The court emphasized that proof of actual damages is essential for recovery under liquidated damages, aligning with contractual principles.

JUDGMENT :

Mohammed Nias C.P., J.

The defendant in O.S. No. 55 of 1990 on the files of the Principal Sub Court, Palakkad, is the appellant herein.

2. A suit was instituted for the realisation of money by the respondent herein, a partnership firm which was a wholesale dealer in industrial minerals. The plaintiff alleged that they had entered into an agreement with the defendant/appellant for the supply of sweetener lime stones at the rate of 100 to 150 metric tonnes per day to be increased to 300 metric tonnes necessary for the manufacture of cement, as per Order dated 28.04.1998. On the request of the defendant, the plaintiff had identified good limestones from Cuddappa and Dronachalam and a report was sent to the defendant quoting the ex-mine rates given by the Andhra Pradesh Government.

3. The plaintiff later informed the defendant, through a letter dated 16.07.1988, that the materials could be moved out of Andhra Pradesh only on payment of mineral rights tax. Accordingly, the defendant amended the purchase order and agreed to pay the extra mineral rights tax and surcharge in addition to the costs of the materials, transportation charges, and other expenses already agreed upon. The purchase order was accepted by the plaintiff by letter dated 08.08.1988. It is alleged that the defendant declined to take delivery of 480.12 MT of materials on the ground that the items supplied were below the prescribed standards. The plaintiff thereupon informed the defendant of its inability to supply the variety and supplied certain other varieties and requested the defendant to allow the plaintiff to take back the unaccepted quantity. The defendant did not give any reply. It is stated that the cost of unaccepted materials would come to Rs. 1,13,000/-. The plaintiff had sent a notice claiming the above amount, and on its refusal, the suit was filed for the above amount.

4. The defendant had refuted the claim of the plaintiff and had also raised a counter claim for damages alleging breach of contract on the part of the plaintiff. The trial court, through its judgment, decreed the suit, allowing the plaintiff to realise a sum of Rs. 1,13,000/- as the value of the rejected quantity of 480.120 MT of limestone, less the amount actually received by the plaintiff.

5. The counter claim raised by the defendant was considered as Issue No. 4, and relying on clause 13 in Ext. A1, held that the defendant was entitled to recover the damages claimed, but it was limited to Rs.10,00,000/-.

6. Against the said judgment and decree, the plaintiff filed A.S.No.701 of 1992 before this court, wherein by judgment dated 23.01.2003, the matter was remanded to the trial court for examining the claim of the defendant as regards the claim for damages, in accordance with law. Both parties were given the liberty to adduce fresh evidence. It was held that it was for the defendant to establish, based on evidence, the damages caused to him. The appeal was allowed to the extent stated above.

7. After remand, through the judgment dated

29.09.2004, the trial court found that the defendant could not prove the actual loss claimed and accordingly found the defendant not entitled to claim any amount as damages from the plaintiff and thus the counter claim was dismissed. The present appeal is preferred by the defendant against the rejection of the counterclaim.

8. The learned counsel appearing for the appellants would argue that the documents produced by the defendant would show contemporaneous purchase, which meant that the defendant had to purchase raw materials from others, as the plaintiff admittedly did not comply with the conditions in the Ext.A1 agreement. Thus, he contends that as the breach is admitted, clause 13 of A1 applies, and since liquidated damages have been fixed, without any proof of further damage, he was entitled to the amounts stipulated. It is also argued that the B14 doc