v. E. Bignold. Manager. Court of Wards , A.I.R. 1923 Cal 306 at 306. 45. Columbus Co. v. Clowes, (1903) I.K.B. 244. substantial loss, 46 he is only entitled to nominal damages. Again, where the plaintiff has no intention of performing his part of the contract and the defendant committed only a technical breach thereof, or where the plaintiff has sustained actual damage not through the wrongful act of the defendant, 47 but from his own (negligent) conduct, the damages he is entitled to receive are merely nominal. In general, it may be said that where a cause of action is established, the plaintiff is entitled to some damages.48 Even where the court finds that the suit is vexatious and that no damages have really been sustained by the plaintiff there is nothing to prevent it from

giving him nominal damages, 49 though as a matter of right, he is not entitled to insist upon such damages being awarded to him. It is important to observe, as courts shall notice hereafter, that in India, owing to the provisions of Section 73 of Indian Contract Act, the award of nominal damages for breach of contract is not permissible. But the American position is different on this issue. Upon breach of a contract, the person guilty of the breach is liable for nominal damages, if actual damages cannot be proved. This means that, nominal damages only are recoverable upon the breach of a

46. Marzetti v. Williams. (1830) IB & Ad. 415. 47. Sanders v. Stuart. (1876) 2 C.P.D. 326. 48. Parusnath Shaha v. Brija Lal. WR 44. 49. Futeek Parooee v. Mohender Nath, WR I Cal. 385: 25 WR 226 contract if no actual or substantial damage has resulted from the breach or no damage has been shown.50 Temperate Damages In United States, what are called experate damages are allowed in certain classes of cases, without proof of actual or special damage, where the wrong done must in fact have caused actual damage to the plaintiff, though, from the nature of the case, he cannot furnish independent, distinct proof thereof. Temperate damages are more than nominal damages, and, rather, are such as would be a reasonable compensation for the injury sustained.51 Damages at Large

The expression damages at large may be explained as meaning that the judge can given whatever amount he think right as if he were the jury. If facts are sufficiently proved from which it may properly be inferred that some damage must have resulted to the plaintiff from the defendants wrongful act, the jury may give any damages, and it is not necessary to give proof of specific damage. Such damages are damages at large. Thus in actions of trespass, 52 or for maliciously inducing persons to break

50. 22 Am Jur 2d L. 9. 51. State Bank v. Marshall. 163 Ark 566 260. SW 431. 52. Saha Lal v. Amba Prasad, A.I.R. 1922 All 526 at 526.

their business contracts53 or for infringement of a copy right, 54 or for publishing a liable, whether on a person, a firm or a company,
55

the damages may be any

amount which the court considers fit, having regard to the conduct of the parties respectively, and all circumstances of the case. Moral Damages Moral damages, are such as can be awarded to a person who has a special dignity by virtue of an office, religious or secular, which he is entitled to maintain against any person who intentionally insults or in any way lowers the dignity of such office. Moral damages are always difficult to estimate in money value, and the position of the plaintiff as respected member of the public and the holder of an office has to be taken into consideration.

Contemptuous Damages The term contemptuous damages by its very nature, indicates that the court is inclined to treat the plaintiffs claim with contempt, and that he is not entitled to anything more than a formal verdict followed by a trifling amount towards damages claimed56. The jury, or those who have to discharge the functions of jury, are entitled to examine the whole conduct of the plaintiff both 53. Exchange telegraphs Co. v. Gregory & Co,. (1966) IQB 147: 65 LIQB 262. 54. Fenning Film Service Ltd. v. Wolver Hampton Walsall and District Cinemas . (1914) 3 K.B.1171. 83 LJKB 1860. 55. South Helton Coal Co. v. North Eastern News Association .(1894) I.Q.B 133 at 139. 56. Nadirshaw v. Pirojshaw. 191 c. 98 (per Beaman J.) before and during the action, and if they find that it was the plaintiff who provoked the wrongful act of the defendant, 57 or that he is not entitled to the same respect and consideration as a thoroughly honest and innocent man deserves, or that his attitude is highly dissatisfactory, 58 they are not bound to give him anything more than what are known as contemptuous damages. The usual amount granted in such cases in English money is one farthing, but in Indian currency one rupee or sometimes even one pie is granted towards such damages.

