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1955 Supreme(P&H) 71
PUNJAB & HARYANA HIGH COURT
D.Falshaw and Kapur JJ.
Delhi Cloth And General Mills Co.Ltd.
Versus
K.L.Kapur
First Appeal No. 222 of 1950,
Decided On : NOVEMBER 24, 1955
The main legal point established in the judgment is that the contract did not imply that the company was bound to implement and try out any schemes suggested by the plaintiff unless they were of the positive view that the scheme of the plaintiff was so manifestly dangerous that its putting into practice would far outweigh the likely advantages.
Headnote:
Implied Contract - Contract Law - [S. 420, Indian Penal Code, S. 202, Criminal Procedure Code, S. 203, Criminal Procedure Code] - The court discussed the implied terms of the contract between the parties and concluded that the contract did not imply that the company was bound to implement and try out any schemes suggested by the plaintiff unless they were of the positive view that the scheme of the plaintiff was so manifestly dangerous that its putting into practice would far outweigh the likely advantages. The court held that the lower Court wrongly imported an implied term into the contract between the parties, and this removed the basis on which the decree in the plaintiff's favour was founded. The appeal was accepted, and the plaintiff's suit was dismissed with costs throughout.
Fact of the Case:
The plaintiff, possessing a diploma in engineering, approached the defendant company to place his skill at its disposal for the purpose of effecting economies in the running of its factories. The plaintiff claimed that the company had adopted his ideas and was deriving profits therefrom. The company denied this and terminated the plaintiff's services. The plaintiff filed a criminal complaint and later instituted a suit claiming damages for breach of contract.
Finding of the Court:
The court found that the lower Court wrongly imported an implied term into the contract between the parties, and the plaintiff failed to establish his claims. The court accepted the appeal and dismissed the plaintiff's suit with costs throughout.
Issues: The issues framed by the Court included the terms of the contract between the plaintiff and the defendant, the maintainability of the suit, the competence of the defendant's officers to decide the usefulness of the plaintiff's scheme, the prematurity of the suit, the breach of contract by the defendants, the readiness of the plaintiff to perform his part of the contract, and the entitlement of the plaintiff to damages for breach of contract and compensation for loss of profits and costs of the plaintiff's labour and skill.
Ratio Decidendi: The court held that the contract did not imply that the company was bound to implement and try out any schemes suggested by the plaintiff unless they were of the positive view that the scheme of the plaintiff was so manifestly dangerous that its putting into practice would far outweigh the likely advantages. The court found that the lower Court wrongly imported an implied term into the contract between the parties, and this removed the basis on which the decree in the plaintiff's favour was founded.
Final Decision: The appeal was accepted, and the plaintiff's suit was dismissed with costs throughout.
Falshaw, J.
1. This is an appeal by the Delhi Cloth and General Mills Company Limited, Delhi, against a decree passed in favour of K. L. Kapur respondent for Rs. 46,712/-.
2. The facts of the case are to a great extent not in dispute, though some ol their implications are, and are as follows. About December 1945 the plaintiff, K. L. Kapur, who possesses a diploma in engineering from the Maclagan Engineering College at Lahore and claims to be an expert in the branch of industrial technology described as "Time and Motion Study" approached the Company with a view to placing his skill at its disposal for the purpose of effecting economies in the running of its factories. He was successful in persuading the management to give his methods a trial and the only terms of the contract subsequently entered into between the parties are embodied in the letters P. 2, P. 3 and P. 4. The first of these dated the 29th of January, 1946 is addressed by the Managing Directors of the Company to the plaintiff and reads:-
-(Page 87).
"Reference your letter No. D. M. I dated the 28th December, 1945, please note that the terms on which we are prepared to engage you for study of Time and Motion in our Mills are as follows :-
- We will pay you 10% of the savings effected annually for the first year only. 2 1/2 of this amount will be payable after three months of the completion of your work to our satisfaction 21/2 after six months and the balance after one year. The payment will not be for suggestions only, but for actual economies effected by your personal effort. The decision of the General Manager, Spinning Superintendent and our Costing Officer will be final for purposes of deciding as to how much economies have been effected and to what an extent. Although the economies effected will be recurring, but the payment will be only on the basis of first one years savings."
Exhibit P. 3 on the same page is from the plaintiff to the Managing Directors dated the 31st of January, 1946 as follows:-
-
"I am in receipt of your letter No. 12853 dated the 29th January, 1946. n this connection I beg to point out that the work was started in the Mills about a month back on the understanding that I will receive 20% of the saving effected annually for the first year only. 20% is already a low figure and it is not possible for me to do the job on anything lesser than this. 5% of this amount was to be payable after three months of the completion of work in a department, 5% after six months and the balance after one year. I agree that the savings will be recurring but payment to me on the first years savings. I also agree that the General Manager, Spinning Superintendent and Costing Officer in consultation with me will decide as to how much economies have been effected and to what an extent. Their decision in this respect will be final. It is, however, suggested that certain basis be formed against which improvements will be compared e.g. average 24 hours production for the months of November and December or any other two months of the year 1945. Time and Motion Study work is mostly educative and as the operators form better habits, the production begins to improve and the costs decrease. Rest of the work consists of improving the effectiveness of supervision and introducing better control. My work, therefore, will be most practical and personal. Suggestions will be made to the management where changes in organisation, machinery and plant lay-outs will be required. Perfect loyalty and honesty in work is assured."
The last letter P. 4 (Page 88) is from the Company to the plaintiff dated the 5th February, 1946 and reads :-
-
"Reference your letter No. DM/3 dated the 31st January, 1946, we are agreeable to the figure of 20% mentioned by you on the terms etc. already decided."
3. Thereafter Kapur began studying conditions in the Spinning Department of the Company, which in itself apparently comprises two separate factories, and on the 21st of February, 1946 he submi
