Important points:
" What the court has to see in a case where liquidated damages is provided for the breach of the terms of the contract is whether the damages provided for in the contract is a reasonable one having regard to the facts of the case including the agreement, irrespective of the question as to whether actual damage is proved to have been caused
" Under Section 73 of the Indian Contract Act, when a contract is broken, what is recoverable is only the loss or damage caused, which naturally arose in the usual course of things from the breach or which the parties knew, when they meet the contract, to be likely to result from breach of it.
" Section 74 of the Contract Act which supplements Section 73 of the Contract Act clarifies that irrespective of the amount stipulated in the contract as the amount to be paid in the case of breach, the party complaining of the breach is entitled to claim only reasonable compensation and the amount stipulated could be taken only as the outer limit. Section 74 of the Contract Act also clarifies that reasonable compensation can be claimed in such cases irrespective of the question whether or not actual loss is proved to have been caused.

The plaintiff in a suit for realization of damages is the appellant in the second appeal.

2. The plaintiff is a public sector company. The first defendant was engaged by the plaintiff as a diploma trainee. As per the terms of the engagement, the first defendant had to be on training for a period of two years. He was entitled to only a consolidated stipend of Rs.600/- per month for the first year of training and Rs.750/- per month for the second year. The terms of the engagement also provided that on successful completion of the training, if the plaintiff desires to have the first defendant in their service, then the first defendant has to serve the plaintiff for a period of three years. The first defendant was also required to execute a bond along with a surety. The first defendant joined the services of the plaintiff on 1.2.1990 after executing the bond along with the second defendant, his father. As per the terms of the bond, the first defendant agreed, among others, that he will not leave the services of the plaintiff during the period of training and that he would refund the plaintiff the full amount of stipend received and pay 50% of the stipend receivable for the remaining period of training by way of damages, if he leaves the services of the plaintiff during the period of training. The case set out by the plaintiff in the plaint is that the first defendant left the services of the plaintiff while undergoing training, violating the terms of the bond, on 3.7.1991 and therefore, he is liable to pay to the plaintiff a sum of Rs.13,479.03 in terms of the bond. The suit was for realisation of the said amount with interest from the defendants.

3. The defendants resisted the suit contending, among others, that the secretary of the plaintiff, who instituted the suit on behalf of the plaintiff, was not competent to institute the suit on behalf of the plaintiff and that the suit is, therefore, not maintainable. It was also contended by the defendants that the bond relied on by the plaintiff is not one voluntarily executed by the defendants. It was further contended by the defendants that, at any rate, the plaintiff is not entitled to realize a sum of Rs.13,479.03 from the defendants.

4. The trial court rejected the contentions of the defendants and decreed the suit as prayed for. The defendants challenged the decision of the trial court in appeal. Though the appellate court found that Ext.A1 bond is one voluntarily executed by the defendants and the defendants are liable to the plaintiff for the amount claimed in the suit, it reversed the decision of the trial court and dismissed the suit holding that the secretary of the plaintiff who instituted the suit on behalf of the plaintiff was incompetent to institute the suit on behalf of the plaintiff. The plaintiff is aggrieved by the decision of the appellate court.

5. Heard the learned counsel for the appellant as also the learned counsel for the respondents.

6. The learned counsel for the appellant, placing reliance on Order 29 of Rule 1 of the Code of Civil Procedure ('the Code') and Rule 29 of the Civil Rules of Practice, contended that in terms of Order 29 of Rule 1 of the Code, the plaints in suits instituted by corporations can be signed and verified on behalf of the corporations by its Secretaries and in terms of Rule 29 of the Civil Rules of Practice, once such signed and verified pleadings are presented before the ministerial officer of the Court either the Secretary himself or his pleader or the registered clerk of the pleader, the institution of the suit is complete. According to the learned counsel, a suit instituted in the aforesaid manner cannot be dismissed as not maintainable. It was pointed out by the learned counsel that the appellate court found that the secretary of the plaintiff was not competent to institute a suit on behalf of the plaintiff, placing reliance on Article 129 (b)(7) of the Articles of Association of the plaintiff empowering its Managing Direc