Exemplary Damages This Kind of damages is sometime called vindicative or punitive damages. They are intended not merely to award adequate compensation to the

injured party but also to punish the wrong-doer. In other words, they are intended society and of the aggrieved party are blended together and the damages are given not only to recompense the sufferer but also to punish offender. These damages are given for examples sake and they are clearly punitive or exemplary in nature. In such an action there are three distinct heads of damages, namely : (1) pecuniary loss, (2) compensation for wounded feelings, and (3) a sum of money of penal nature in addition to the compensating damage given for either pecuniary or physical or mental suffering. 59

57. Ibid. at 118. 58. Kelly v. Sherlock, (1866) 7. B & S. 480 59. Butterworth v. Butterworth of Englefield. H.R (1920) Pat. 126. It may be noted that in action for breach of contract with the exemption of the breach of promise of marriage.60 indicative damages are not granted, in as much as the motives of the defaulting party never enter into the consideration of the quantum of damages. Damages for breach of contract are in the nature of compensation, not punishment.61 Where the court finds that the conduct of the public officer is high-handed, insolent or mischievous and that the wrong suffered by the plaintiff is traceable to the willful and insolent conduct of the officer, there is no reason to refuse substantial if not vindicative damages to the plaintiff.

Substantial Damages

Substantial damages are those damages which a plaintiff, with a good cause of action, is entitled to receive as a fair and adequate compensation for the damage he has suffered from the wrongful act of defendant .No extraneous factors are taken into consideration in the assessment of such damages and the principle of restitution in integrum is more faithfully adhered to. The courts will endeavour to get at that sum of money which will put the party who has suffered, in the same positioning which he would have been, if he had not sustained the wrong for which he seeks to recover compensation.62 60. Berry v. Decosta, (1956) I.A. & N. 408. per Pollock. C.B. 61. Addis v. Gramophone Co. Ltd. (1909) AC 488 (Per Lord Atkinson). 62. Livingstone v. Ranyards Coal Co,. (1880) 5 App. Cas. 25. The Columbus. (1849) 3 W. Rob. 158. It has been seen that the courts in India more frequently adopt the principle of granting substantial damages even in cases of aggravated wrongs, and in case of failure to prove damage that can be measured in money, award nominal damages.63 Besides where a person has suffered injury in respect of his social position and estimation, substantial damages are awarded notwithstanding that he may not have sustained a pecuniary loss or physical injury by the act complained of.64 Consequential Damages

This term consequential damages, denotes those damages which follow as a consequence of a wrongful act producing loss of an indirect nature and which, however, are so proximate as to be recoverable. The term consequential damages has acquired significance in this branch of law, i.e., of damages. Whenever damage follows a wrongful act, it may, in a broad sense, be said to be a consequence of the wrong and damages therefore reclaimed by the injured party. But the law does not authorize the award of compensation in respect of all damages that flows out of a wrongful act. There can, properly speaking, be no limits to the damage caused by a wrong. Law has, therefore, set certain limits to the recovery of damages. The damages that are sufficiently proximate to the cause of action so as to be the natural consequence of

63. Keshob Lal Nag v. Jhanendra Nath. 24 IC 538. 64. Bhyran Prasad v. Isharre. 3 NW 313. the wrongful act, though of an indirect nature, are called consequential damages and are held recoverable in law65 and recognized under Indian Contract Act. The doctrine of Hadley v. Baxendale66 pertaining to recovery of compensatory damages, direct and consequential, have been uniformly followed by American courts. As pointed out in the Bates Case67 unless the promiser (seller or Carrier) is informed that the plaintiffs factory is shut down waiting delivery of the machine or part to be shipped he will not be liable for loss of profit due to negligee case of duty. In the Glove case68 it was pointed that one who has committed a breach of

contract is bound to pay damages only for such injury as he had reason to foresee when he made the contract. McCormick enunciated the rule thus69 Where the party has broken his contract the damages which the other party may recover are: (1) such as may fairly and reasonably be considered to arise naturally i.e. according to the usual course of things from such breach or such as may reasonably be considered to have been in contemplation of both parties at the time they made the contract as the probable result of its breach; (2) that, if the damages arose out of special circumstances, communicated and so known to both parties when the contract was

