2015 Supreme(Kar) 1337

KARNATAKA HIGH COURT
N. KUMAR, B. VEERAPPA, JJ.
Goetze (India) Ltd., Bangalore and another - Appellants
Versus
H.R. Thimappa Gowda – Respondent
R.F.A. No. 1475 of 2010 C/w RFA Crob. No. 9 of 2012
Decided on : 20-02-2015

Headnote:LABOUR & SERVICES - Termination of service: [N. Kumar & B. Veerappa, JJ] Suit for declaration against termination of service - Defendants reviewing Plaintiff’s performance as not satisfactory, terminated his services with immediate effect - Trial Court held, order of termination as illegal, unjust, arbitrary, null and void and Plaintiff is entitled for the relief of declaration and mandatory injunction as sought - Damages of Rs.26,76,000/- awarded - Held, Plaintiff is entitled to damages because of wrongful termination. He would also be entitled to all the statutory benefits such as PF and Gratuity.

       INDIAN CONTRACT ACT, 1872 - Section 73: [N. Kumar & B. Veerappa, J] Termination of employment - Compensation for loss or damage - Principles of mitigation - Held, The master who wrongfully dismisses his servant is bound to pay him such damages as will compensate him for the wrong done to him. The measure of damages for the breach of promise is obtained by considering what is the usual rate of wages for the employment contracted for, and what time would be lost before a similar employment could be obtained. The damages are to be assessed by reference to the amount earned in the service wrongfully terminated and the time likely to elapse before the servant obtained another post for which he fitted. If the contract expressly provides that it is terminable upon, e.g., a month’s notice, the damages will ordinarily be a month- s wages. If the contract of employment is for a specific term, the servant would then be entitled to the whole of the salary, benefits, etc., which he would have earned had he continued in the employment of the master for the full term of the contract, subject of course to mitigation of damages by way of seeking alternative employment. Such damages would be recoverable by the servant for his wrongful dismissal by the master only on the basis of the master having committed a breach of the contract of employment. The damages awarded to the non-defaulting party to a contract will be determined and measured as though that party had made reasonable efforts to avoid the losses resulting from the default. The servant would in that event be entitled to damages the amount of which would be measured prima facie and subject to the rule of mitigation in the salary of which the master had deprived him.

        The principle of mitigation of loss does not give any right to the party who is in breach of the contract but it is a concept that has to be borne in mind by the Court while awarding damages. The common law which recognizes his right to recover damages for wrongful dismissal imposes a corresponding duty on him to do all that is possible to mitigate such damages. He is bound to act in that direction not only in his own interest but also in the interests of the opposite party against whom he has to sustain an action for damages. He has to use due diligence in endeavouring to obtain suitable employment with wages approximating that which he was getting in the service from which he was dismissed, even though he is not expected to accept a fresh engagement in a lower status. The plaintiff must take all reasonable steps to mitigate the loss which he has sustained consequent upon the defendant- s wrong, and, if he fails to do so, he cannot claim damages for any such loss which he ought reasonably to have avoided. The plaintiff is only required to act reasonably, and whether he has done so is a question of fact in the circumstances of each particular case, and not a question of law. He must act only in his own interests but also in the interests of the defendant and keep down the damages, so far as it is reasonable and proper, by acting reasonably.

        A servant complaining of wrongful dismissal from service cannot rest content by merely putting forward a claim for recovery in a lumpsum and in advance the entire amount of anticipated salary covering the whole period for which he is expected to continue in service so as to utilize such amount for safe investment and thus to convert the very injury complained of into a blessings in disguise. The possibility of continuance in service for the whole of such period cannot be asserted with certainty. The possibility of the termination of service at any time during that period, on account of death or physical or mental disability or on account of other justifiable causes, cannot be ruled out. The assumption that there would have been a progressive increase in the salary of the plaintiff by regular increments and higher scales of pay on account of promotions, is equally bad for uncertainty. Promotions and the consequent increase in salary cannot be taken to be automatic, but can be expected to follow only from the acceptance of the service as satisfactory and creditable. The anticipated salary or wages for an unreasonably long period subsequent to the date of the dismissal cannot be fixed as the measure of damages arising out of the wrongful dismissal. A servant who has been wrongfully dismissed must use diligence to seek another employment, and the fact that he has been offered a suitable post may be taken into account in assessing the damages.

       INDIAN EVIDENCE ACT, 1872 - Sections 137, 145: [N. Kumar & B. Veerappa, J] Examination of witness - Merely because one sentence in the examination-in-chief is not traversed in cross-examination that does not mean that what has been stated in the examination-in-chief is held to be proved. It is the substance of the evidence which has to be taken into consideration and a finding has to be recorded on the basis of such evidence.