The main legal point established in the judgment is that compensation for breach of contract can only be claimed if the party suffering from the breach has sustained legal injury in the form of actual loss or damage. The requirement of proving the existence of legal injury or damage is essential for claiming compensation, and the provisions of S.74, S.73, and S.75 of the Indian Contract Act, 1872 must be interpreted in light of this requirement.

1. These appeals arise out of the common judgment of the First Additional Sub Court, Ernakulam in O. P. Nos. 59 of 1980 and 80 of 1980. which ended with the Award passed by the Chief Engineer being made into decree of court. The award was passed in O. P. No. 59 of 1980.0. P. No. 80 of 1980 filed by the Government to set aside the award has been dismissed

2. The first appellant Government of Kerala through the second appellant Superintending Engineer, Irrigation Central Circle, Trichur, entered into a contract with the respondent on 19-9-1975 to do the work of improvements to Champakkara Canal-Dredging works and allied works. The work was agreed to be completed on or before 15-7-1976. The agreement also required the respondent - contractor to maintain progress in work as prescribed in the schedule in Clause.3 of the agreement. There was also a provision in the contract to enable penalty to be levied in case of failure on the part of the contractor to maintain stipulated progress. He did not maintain stipulated progress and extensions of time were granted on contractor's requests as per supplemental agreements. On account of the delay in maintaining agreed progress in the work, penalties were levied against the contractor at the rates prescribed. After the completion of the work and the drawing of the final bill, disputes arose between the contracting parties and as provided in the agreement, disputes were referred to the Chief Engineer (Arbitration). The claims of the respondent - contractor were under eight different heads. On 13-6-1980 the Arbitrator passed an award to the following effect:

"Claims 1, 2 and 3. No legal injury or damages are caused by the claimants to respondents. From with-held amount a sum of Rs. 7,35,000/- (Rupees seven lakhs and thirty five thousand only) shall be refunded to claimant by the respondents."

As authorised by the Arbitrator the award was filed in the court by the respondent's advocate. Respondent filed O. P. No. 59 of 1980 for passing a decree in terms of the award to which the appellants raised objections. Appellants also filed O. P. No. 80 of 1980 to set aside the award and this was opposed to by the respondent. By a common judgment, the learned Subordinate Judge overruled objections of the appellants and made the award into decree of court directing both parties to suffer their respective costs.

3. The first submission made by the learned Government Pleader is that the respondent having received final payment for the work in November, 1977 in full and final settlement of all his claims and under Clause.62(c) of M.D.S.S-. which forms part of the contract by virtue of Clause.5 of the agreement dated 19-9-1975, is debarred from making any further claim after receiving payment under the final bill. According to the learned Government Pleader, in this view, the Arbitrator had no jurisdiction to entertain the claim of the respondent or to pass an award. We are unable to agree that the plea involves a question of jurisdiction. At best it may involve a plea of estoppel, estopping the respondent from raising the claim after he accepted payment under the final bill, assuming that he accepted it without protest. To say that the respondent is estopped from raising claim or contention is one thing; but to say that Arbitrator had no jurisdiction to entertain the claim or to pass award in that behalf is quite a different thing The plea of estoppel shuts the parties from raising the claim; the plea of lack of jurisdiction bars the Arbitrator from entertaining the claim or passing the award. The plea of estoppel does not involve a plea of want of jurisdiction. We also find that the plea of want of jurisdiction bad not been raised in any form before the Arbitrator; it was raised for the first time before the court below. The appellants cannot, therefore, be permitted to raise such a plea, they having failed to raise it before the Arbitrator. This contention, therefore, fails.

4. The more important con