65. Hadley v. Baxendale. (1854) 9 Exch. 341. The Argentino (1888) 13 PD. (9). 66. Ibid. 67. Bates Machine Co. v. Norton Iron Works. Ky. 372. 68. Glove Ref. Co. v. Landa Cotton Oil. 190 US 540. 545. 69. 19 Minn L rev. 497. The Contemplated Rule as a Limitation on Damages made, the damages which the parties would reasonably contemplate would be the amount of injury which would ordinarily follow from the breach of a contract under those special circumstances as known and communicated; but (3) if the special circumstances were wholly known to the party breaking the contract, he at the most could, only be supposed to have had in his contemplation the amount of injury which would arise generally and in the great multitude of cases not affected by any such special circumstances.70 Prospective Damages

The term prospective damages is used in cases where damages are granted to a plaintiff in respect of a probable future loss or loss which he may reasonably be expected to suffer from the wrongful act of the defendant. In such cases, damages which the plaintiff has already suffered and damages which he might suffer in future will be once for all assessed in a single action. The cases of action is single and indivisible and due to very nature of things. Therefore, prospective damages can not be awarded in a case where a continuing cause of action subsists.71 In the assessment of prospective damages, that is, of loss which is expected to happen in the future, there is some degree of vagueness and want of precision, but a finding of future of prospective damages will not be bad in law merely because it can not be justified by the evidence with perfect legal accuracy.72 70. See Bates Case. Supra Note 44. 71. Hardeo v. Ram Chander. A.I.R. 1927 Nag. 85 at 86. 72. Koomaree Dasee v. Bama Sundri Dasee. 10 WR 202. Liquidaged Damages and Unliquidaged Damages: (A) Liquidated Damages:

The old common law distinction between liquidated damages and penalty has been done way with by virtue of the provisions of Section 74 of the Indian Contract Act, IX of 1872, as amended by Section 4 of Act VI of 1899. The term liquidated damages is applied to such damages, which constitute a liquidated demand payable in money. If a sum of money is previously agreed upon by the parties to a contract, will be paid, to either party, in case of breach of such

contract, whether or not actual damages is proved to have been caused thereby, it is called liquidated or stipulated damages which the party complaining of the breach is entitled to recover.73 The American position on liquidated damages is given under Section 151 (Simpson), 74 which runs as under: If the parties fix upon a certain sum to be paid on the breach of the contract: (a) It may be recovered if it was really fixed upon a liquidated damages for non performance. This is subject to the rules of construction stated below; (b) But if it was intended in the nature of a penalty in access of any loss likely to be sustained, the recovery will be limited to the loss actually sustained.

73. Arnold on Damages. 2nd Ed. P. 4. 74. Simpson on Damages. at p. 534.

In determining whether the sum named is penalty or liquidated damages, these rules may be stated: The court will not be guided by the name given to damages, by the party; (a) If the matter of contract is of certain value, a sum in excess of that value is penalty; (b) If the matter is of uncertain value the sum fixed is liquidated damage. (c) If a debt is to be paid by installments, it is no penalty to make the whole debt due on non payment of an installment.

(d) If some terms of contract are of certain value, and some are not, and the penalty is applied to a breach of any one of them, it is not recoverable as liquidated damage.75

Unliquidated Damages The term unliquidated damages, as opposed to liquidated damages, is applied to those damage which are not pre-determined or pre-arranged by the parties, but left to the discretion of the court to be determined by the rules governing the measure of damages. It is immaterial even if a particular amount is specified in the pleading as the sum at which the plaintiff estimates the damages.75 The law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or

74. Simpson on Damages. At p. 538. 75. Arnold on Damages. 2nd Ed. p.5. order to a court or other adjudicatory authority. When there is a breach of contract, the party who commits the breach does not incurs any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for damages. That is not treated as an actionable claim.76 Statutory Damages

In Halsburys Laws of England, statutory damages are described as, either the remedy in damages provided by some particular statute, under which the action is brought, or such damages are awarded for the direct infringement of the provisions of a statute or for neglect of statutory duty.77 The remedies provided by the Fatal Accidents Act, the workmens Compensation Act, etc. fall under the first head, while the damages that can be recovered from railway companies and other statutory bodies for infringement of duties bail upon them by virtue of the provisions of particular statute under the second head. Before a person can get any damages he must prove that he had suffered an injury: A person can get compensation only if he proves to have suffered injury because of an illegal act of the defendant and not otherwise. Malice does not enter 76. Union of India v. Raman Iron foundry. A.I.R. 1974 S.C. 1265 at 1273. 77. Halsbury Law of England. Vol. X pp. 306 at 307. the scene at all. A legal act, though motivated by malice, will not make the actor liable to pay damages. The proposition finds support from Salmonds observations: So too a land lord who serves a valid notice to quit can not be held liable in tort because his motive was the vindictive one of punishing the tenant for having given evidence against him in other proceedings.78 Merely because some officer has malice against a citizen who has committed a wrong will not render the action of the authority invalid if it is otherwise in

accordance with law. Mere Malice can not disentitle a person from taking recourse to law for getting the wrong undone. It is,therefore, not necessary to investigate, whether the action was motivated by malice or not. A person can get any damages after proving that he had suffered an injury. Law does not take into account all harms suffered by a person which caused no legal injury. Damage so done is called damnum sine injuria. Such a damage does not give the sufferer any right to get compensation. The term injuria is to be understood in its original and proper sense of worng.79 There is no right to enjoy property not legally obtained or constructed. A person has been given by law a right to construct a building but that right is restricted by a various enactments, one of which is the U.P. Municipalities Act. If a person authorities constructs a building illegally, the demolition of such building 78. Salmond on the Law of Torts. 15th Ed. p. 13. 79. Salmond on the Law of Torts. P. 17: see also Bhagya thammal v. Dhanabagvathammal. AIR 1982 Mad. 303 at 305. by the municipal authorities would not amount to causing injuria to the owner of the property. No person has the right enjoy the fruits of an act which is an offence under law. When the plaintiff has failed to prove that he had suffered injuria in the legal sense, he is not entitled to get any compensations.80 A breach of contract or the infringement of an absolute right is actionable, and no actual damage needed to be proved; if none is , any damage will usually be nominal.81 So the burden is clearly on the plaintiff to prove the contract as well as the breach thereof, and also as to the suffering or injury he is subjected to

consequent upon the breach.82 The essential thing is that the plaintiff must also prove that he has performed or had at all times been ready to perform his part of the contract.83 It is necessary to prove that the defendant, or his agent or other such contracted committed the breach off contract. It is not essential to establish malice while proving existence of a contract.84 It is the duty of the plaintiff to offer the best evidence to prove damages. Nevertheless, it is also the province of the court to assess the same on the basis of the evidences tendered before it.85 Though it is the duty of plaintiff ordinarily to show that the quality of the goods offered (but rejected) was the same as contracted for, yet where in Calcutta 80. Town Area Committee v. Prabhu Dayal. A.I.R. 1975 All. 132 at pp. 134. 135. 81. Vide Halsburys Laws of England. 4th Ed,. Vol. 12 P. 413. 82. Keshaw v. Gandhi, 29 IC 952: 67 IC 602. 83. Tan v. State of Johore. 163 Ic 417 PC 84. Pandurang v. Nogu. 30 E 598, 39 Bom. 682: 52MLJ 765. 85. Joseph v. shewbuse,29 CLJ 348 P.C. the plaintiffs agent took delivery after the usual examination of goods quality, the burden was on the plaintiff to show that the goods were not of the requisite standard in so far as they had been tested by their agent at Calcutta itself. 86 Proof can be let in as to the due date specified in a contract unless that is repugnant to express terms of the contract.87 In the matter of goods sent by railway, the plaintiff can not ask for open delivery. He can at best take the delivery and on discovery of damage can claim damages.88

86. Gan Kim v. Rally Bros, 13 P.C. 237 PC. 87. Goverdhandas v. Rawji. 76 IC 62. 88. Hari Singh v. Vidyawati, A.I.R. 1960 J & K 91.